The leading e-commerce corporation in Latin America, MercadoLibre, has reached 5 million customers in its insurance branch, according to a senior executive of the company. This represents further progress in its goal of becoming the most region’s prominent ecommerce and financial ecosystem.

MercadoLibre achieved this goal in less than four years due to significant investments in technology and a strong focus on users, as expressed to Reuters by Carlos Cernadas, the director of its Insurtech LatAm unit.

Regarding insurance, Cernadas identified the most significant need among people with “low or medium-low” incomes. They added that offering insurance through the company’s marketplace and Mercado Pago has facilitated access.

Cernadas also highlighted that throughout Latin America, there is a lack of access to products and coverages related to insurance.

According to OECD data, Latin American countries are significantly below their competitors in North America, Europe, and Asia regarding their gross insurance premiums. However, according to Statista, the region is expected to experience more remarkable growth in insurance premiums between 2022 and 2023 than other geographical areas, except for China.

Companies-Leaders-Non-Life Insurance Latam-2020
Companies Leaders-Non Life Insurance in Latam 2020. (Source: Statista)

This growth has benefited from the region’s economic expansion until 2020, reflected in the contribution of insurance premiums to GDP, with Puerto Rico and Venezuela as the countries with the highest and lowest insurance densities, respectively.

The firm, headquartered in Argentina and present in 18 nations, did not disclose how much it invested in the insurance sector this year. However, it revealed plans to invest USD $3.9 billion in logistics, technology, and fintech in Brazil and USD $1.6 billion in Mexico.

According to Caroline Sánchez, an investment consulting firm Levante analyst, it is reaching the five million mark due to a decisive action by MercadoLibre that reinforces the offer of the company’s key businesses.

Sánchez added that “each of MercadoLibre’s recent launches functions as a subdivision of the company’s core e-commerce and fintech businesses, areas in which the company has bet and that have been bearing fruit.”

The company reported last Wednesday a year-over-year increase of 113% in its net profit for the second quarter, reaching 261.9 million dollars, amid an increase in sales and the number of users.

In its fintech division, MercadoLibre announced that it had added 7.1 million new users in all its operations over the last 12 months, bringing its base of active financial users to 45.3 million.

MercadoLibre’s expansion shows growing demand and opportunities in various regional sectors, improving access to insurance in less attended segments of the population, which can generate leverage with other startups focused on SMEs, for example.

Additionally, given the complexities that raising capital has represented for several startups, the fintech sector, including insurtech, seems to be positioning itself as an increasingly reliable market for venture capital investments.