Revision of forecasts: Domestic insurance market growth to be driven by non-life insurance market
In the first half of 2016, the domestic insurance market grew by 5.7 per cent. The Bank of Lithuania projects that by the end of the year the domestic insurance sector will slightly increase its growth rate and the market will grow by 6 to 7 per cent, as was projected early in the year. However, contrary to what was expected, strong market growth will be driven by the non-life insurance sector, which is expected to grow by 8 to 10 per cent. Life assurance is likely to maintain the same market volumes as in the previous year.
‘We are revising the forecasts having considered this year’s significant changes in the life assurance and non-life insurance markets. In the first half-year, insurance market growth was driven by a spurt in the non-life insurance sector, with the strongest growth posted in the premiums of vehicle insurance classes. The fall in the life assurance market was due to a more than EUR 10 million decline in the volume of single life assurance premiums, with the major influence on it having stemmed from residents’ lowered investments due to unfavourable equity market trends’, says Mindaugas Šalčius, Deputy Director of the Prudential Supervision Department of the Supervision Service at the Bank of Lithuania.
He noted that the insurance premiums of four insurance undertakings distributing insurance products and of nine branches registered in other EU countries providing services in Lithuania were the largest in the last five years — they amounted to EUR 230.1 million over the half-year. The premiums within the non-life insurance sector picked up by 11.8 per cent, which ensured growth in the market. Life assurance premiums dropped by 6.1 per cent from the first half-year of the last year.
EUR 181.1 million in claims were paid over the first half-year, an increase of 11 per cent year on year. The main part (69.7%, or EUR 126.2 million) was paid under non-life insurance contracts, of which almost 70 per cent were related to insured transport vehicles.
In the first half of 2016, insurance undertakings registered in the country earned more than EUR 2 million in profits. All life assurance undertakings and 2 non-life insurance undertakings operated profitably. The overall result of non-life insurance undertakings — a loss — was due to the loss-bearing activity of two undertakings, in which the processes of business restructuring, taking the business over, and expansion to other countries are underway
All insurance undertakings are solvent and meet the legal requirements. Three life assurance undertakings were inspected under stress testing scenarios constructed by the European Insurance and Occupational Pensions Authority. The results of the stress testing showed that all undertakings held sufficient own funds to cover the solvency capital requirement.
The full Review of Lithuania’s Insurance Market for the First half of 2016 (519.5 KB download icon) (519.5 KB download icon)and financial statements is available on the website of the Bank of Lithuania.