Spurt in Life Insurance Raised the Entire Life Insurance Market
After shrinking in the first quarters of 2012, Lithuania’s life insurance sector gained momentum and recorded an annual increase of 2.5 per cent towards the end of the year. Last year the entire insurance market grew by 5.2 per cent.
“Towards the end of the year the life insurance market usually becomes more active. In 2012, this tendency more than proved itself—a sum of LTL 94.9 million in insurance premiums was signed in December, the largest in the history of the life insurance market,” said the Deputy Director of the Prudential Supervision Department of the Bank of Lithuania’s Supervision Service, Mindaugas Šalčius.
The entire insurance market grew by 5.2 per cent—to LTL 1.8 billion in 2012. A contributor to the growth was not only the spurt in life insurance at the end of the year, but the gradual growth of the non-life insurance market as well. It picked up by 6.6 per cent—to LTL 1.2 billion; almost 5 million contracts were concluded, 3.7 per cent more than in 2011.
In the non-life insurance portfolio the most significant is still motor third party liability insurance and CASCO motor insurance; their premiums increased, respectively, by 9 per cent—to LTL 425 million, and 11.9 per cent—to LTL 286.9 million.
In 2012, customers of insurance undertakings were disbursed LTL 697.7 millions in benefits under the non-life insurance contracts for damage inflicted—6.2 per cent less that in 2011, when record-high compensations were paid out for crop insurance. The storm which swept by in the autumn of 2012 did not have a significant influence on property insurance compensations either.
The amount of insurance compensations paid out under life insurance contracts last year rose by 15.7 per cent—to LTL 390.1 million. Insurance compensations, which had risen significantly during the last two years, increased due to growth in the amounts paid out to the survival insurance group.
While investment insurance continues to dominate with its life insurance premium amounts, when entering into new contracts individuals more often chose traditional insurance products. The number of such contracts grew by a fifth, while 16 per cent less investment life insurance contracts were drawn up.
Fluctuations in the life insurance market were also influenced by the fact that in 2012 a large portion of insurance contracts, drawn up ten years ago, expired because tax reliefs ceased to be effective. Further insurance market developments will also depend on the policyholders’ choice of behaviour after expiration of their contracts.
“We project that the whole insurance market this year will grow by approximately 5–6 per cent. The volume of the non-life insurance market is expected to grow faster—to 7 per cent, whereas growth in the life insurance market is expected to decelerate somewhat—to 3 per cent,” projected M. Šalčius.