Market's statistics (Nerodomas)
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In 2011, the number of insurance contracts concluded by insurance brokers exceeded one million
In the previous year, insurance brokers acting in the country boosted significantly their activity volumes. According to the data of the Bank of Lithuania, upon the mediation of insurance brokerage firms, 1.024 million of insurance and pension accumulation contracts were concluded in 2011 (19.2% more than in 2010). The share of agreements concluded through brokers augmented from 18.2% to 21%. Sales income earned by insurance brokers increased by 22.3%, i.e. to LTL 89.9 million over the same period.
Last year, same as two years ago, insurance brokers were most active in the non-life insurance market. Upon mediation of the latter, 1.023 million of contracts were concluded (i.e. 21.2% of all contracts concluded in this branch of the insurance market).
Results of the mediation of insurance brokers in the field of life assurance are less impressive. In 2011, making use of the services of insurance broker companies, 1.59 thousand of life assurance (excluding pension accumulation) contracts were concluded, i.e. 2.8% of all life assurance contracts concluded in Lithuania last year.
Structure of contracts concluded through insurance brokers last year was much like that in the previous year. The bulk of agreements accounts for the group of motor third-party liability insurance, i.e. 61.4% of all contracts.
Second in popularity among the contracts concluded upon mediation of insurance brokers remained the property insurance (encompassing risk groups of property insurance from fire or natural forces and property insurance from other risks). The said insurance accounted for 10.8% of the total number of all the contracts concluded through the insurance brokers. Health insurance (encompassing groups of accident insurance and health insurance) ranked the third place.
Last year, almost a half (45%) of all the life assurance contracts concluded by insurance brokers accounted for the investment life assurance contracts, while 37.8 % accounted for the traditional life insurance contracts.
Last year, revenue from sales earned by the ten biggest insurance brokerage firms accounted for 52.5 % of the total sales revenues.
Nearly a half of all the insurance contracts concluded through the mediation of insurance brokerage enterprises consisted of the insurance contracts provided by three insurers: the bulk of the contracts accounts for insurance contracts issued by BTA Insurance Company SE branch in Lithuania (17.5%); AB “Lietuvos draudimas” ranked second (14.1%), and the third place went to UADB “Ergo Lietuva” (13.7%).
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In January 2012, the insurance market contracted due to expired and not renewed life assurance contracts
The amount of insurance premiums written in the domestic insurance market over the first month of this year made up LTL 145.7 million, which was 3.5 per cent less than in January 2011. Negative market change was determined by a significant decline in the volume of life assurance. The amount of LTL 87.1 million in claims paid to policyholders over the first month was 8.5 per cent higher than in the same month last year. The number of insurance contracts concluded in January stood at 346 thousands, i.e. 6.7 per cent more than a year ago.
“The changes in the life assurance market raise the highest concern, particularly in its largest class, unit-linked life assurance. The increasing number of expiring contracts that were concluded ten years ago raised hopes that policyholders will renew their contracts and invest the accumulated funds; however, the results for January testify that the amount of funds laid aside for long-term saving in the consumer basket is gradually decreasing”, the January results were summarised by Mr. Mindaugas Šalčius, Head of the Insurance Supervision Division and Deputy Director of the Prudential Supervision Department of the Supervision Service of the Bank of Lithuania.
The beginning of the year is usually more moderate in the life assurance market, however this year the decline was slightly larger than expected – premiums written in January for the amount of LTL 39 million were 14.5 per cent (LTL 6.6 million) lower than in the first month of 2011. The largest fall was observed in the unit-linked life assurance class, where monthly premiums made up LTL 26.4 million and were 24.1 per cent lower than at the same time last year. The premiums written according to the traditional life insurance contracts increased by 18.7 per cent – to LTL 12.1 million per month.
In January, the number of contracts in the life assurance market declined year on year by as much as 20.9 per cent (1.0 thousand). This was basically determined by a decline of as much as 33.7 per cent (0.8 thousand) in the number of unit-linked life assurance contracts.
Although the number of the concluded traditional life assurance contracts also declined, the number of contracts of insurance in case of survival, one of the most popular products, was 78.4 per cent (0.3 thousand) higher.
Non-life insurance market, which recovered last year, is rising further – the premiums written increased by 1.2 per cent, compared to January 2011, and made up LTL 106.7 million. Premiums of the transport insurance-related insurance class, which accounts for almost a half of the non-life insurance market, grew by more than 15 per cent (LTL 6.9 million).
The largest negative change was recorded in the property insurance class, where the amount of premiums written in January was lower by 26.7 per cent than in the first month of 2011. This was determined by almost a fivefold decline in the volume of crop insurance.
The number of contracts concluded in all main non-life insurance groups increased, whereas the largest positive growth of 8.6 per cent (13.2 thousands of new contracts) was observed in motor third-party liability (MTPL) insurance. The total number of contracts concluded in the non-life insurance market per month (342 thousand) was 7.1 per cent higher than in January last year.
The amount of LTL 87.1 million in claims paid to policyholders over the month was 8.5 per cent higher than in the same month last year. Claims paid to customers grew mostly due to LTL 6.5 million larger compensations for damages according to non-life insurance contracts. The largest increase in claims paid was recorded in property (LTL 3.5 million or 59.9 %) and MTPL (LTL 2.6 million or 13.5 %) insurance classes. The rise of claims paid in the life assurance market of 1.1 per cent (LTL 323 thousand) was determined by payments according to expired insurance contracts. -
Insurance market grew in 2011 driven by non-life insurance
Last year was a successful one to the insurance market as its growth rate almost doubled compared with the national economy. In 2011, the amount of written premiums reached as high as LTL 1.7 billion, a year-on-year rise of 9.5%. And the number of insurance contracts surged in 2011 by 3.3% to LTL 4.9 million. The premium amount paid out last year by domestic insurers saw an increase of 15.5% compared with the year before last year.
“Non-life insurance which traditionally lags somewhat behind the economic cycle took over the locomotive role of the life-insurance market, as the growth of the latter was contained by concerns which intensified in global financial markets in the second half of the year,” Mindaugas Šalčius, director deputy of the Prudential Supervision Department under the Supervision Service of the Bank of Lithuania said.
The amount of non-life insurance premiums written in 2011 made up LTL 1.1 billion, an increase of 12.5% compared with 2010. The number of contracts grew by 3.5% to LTL 4.8 million.
Types of insurance associated with the risk of transportation were the major drivers behind the growth of non-life insurance. As the number of motor cars increased, written premiums of motor third party liability insurance climbed by nearly LTL 28.4 million (8%) with their gross amount reaching LTL 400 million and the number of contracts having growing during the year by 140.6 thousand or 6% to LTL 2.47. After a drop in 2010, the amount of written premiums of CASCO insurance climbed by almost LTL 33.0 million (15%) to LTL 256.3 million.
Property insurance has become popular in 2011. The amount of premiums of this type insurance grew during the year by nearly LTL 34.4 million (17%) to more than LTL 243 million. The increase was driven largely by farmers and agricultural companies which decided to buy insurance for their crops. Consequently, premiums for crops insurance jumped by 6 times to LTL 32.4 million, and the insured area under crops was threefold higher than in previous year.
The amount of non-life insurance benefits paid out to customers of insurance companies in 2011 for damages incurred made up LTL 743.5 million, a 1.9% hike compared with 2010.
In 2011, the growth rate of life-insurance market was three time lower than the growth rate of non-insurance market. The amount of life-insurance premiums written during the year went up by LTL 21.2 million (3.9%) to LTL 560.8 million.
The life-insurance results have been affected by lower one-time life-insurance premiums during the last months of the year, when population seized an opportunity of additional investments of free funds after they had sensed the benefits of tax reliefs.
The amount of premiums of investment-oriented life insurance, the dominant component of life-insurance, grew during the year by LTL 12.7 million (3.3%) to LTL 396 million.
There were 56.1 thousand of life-insurance contracts concluded in 2011, a drop of 16.6% compared with 2010, driven mainly by a one-third decrease in contracts for insurance against death.
Last year, life-insurance customers were paid LTL 337.3 million in benefits, an increase of 63.9% compared with the previous year.
The Bank of Lithuania expects the insurance market to grow further this year.„We expect the general insurance market to grow this year by approximately 5%, but at a decelerated rate. This will contribute to the increase in the demand for non-life insurance products. Extreme climate conditions may contribute to this too, as they motivate people to ensure property. Expectations and the development of financial markets may freshen up the life-insurance market. Moreover, we cannot rule out that people are to invest or have already invested the insurance compensations they received for the deposits held with a bankrupt SNORAS bank,” Šalčius added.
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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.