1.1 Property insurance


A great deal of attention is paid to the profitability of the insurance portfolio. In order to ensure this, the product premiums are appropriately calculated and the profitability is continuously evaluated throughout the entire Group with the help of monitoring systems. In this regard, the discounts offered outside of normal rates are adapted to the risk situation in the segments of household/home, legal expenses protection, casualty, motor vehicle liability and motor vehicle comprehensive.

Reinsurance policies reduce the retained earnings of the initial insurer and lead to a smoothing of results. On the one hand, they can lead to a reduction of the claim ratio in retained earnings in the event of extraordinary events; on the other, a good level of claims can worsen the claim ratio in retained earnings. The aim of an optimal reinsurance strategy is to find a structure that takes both of these points into consideration.

Claims ratio (gross)

%

2010

68.8%

2009

69.9%

2008

61.6%

2007

68.1%

2006

64.3%

2005

66.7%

2004

64.1%

2003

68.9%

With regard to unexpected claims, risk management makes assessments on elemental, major and cumulative losses in the areas of storms, floods and earthquakes that are based on accepted scenarios. Reinsurance contracts also considerably reduce the level at which any losses occur. Due to the possibility of the failure of reinsurers, the reinsurance structure of the UNIQA Group is described below.

For the exact determination of the reserve risk and premium risk, an internal model is implemented that indicates the risk based on the fundamental portfolio structure, the current reinsurance program and future developments. Detailed information regarding the future development of mass, major and catastrophic damages calculated on the basis of historic data are used as the basis for this. This makes it possible to identify developments at an early point and take direct measures (structuring of premiums and scopes of coverage, adaptation of reinsurance structures) to minimise the risk and control financial results.

Excursus: Reinsurance

The total obligatory reinsurance requirement of operating UNIQA companies and of UNIQA Versicherungen AG is covered with Group internal reinsurance policies at UNIQA Re AG.

Within these internal reinsurance policies ratio figures, which reach from 25% and 90% depending upon the volatility of the respective insurance branch, are supplemented with excess loss policies. Two cumulative excess loss policies also exist which should cover major losses across the insurance branch (“umbrella”) incurred through natural disasters (earthquakes, flooding, high water, storm, etc.).

UNIQA Re AG pools the business acquired by the Group companies according to insurance segments and passes gross excess loss policies, which are supplemented by net ratios, on to international reinsurers as a “bouquet”.

The effect of the reinsurance programme on the claim ratio in retained earnings can be seen in the following table:

Claims ratio (retained earnings)

%

2010

71.5%

2009

68.0%

2008

64.2%

2007

67.6%

2006

66.0%

2005

68.0%

2004

65.6%

2003

69.8%

The table below shows the reinsurance requirements for outstanding claims and incurred but not reported claims arranged according to ratings. This concerns the reinsurance business ceded from the property insurance lines to companies outside the Group. The cessions of the international Group subsidiaries are not included.

Rating

31 Dec. 2010
€ 000

31 Dec. 2009
€ 000

AAA

0

0

AA

92,350

72,653

A

58,343

122,485

BBB

13

23

Not rated

6,190

6,747

The creditworthiness of reinsurers is also very important, not least because of the long duration of claim settlement in the area of general liability insurance and motor vehicle liability insurance.

Systematic analyses, supported by actuarial methods, are used to assess the appropriateness of the actuarial provisions.

The Group’s central actuarial office supports the operational domestic and foreign UNIQA companies on a quarterly basis with the introduction of adequate processes and by checking the results of the analyses.

In addition to the elemental lines, the commercial property business also includes liability and technical insurance. In the UNIQA Group, this is divided into three areas:

  • Standardised bundled policies for small commercial businesses.
  • Customised policies for medium-sized companies; however, the scope of coverage and exposure of these policies are such that they can be accepted decentrally in the Austrian regions and international subsidiaries.
  • Large policies, or policies with a complicated scope of coverage, are decided on and arranged centrally both in Austria and for the international subsidiaries; these policies are selected according to quantitative criteria (e.g. € 2 million insured sum in property insurance) as well as by content-based, qualitative criteria, such as asset damage coverage in liability insurance.

In the property segment, major risks are evaluated for risk prior to acceptance and subsequently at regular intervals and documented in survey reports. In the liability insurance line, the portfolio for risks with high hazards is subject to permanent monitoring (e.g. planning risks and liability insurance in the medical segment).

The industry holdings of the international companies are regularly analysed Group-wide for their exposure and composition (risk mix), and survey reports on the exposed risks are prepared.

The most important decisions are made here on a central basis in coordination with the experts at the Group headquarters (International Desk).

© 2011 BY UNIQA GROUP AUSTRIA