Microinsurance and access to insurance in Mexico

The Ley de Instituciones de Seguros y de Fianzas (LISF, Insurance and Surety Institutions Law) does not define microinsurance; the CNSF's (National Insurance and Surety Commission) Circular Única de Seguros y Fianzas (CUSF) does. Its Provision 1.1.1, section XCI, defines Microseguros (microinsurance) as insurance products in the life, property and casualty, or accident and health lines whose purpose is to promote access to insurance protection for the low-income population through low-cost distribution and operating channels. Excluded are the lines in sections II, XI, XII, XIII and XIV of article 27 of the LISF: social security pensions, credit, caución (performance guarantee), mortgage credit and financial guarantee insurance.

Chapter 4.8 of the CUSF sets the limits and requirements that distinguish microinsurance from ordinary insurance. They are designed so that the product is small, simple and easy to collect.

Alongside microinsurance, Mexican regulation has two other vehicles designed to expand coverage. They should not be confused, because each has its own rules.

In microinsurance the channel is the product. A premium of twenty or thirty pesos a month cannot pay for an agent's visit, a printed policy and a claims adjuster. That is why the regulatory definition speaks of "low-cost distribution and operating channels." The ENIF 2024 shows where people are today: 77.6% of adults used some financial channel in the past year, and of those, 79.2% used ATMs, 62.8% branches and 56.5% banking agents in retail stores. Among those with a formal savings account, use of a mobile app rose from 54.3% in 2021 to 69.1% in 2024.

Parametric insurance does not indemnify the measured loss but an index: cumulative rainfall at a weather station, soil moisture estimated by satellite, earthquake intensity or a hurricane's central pressure. Because the index does not depend on what the insured does or on the loss adjustment of each plot, the product removes much of the moral hazard and adjustment cost, and it can pay within days. That makes it a natural fit for smallholder farmers, whose policies are too small to justify an inspection. The price of that simplicity is basis risk: the index may not trigger when the farmer did suffer damage, or the other way around.

In Mexico the largest public example is sovereign. The federal government maintains catastrophe bonds with the World Bank and a parametric insurance policy placed through Agroasemex, the national insurance institution with majority federal ownership whose mission is to protect the assets and productive capacity of the rural sector. At the June 2026 renewal, that parametric cover was doubled to 10,000 million pesos for earthquake, volcanic eruption, hurricane and flood. It is not microinsurance (the insured is the government), but it shows that the Mexican market already operates parametric triggers at scale.

For individual farmers, a parametric design is filed under the agricultural and livestock line of article 27 of the LISF and, if aimed at low-income people through a cheap channel, may fit the property and casualty microinsurance vehicle, with its limit of 20 UDI of monthly risk premium or 45,000 UDI of sum insured for property exposed to hurricanes. The international experience in section 09 shows how this has been done for livestock in arid regions.

Microinsurance forces you to get the basics right with very little information and very little margin. These are the problems that show up in almost every project.

The Microinsurance Network publishes an annual Landscape of Microinsurance study with data reported by insurers themselves. In its 2024 edition, the products reported covered 344 million people in 37 countries, 70% more than three years earlier, with 6,200 million dollars of written premiums in 2023. The same study stresses that 9 out of 10 people worldwide remain unprotected against risks such as climate, health crises and economic shocks. Mexico is one of the Latin American countries included.

The IAA has documented that inclusive insurance markets suffer from a shortage of actuarial services. Its paper "Addressing the Gap in Actuarial Services in Inclusive Insurance Markets" identifies the lack of qualified or experienced professionals, the limited supply of actuarial capacity in microinsurance, poor understanding of what an actuary can contribute and the need to balance supply and demand. Its follow-up, "Assessing Risk and Proportionate Actuarial Services in Inclusive Insurance Markets," the result of a joint project with the IAIS, proposes proportionate actuarial services: identifying the key risks of a product or provider, defining what actuarial advice each one needs and what level of skill is required to provide it.

In Mexico, technical notes for microinsurance, mass insurance and basic products are filed with the CNSF like any other product, under Chapter 4.1 of the CUSF and the actuarial standards of practice in Chapter 4.3, and, under article 201 of the LISF, must be prepared and signed by an actuary holding a cédula profesional (professional license) and current certification from the professional college, or who demonstrates the required knowledge to the CNSF. The actuary's value, however, goes beyond the filing:

Actuaries Without Borders was for years the IAA section that brought together volunteer actuaries to support the development of the profession and of protection systems in countries with little actuarial capacity. The IAA's historical record lists section chairs between 2003 and 2020. Today the IAA lists six sections (AFIR-ERM, ASTIN, IAAHS, IAALS, IACA and PBSS) and Actuaries Without Borders is no longer among them; related work is channeled in other ways. These are the ones we were able to verify: