Lithuanian insurance market remains one of the smallest in the EU

According to the Association of Lithuanian insurers, Lithuanian insurance market in terms of premiums reached and exceeded pre-crisis level last year, but by its ratio to gross domestic product (penetration) and per capita expenditure (density) remains one of the smallest in the European Union (EU).

"Lithuania's insurance market remains the most attractive and largest in the Baltic countries, but, according to the main insurance indicators - penetration and density, descend Latvia and Estonia. Lithuania is ahead of only Romania and Bulgaria in the EU. These trends are essentially unchanged since 2011", - told Lithuanian Insurance Association director Andrius Romanovskis.

Written premiums reached 601 million euros last year. Their ratio to gross domestic product (GDP) stood at 1.66 %, while the average cost of insurance per capita was 204 euros. Residents has spent more than before the crisis (in 2008 - 180 euros), but market penetration has not reached pre-crisis level yet (in 2008 - 1.76 %). 

Latvian insurance market penetration and density was respectively 2.15 % and 255 euros last year, Estonian - 1.75 % and 259 euros, while the average penetration and density in the EU countries of Central and Eastern European region was 2.64 % and 334 euros. 

Only Bulgarians and Romanians spent less money on insurance than residents in Lithuania, respectively 126 and 93 euros per year. From all EU countries of Central and Eastern European region the highest insurance density was in Slovenia - 940 euros or 4,5 times more than in Lithuania.

"This is primarily due to weak security traditions, as well as the late appearance of new insurance types, especially compulsory insurance, in the market and, ultimately, due to poor financial literacy of the population. On the other hand, there is a direct correlation between GDP growth and the increase of expenditure to insurance. Therefore, rapid Lithuanian economic growth creates conditions to further growth of the insurance market", - said A. Romanovskis.

He also acknowledged that the growth of Lithuania's non-life insurance market, which, according to insurance premiums, last year amounted 0.96 %, was hampered by the high competition that does not allow insurers to raise prices for services.

One resident of Lithuania gave about 103 euros to the main types of insurance last year: 46 euros was spent to motor third party liability insurance, 30 euros - to motor hull insurance and 27 euros - to property insurance. In Latvia the expenditure to the main types of insurance was about 109 euros, in Estonia - 172 euros.

According to A. Romanovskis, talking about property insurance, the percent of insured houses is still the highest in Lithuania - about 50 %. While flat insurance reaches 24 % and household property - only 17 %.

"House insurance popularity can be explained by the fact that it was compulsory in Soviet times, so many of the country's population, especially in the province, still has a habit of remaining insured. In addition, potential house insurance claims are higher than flat insurance", - said A. Romanovskis.

According to him, people often insure flats compulsory while purchasing them for loans. Real security awareness level of Lithuanians, according to A. Romanovskis, is shown by household property insurance, as it always has been and is voluntary.

"On the other hand, we can rejoice that this awareness is rising - the insurance of household property increased by 4 %, compared with 2011", - said the head of the Association.

The overall level of motor hull insurance was only 16 %, because this type of insurance is recommended for new, up to ten year old cars. Motor hull insurance is mostly popular among legal entities - 42 % of cars were insured. While among the residents there were only 10 % of insured cars.