Mexico: Demand Grows for Private Sector Disability Insurance, Insurer Says

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By Emily Pickrell

Aug. 4—The demand for private disability insurance in Mexico is greater than in countries with higher average incomes, according to a recent study by Zurich Insurance Company.

Despite a state system that provides disability insurance for a range of ailments, more than 70 percent of Mexicans have considered purchasing income protection insurance compared with 52 percent of German workers and 37 percent of Australians, according to a Zurich study that compared worker views on the need for income-gap protection in 12 countries.

One of the biggest drivers for Mexican interest in disability insurance is the high number of workers in the informal sector. Less than half of Mexican workers were in the formal sector in 2015, according to Mexico's National Statistics Office, excluding them from the automatic benefits provided by the social security system.

“Limited social protection and uncertain working conditions mean that Mexicans are more aware of the need for income protection than people in other markets,” the report said, noting that 79 percent of Mexican respondents indicated they would accept a lower salary in exchange for disability benefits.

Formal Sector Covered

Mexican workers in the formal sector are covered for both work-related disability and general illness disabilities through the Mexican Social Security Institute (IMSS). Incapacitated workers can receive disability benefits (and medical treatment) for a range of reasons, including accidents, illnesses and pregnancy.

A worker on disability will receive 100 percent of his or her salary for up to two years, though this amount is capped at 25 times the minimum wage, which is currently about $4.00 a day.

“After that, the IMSS will have to determine whether you are fit to continue working or if you have a permanent disability,” said David Leal Gonzalez, a senior associate with a Mexican branch of Littler, an international employment law firm. “If you have a permanent disability, it will have to say how much is the percentage based on the nature of the disability. They will pay you based on the percentage of your daily salary for life.”

Despite these benefits, more than half of those surveyed who had lost income due to a disability said they had to use savings to cover the earnings shortfall, while 44 percent said their families had provided additional support, the Zurich report said.

Currently, private disability insurance is typically coupled with private medical insurance, and such packages are usually limited to mid-level executives or higher, Leal said.

‘No Income Protection'

While informal sector workers are not automatically included by the IMSS system, they can participate if they pay the premiums that both an employer and an employee would otherwise pay into the system, which range between $200 and $500 a year, depending on age.

“It is an important sector that has no income protection,” said Radames Lopez, the head of corporate, life and pensions for Zurich Insurance Mexico.

The popularity of private disability insurance is increasing, Lopez said, noting that the disability and life insurance market in Mexico is estimated to be more than $13.5 billion and is growing at about 7 percent annually.

Human resources experts, however, caution employers that workers expect any new benefits, such as private disability insurance, to be maintained, given Mexico's history of strong labor protections.

“Any benefit or slate you put in, you are sort of stuck with that level and it has a huge impact on how employees see things,” said Harry Jones, an international employment lawyer with Littler in Dallas who focuses on Mexican labor issues.

To contact the reporter on this story: Emily Pickrell in Mexico City at

To contact the editor responsible for this story: Rick Vollmar at

For More Information

For more information on Mexican HR law and regulation, see the Mexico primer.

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