2023-05-03
According to the Bank of Lithuania, Lithuania’s insurance market expanded by almost a fifth but was negatively affected by inflation, therefore, the development in real market growth was at its minimum. While premiums, especially for non-life insurance, increased significantly, insurers recorded lower profits than in 2021.
“Last year, the insurance market was mainly affected by russia’s war against Ukraine and inflation. Insurance market participants contained the challenges, but the continuing developments in the business environment are guiding them to no less of a challenge this year. It is therefore essential that insurers continue to adequately assess operational risks,” says Renata Bagdonienė, Director of the Banking and Insurance Supervision Department.
In 2022, in terms of new premiums, Lithuania’s insurance market grew by 18.6% to €1.23 billion: non-life insurance premiums accounted for €894.9 million (72.5%), while life insurance premiums stood at €339.8 million.
Claims paid over the year amounted to €682.4 million: non-life insurance customers were paid €503 million (nearly 74% of the total) in respect of insured events, and almost €180 million were paid under life insurance contracts.
Insurance undertakings earned an unaudited profit (before tax) of €40 million in 2022, nearly 18.5% less than in 2021. Insurance brokerage firms earned a profit of €14.5 million, 60% more than in 2021.
Non-life insurance premiums went up by 24%: 21.7% (to €284.8 million) for compulsory motor third party liability insurance, 22% (to €206.2 million) for CASCO insurance, and 25.6% (to €191.2 million) for property insurance. Businesses were particularly interested in supplementary voluntary health insurance as a tool for motivating employees, with a 61.4% surge in the number of contracts signed and a 38.5% increase in premiums (to €75.8 million). The number of travel insurance contracts doubled, while premiums grew by 65.5%, to €14.8 million.
Non-life insurance claims paid increased by 23.3%. This was due to inflation-driven increases in expenses of covering insurance damages and growth in operating costs of firms, as well as a rise in the average frequency of damages. Compulsory motor third party liability insurance claims increased by 11.6% (to €161.1 million) and those of CASCO went up by 24% (to €136.8 million). Claims paid under property insurance amounted to €102.8 million, a year-on-year increase of 27.3%. Compared to 2021, crop insurance claims rose by 57% and amounted to €15.2 million.
In 2022, premiums in the life insurance market grew more moderately, by 6.4% (9.8% in 2021), and stood at nearly €340 million. In unit-linked life insurance, which accounts for nearly 70% of this market, premiums went up by 8.7% (14.9% in 2021), while claims grew by 27.4% (to €119 million). The slowdown in the sector’s growth rate was also underpinned by a 6.2% decrease in the number of new contracts and a 4.6% rise in the number of terminated contracts. The reason behind this slowdown was the reduced attractiveness of investments due to their decline in value and the increased need of residents to finance expenses that grew due to the effects of inflation.
At the end of 2022, insurance services were provided by 19 insurers registered in Lithuania, with 9 undertakings and 10 branches of firms registered in other countries of the European Union. 8 insurers provided life insurance services and 11 – non-life insurance services, 102 insurance brokerage firms were in operation.
All insurance undertakings complied with their solvency capital requirements.