Forecast: Insurance market to keep growing strong this year on account of non-life insurance development
Lithuania’s insurance market, following last year’s one-tenth increase in terms of insurance premiums, will grow less strongly, to increase by 6–7 per cent. Stronger development is projected for the non-life insurance market, while the life assurance market is pending a decline, forecasts the Bank of Lithuania.
‘Growth in the insurance sector will be ensured by the dynamic development of the non-life insurance sector. The non-life insurance market will benefit from the development of the entire economy and the resulting growth in domestic consumption and inflation. No significant structural changes in the insurance portfolio are expected; compulsory and commercial asset insurance products will continue dominating this market. Meanwhile the projections for life assurance are opposite: a decline is forecasted. Recent changes in the regulatory and taxation environment, the protracted low interest rate environment, which resulted in a decline in the guaranteed return on insurance products, as well as an unusual leap in premiums in the last month of 2016 that will determine a high comparable base, will be the reasons behind the projected negative market change,’ said Vytautas Valvonis, Director of the Supervision Service of the Bank of Lithuania.
According to the forecasts of the Bank of Lithuania, the growth rate of the non-life insurance branch, which accounts for two thirds of the entire insurance market, this year will slightly decline compared to 2016; however, it is likely to account for 10–12 per cent. The year 2017 is not expected to be as favourable for the life assurance market as last one – this year, the amount of insurance premiums may decrease by 4–6 per cent (a year-on-year increase of 4.6% in 2016).
The insurance undertakings registered in Lithuania and the branches of insurance undertakings of other EU countries established in Lithuania wrote insurance premiums to the amount of EUR 709.8 million in 2016, while growth within the entire insurance market was 10 per cent. This was nearly in line with the Bank of Lithuania’s early projection that the non-life insurance market would accelerate its growth rate, while the scenario for the development of the life assurance market was fulfilled far better.
The amount of insurance premiums within the non-life insurance sector stood at EUR 463.1 last year, an increase of 13.2 per cent year on year. The largest contribution in terms of the growth rate within the non-life insurance market in 2016 came from motor insurance classes.
The life assurance market grew by 4.6 per cent and the insurance premiums amounted to EUR 246.7 million last year. A positive contribution to the result of the life assurance sector stemmed from a record-high increase in the amount of single insurance premiums within the unit and index-linked insurance class, accounting for the largest share of the life assurance market.
Detailed latest data about the domestic insurance market is available on the Bank of Lithuania website.