Weak growth in the Austrian insurance industry continues
Following the significant downturn in premiums in the previous year, the Austrian insurance industry again generated lower premiums in 2012. According to the latest forecasts (source: Austrian Insurance Association), the total premium volume is expected to decline by 0.9 per cent to € 16.3 billion. A return to moderate growth (+ 0.2 per cent) is forecast for 2013.
The reduction in total premiums is due in particular to another substantial downturn in the area of life insurance: premiums fell by 6.7 per cent in 2012, thereby reducing total premiums earned by € 470 million compared with the previous year. Sustained high losses on single premiums (minus 19 per cent) were the main cause of this development. However, recurring premiums also decreased. This was largely due to the lower level of premiums from retirement annuities, with the 50 per cent reduction in state support placing old-age provision under pressure. The outlook for life insurance for 2013 is also muted (minus 3 per cent) on account of the low level of guaranteed insurance and the development of old-age provision.
On the other hand, property and casualty insurance had a positive impact on total premiums earned, recording growth of 3.4 per cent in 2012. Other property and casualty insurance grew by 4.2 per cent, with premiums rising in the areas of legal expense insurance and technical insurance in particular (+ 5.2 and + 4.4 per cent respectively). Health insurance also provided positive support for total premiums with stable growth of 3.4 per cent, and this development is expected to be largely repeated in 2013 (+ 3.2 per cent).
However, insurance penetration in Austria fell in 2012 as a result of the largely negative overall trend, amounting to 5.26 per cent. Despite a slight increase in premiums earned, this figure is expected to decline further to around 5.10 per cent in the coming year.
Market potential in CEE remains immense despite weaker economic growth
As the economy in Central and Eastern Europe is dependent to a large extent on development in Europe as a whole and the euro zone, the CEE states were unable to maintain the high level of growth they had enjoyed in previous years. However, growth rates in the region continued to overshadow the western EU member states. CEE recorded real GDP growth of 2.2 per cent in 2012, while the euro zone entered a recession with GDP falling by 0.5 per cent. CEE is expected to enjoy similar growth in 2013, with the second half of the year in particular seeing a strong upturn. Growth of 2.8 per cent is forecast for 2014. The renowned international research institution Business Monitor International (BM) is forecasting significantly stronger growth for CEE than for Western Europe in the period from 2010 to 2012. While BM envisages economic growth of 45 per cent in Austria for those ten years, the comparable growth rates in Poland, Romania and Albania are 84 per cent, 92 per cent and 97.9 per cent, respectively.
The particular strengths of the CEE nations are their competitiveness and workforce flexibility. Rising wages and salaries are expected to result in growth potential for the insurance market in particular, while private consumer spending is also set to increase over the coming years. As the insurance density and penetration seen in Western Europe have yet to be achieved in the region and the corresponding key figures are substantially below the level of the Austrian market, a higher level of insurance sales is anticipated. Various regulations and statutory provisions also mean that the CEE market will maintain its potential and become even more attractive.
Unlike the western markets, the CEE region also succeeded in generating solid premium growth in 2012 due to the aforementioned factors. However, the outlook for the coming year is far from unclouded, with many countries seeing a reluctance to invest in insurance on account of the uncertain macroeconomic environment. The low level of interest rates at present is also having an adverse effect on life insurance in the CEE region. Nevertheless, UNIQA expects growth in the Eastern European markets to be significantly higher than in Austria.