Background on the Situation
Miguel Ángel Rosas Ortiz, a senior fiscal associate at the law firm Pérez-Llorca, discussed potential strategies for Mexican insurance companies to cope with tax changes in the “Actualidad Iberoamericana de Seguros” report for Q4 2025. These changes will affect insurers’ ability to claim VAT on accident payouts, prompting them to consider vertical integration strategies.
Vertical Integration in Insurance
Vertical integration in insurance involves companies owning various parts of a service chain, such as healthcare facilities like pharmacies or hospitals. This approach aims to control costs and services, as seen in the US with insurers like UnitedHealth and CVS creating integrated networks for efficiency.
Tax Changes and Their Impact
The tax changes for insurance companies stem from a new interpretation of VAT by the fiscal authority. Historically, insurers could claim VAT after paying hospitals, workshops, or other service providers for post-accident medical or repair services. However, in 2024, the fiscal authority changed its stance, denying VAT reclamation retroactively from 2019.
This new interpretation led to substantial tax credits for insurers, causing severe financial strain and increasing the risk of insolvencies within the sector. An agreement between the government and insurance industry, incorporated into the Federal Income Tax Law of 2026, addressed these concerns by condoning previously accrued VAT, allowing 2025 regularization without penalties, and setting the new criterion for 2026.
Potential Consequences
- Rising Premiums: Rosas Ortiz and other industry voices agree that tax changes will inevitably lead to increased premiums for end-consumers, who will absorb the additional cost in a challenging economic climate.
- Increased Write-offs: There’s a growing trend of declaring vehicles as “total losses” instead of repairing them due to the inability to claim VAT on repairs, which is more economically rational for insurers. This practice results in higher used car prices, increased scrap generation, and reduced insurance penetration.
Proposed Solutions
Rosas Ortiz highlighted that legislative proposals aim to control premium hikes through regulatory acts. However, he warns that preventing insurers from passing tax costs onto premiums while maintaining the fiscal authority’s stance on VAT claiming would likely result in industry insolvencies.
The true solution, according to Rosas Ortiz, lies in revisiting the fiscal authority’s criterion change that triggered this crisis. He urges authorities to reconsider a criterion that, instead of sustainably strengthening tax collection, threatens the viability of a crucial sector for Mexico’s economy.
