Growing insurance market has not yet reached EU level
Last year, the insurance market grew by more than a tenth, however, growth momentum was moderating, compared to 2017. Growth of non-life insurance market, mostly dominated by transport insurance, was faster and outpaced life assurance sector growth that continued to be driven by unit-linked life assurance.
‘2018 were marked by favourable developments in insurance sector: the volume of premiums within all larger insurance classes expanded. No significant changes were observed in the market and the portfolio structure, thus, market growth reflects positive developments in the country’s economy. However, even with Lithuania’s insurance market growth in double digits, in terms of indicators showing insurance market development level, it lags behind the EU average,’ – Vytautas Valvonis, Director of the Supervision Service at the Bank of Lithuania.
At the beginning of 2018, non-life insurance market expanded at a robust pace (about 23%), leading to expect that growth in insurance premiums would reach record highs, however, growth moderated at the end of the year. As a result, non-life insurance premiums increased by 12.2% last year, largely driven by the increased volumes of transport and medical expenses insurance. The premiums of MTPL insurance, the most important insurance class in non-life insurance market, picked up by almost 16%, to €249.6 million, and accounted for 40% of non-life insurance market. CASCO insurance premiums posted an increase of 12%, to €148.9 million. Last year, medical expenses insurance, growing in popularity and chosen by a majority of companies as an additional incentive to employees, increased by a fifth and accounted for 6.6% of all non-life insurance market. Third in terms of size, property insurance premiums picked up by almost 6%, to reach €109 million.
The growth (7.3%) of life assurance market turned positive last year. Broad comparative base was one of the main reasons for this development. In 2016, the volume of insurance premiums surged due to amendments made to legal acts, but in 2017 it decreased, and in 2018 it once again reached levels seen in 2016. Furthermore, the number of traditional life assurance contracts scaled down, however, investment life assurance premiums picked up by a tenth: at the end of the year, they amounted to €151.2 million and accounted for almost two thirds of all life assurance premiums.
Even though insurance market is on an upward path, compared to other European countries, it is still rather poorly developed. In 2018, insurance market penetration, the main indicator showing the market development level, in Lithuania accounted for 1.8%, and market density, or insurance premiums per capita – €313. According to the latest (2017) data, in the EU, respective indicators stood at 7% and 2,000.
While the insurance market and premiums grew, insurance claims paid last year decreased by 0.6%, compared to 2017, and amounted to €452.6 million. Last year, non-life insurance claims increased by almost 7%, to €323.7 million, while life assurance claims contracted by 15%, to €128.9 million. This might be explained by the cyclicality of life assurance contracts: in 2017, 15‑year term life assurance contracts concluded in 2002, when the number of insurance contracts reached its peak, ended, hence compared to 2018, the previous comparative base was significantly broader.
At the end of 2018, insurance services were provided by 20 insurers registered in Lithuania: 9 undertakings and 11 branches of companies registered in other EU countries. The number of insurance brokerage firms operating in Lithuania stood at 95. Almost all insurance undertakings operated at a profit: insurance undertakings earned €42.2 million, while insurance brokerage firms – €3.9 million. Last year, all undertakings complied with their compulsory solvency capital requirements.