Since 1935, all life, fire, marine, automobile, agriculture, accident and health, and other insurance companies have been Mexican operated. Insurance companies must be authorized by the National Banking and Insurance Commission. In recent years, regulation has changed from rates and forms to solvency requirements. The effect of this change has been to increase product and price competition to the advantage of the consumer. The Mexican market has been divided into general and life insurers (including composites) and surety companies for purposes of regulation and government oversight. At year-end 1995, there were approximately 55 insurers, including three mutuals, two reinsurers, and two government companies. In addition, there were approximately 20 surety organizations with a total premium volume exceeding $115 million. Government companies provide the compulsory workers' compensation insurance, which is a part of the social security scheme.
The Mexican insurance market is characterized by a relatively small number of insurers, with the top five insurers enjoying 70% of the market in terms of premiums. Thereafter, the size of insurers drops very rapidly. During 1996, two of the top five insurance organizations were expected to complete a merger, with the resulting company having 30% of the 1995 market. With the liberalization of the insurance market, a number of foreign insurance organizations have established or strengthened their presence in Mexico. In 1995, the insurance market in Mexico totaled approximately $3 billion, with very low penetration when compared to North America and Europe, especially for life products.