Most of the markets in the CEE region experienced above average growth rates in 2015, which were also generally well above the levels in Western Europe. The economic outlook is also positive for the region in 2016. UNIQA therefore expects the convergence process for the countries in Central and Eastern Europe to continue, albeit at a slower speed than previously predicted. A comparable trend is also expected for the insurance market in the CEE region. Although the trends in the some of the individual insurance markets were highly heterogeneous in 2015, the region was able to stabilise to a noticeable extent as compared with the last two years.
The market grew in the non-life sector in Central and Eastern Europe in 2015, although the intense price competition, particularly in the vehicle and property insurance business in a series of markets, also continued to prevent higher premium revenues. Improved legal structural conditions combined with the exit or withdrawal of individual competitors should, however, play a part in easing the competitive situation in these markets in the medium term.
Developments in the life insurance sector in CEE were patchy: on the one hand a series of markets – particularly in Southeastern Europe – were able to record double-digit premium growth, despite the downward trend in interest rates, while on the other the continued decline in single premiums – particularly in the Czech Republic – resulted in a slight fall in premium volumes for the region as a whole. The aggregate figures on market development were also impacted in 2015 by negative exchange rate trends in some of the major markets in Eastern Europe, such as in Ukraine and Russia.
The significant improvements in the economic situation in the countries in Central and Eastern Europe should have a greater impact on consumer spending and investment activity by companies in 2016. The insurance markets in CEE should also benefit from this. The insurance markets which are heavily affected by the detrimental effects of the current political crisis in Ukraine and Russia should also return to positive growth rates.
Despite the patchy development overall in 2015, the CEE region remains a growth region with high potential for UNIQA. Per capita expenditure on insurance products, the ratio of premiums to gross domestic product and the share of life insurance in total premium revenues illustrate that there are still significant opportunities for market development in these countries. The economic growth in CEE, which is notably higher as compared with Western Europe and the EU, with the resulting increased prosperity accompanied by a rise in the need for insurance in the population, offer very good growth opportunities for the insurance industry that clearly surpass those in the already saturated insurance markets of Western Europe.