Insurance market shrinks further in the first half, but number of insurance contracts keeps growing
According to the data of the Bank of Lithuania, the amount of insurance premiums signed up in the domestic market in the first half of 2012 totalled LTL 855.3 million, a year-on-year decrease of 1.2 per cent.During the same period, the number of new insurance contracts reached 2.52 million, an increase of 2.2 per cent compared with the first half in 2011.The total amount of benefits paid out by insurers made up LTL 0.5 billion, a year-on-year decline of 8.6 per cent.
“The contraction resulted basically from the decrease in the amount of life insurance premiums. The number of new contracts signed up is going down, and the renewal of old contracts after their expiration has decelerated. Sinking popularity of life insurance, primarily of unit-linked insurance, also owes to investment results that have been most seriously affected by the global financial crisis,” Mindaugas Šalčius, deputy director of the Lithuanian Bank‘s Prudential Supervision Department said.
The amount of life insurance premiums went down year on year by 11.2 per cent to LTL 254.6 million in the first half of 2012, and the number of contracts decreased by 9.6 per cent to 26,137.
Although unit-linked life insurance has continued to generate the largest portion of insurance income (68.2%), the amount of signed up premiums decreased year on year by 18 per cent to LTL 173.7 million.
The figures for traditional (fixed return) life insurance appear to paint a more optimistic picture. During the first six months this year, total amount of this type of insurance premiums jumped year on year by 9.3 per cent.
A moderate growth has been observed within the non-life insurance market. According to the Bank of Lithuania data, the amount of signed-up premiums of this type of insurance coverage totalled LTL 600.7 million, an increase of 3.8 per cent compared with the same period last year.
The positive change in this type of insurance was traditionally due to increased auto and health insurance volumes. The most notable growth was observed in CASCO insurance group. During the first half of 2012, the year-on-year growth of the signed-up premiums surged by 14.6 per cent to LTL 136.6 million. The amount of insurance premiums of the motor third party liability insurance coverage went up during the same period by 4.5 per cent to LTL 213.2 million.
According to the Bank of Lithuania data, 2.49 million of non-life insurance contracts were concluded in the first half of 2012, a 2.4 per cent increase compared with the period a year ago. The largest contract growth rate was observed in the group of property insurance. The number of new contracts signed up in the first half of the year climbed to 0.484 million or by 6.2 per cent year on year.
In the first half of 2012, insurers paid out LTL 499.4 million in benefits, the amount which was less by 8.6 per cent compared to the same period last year. Regarding the changes in benefit payments by insurance type, the trends diverged: non-life insurance benefits went down by 15.2 per cent to LTL 344.1 million, and life insurance benefits grew by 10.1 per cent to LTL 155.2 million. The increase in the latter was the result of benefits (LTL 60.1 million) paid out under ten-year old contracts on survival insurance, which ended during the reported period.