Mexico has introduced a tax reform that changes how insurance companies handle Value Added Tax (VAT/IVA) associated with claim payments. While this adjustment does not lead to an automatic increase in premiums, it modifies the cost structure for insurers, which will influence pricing, particularly in major medical plans and auto insurance.
This reform states insurance companies will no longer be allowed to credit the VAT they pay to hospitals, medical providers, repair shops, and other suppliers when settling claims. Until now, insurers could offset that VAT. With the reform, tax credit is eliminated, and the VAT paid during claims becomes a final cost for the insurer. It is also important to note that the reform is applied retroactively to the insurer, meaning that they will have to pay to SAT all taxes deducted for VAT concept for all the claims paid during 2025.
According to La Jornada, the Mexican tax authority (SAT) expects to collect an additional 20 to 25 billion pesos per year because of this new measure. Additionally, AMIS (the Mexican Insurance Association) has stated that premiums could rise between 10 and 20 percent in 2026 due to this and other market factors.
As this is the first time insurers in Mexico face this type of fiscal adjustment, the industry is still in a learning and adaptation phase. Companies are currently analyzing how the reform will affect their operations and how much of the additional cost they will absorb versus pass on through future premiums. As clarity increases during 2025 and 2026, insurers will adjust their strategies accordingly.
What does this mean for your company?
Instead of representing a direct or immediately visible change in premiums, this reform is expected to influence how insurers manage their long–term pricing strategies. Its impact will vary by company, depending on each insurer’s claims patterns and internal financial decisions. Because of this, it is better understood as something that may impact general trends in future premiums, rather than something you will see itemized or clearly separated into your renewal.
This change becomes one more element to consider in pricing within the overall renewal process, along with medical inflation, country inflation and loss experience. As the market adjusts, we will share any information that may help support your planning and decision–making.