The economic environment in the euro zone and in a few CEE markets deteriorated in the 1st quarter of 2012. This development was driven by the interplay of three mutually reinforcing elements: the debt crisis in Europe continues to pose a high risk potential for the entire continent. This includes the risk of a banking crisis, which has been mitigated by measures undertaken by the European Central Bank but not yet fully alleviated. Savings and consolidation measures in several countries have also led to a deterioration in growth rates.
From ’a current perspective, these trends will remain in place for the entire 1st half of 2012. An upturn is only expected in the 2nd half of 2012 and in 2013. A key factor will be developments in the PIIGS states. For the UNIQA Group, the risk of default on government bonds is no longer the primary issue at hand; instead, the foremost concern is the potential effect of a government default on wider economic development in Europe.
Austrian GDP will only rise slightly in real terms in 2012. Economic researchers expect to see stable growth in private consumption, while public consumption and investments could decline. Unemployment in Austria is extremely low compared with other countries, but it must be assumed that there will be a slight increase in the current year.
Property and casualty insurance
The automobile insurance market in Austria continues to be characterised by fierce price competition. The UNIQA Group is controlling this development with product innovations such as driver protection and SafeLine, the latter of which already has more than 45,000 customers. We expect to enjoy further solid gains in 2012. We are forecasting strong growth in 2012 in the area of driver protection, a product that offers insurance coverage of up to € 1 million for drivers who are at fault in an accident.
In the industry and individual area, we are looking to attain and grow new and attractive customer segments in 2012 with a significant increase in capacity in the property insurance segment.
Compared with the other business segments, health insurance has the highest growth potential for the coming years. The hospital prices and physicians’ fee schedule agreed for 2012 will provide a solid framework for positive developments.
We see renewed challenges in the life insurance segment in 2012, but we are also anticipating opportunities for traditional life insurance. There is hope in the insurance industry that regulators will allow a new category of investment-oriented life insurance with reporting date guarantees.
One major task this year will be the implementation of the ruling of the European Court of Justice, under which differences in premiums for men and women will be prohibited as of 21 December 2012. This ruling requires the recalculation of nearly all products in the life, health and casualty insurance segments. UNIQA will use this as an opportunity to streamline its product portfolio and launch targeted innovations.
Experts are forecasting much stronger growth in the CEE region than in the euro zone over the coming years. For 2012, however, the outlook for CEE must be assessed carefully. We are anticipating positive developments in Poland driven by substantial domestic demand and economic ties to strong export countries such as Germany. Hungary is also showing a positive trend in the medium term, although major political risks remain and specific issues, such as an agreement with the International Monetary Fund, are still outstanding.
The larger markets in Southeastern Europe, such as Serbia and Croatia, should be strengthened by improved relations with the EU in 2012. Croatia’s entry to the EU on 1 July 2013 and Serbia’s admission as a candidate will most likely provide positive effects in the medium term. We are anticipating positive economic growth in Russia and Ukraine in 2012. Overall development in these countries depends strongly on prices for commodities such as oil and steel, while there is solid growth potential for the insurance sector due to low levels of insurance density and penetration.
With its strong market presence in CEE, the UNIQA Group will benefit from the region’s backlog of demand for insurance by using a clear multi-channel sales strategy.
From a product perspective, we will position ourselves in the CEE region as a composite insurer. Our sales points include in particular automotive liability and comprehensive insurance, as well as casualty and homeowner’s’ insurance. We also have our eye on a further area with potential: traditional life insurance. We are intensifying our involvement in the health insurance segment in selected markets, as this is clearly a growth market.
In 2012, we are also focusing on continuing to expand the range of cross-border insurance solutions for our industrial customers. International underwriting is guaranteed by close cooperation within the UNIQA network and additional expert fronting partners. In addition, we are implementing a series of measures in 2012 to expand our position as a market leader in the transportation and liability insurance segment.
In the area of the arts, we will continue our positive development at a national and international level in 2012 by providing risk-appropriate, individualised insurance solutions. We are also looking to further expand the position of UNIQA Fine Art Underwriting (London) in 2012.