The markets in the CEE region generally also experienced growth in 2014 which was mostly above the levels in Western Europe. The countries of Central Europe in particular – Poland, Slovakia, the Czech Republic and Hungary – recorded good GDP growth rates, which were also driven by strong domestic demand. UNIQA expects the convergence progress for the countries in Central and Eastern Europe to continue, albeit at a slower pace than previously predicted. A comparable trend is also expected for the insurance market in CEE.
Development in the insurance market for the region was only positive to a limited extent in 2014. The life insurance sector in particular recorded an overall decline in premium volumes, driven once again by heavy declines in business with short-term single premium products in Poland. However, the intense price competition, particularly in the vehicle and property insurance business in a series of markets in Central and Eastern Europe, also resulted in lower premium revenues in the non-life sector. In Ukraine, the political and economic events had a negative impact on the insurance market. In contrast, the Russian market remained virtually un-affected with growth in premium volumes both in the life as well as in the non-life sector.
The aggregate figures on market development were also impacted in 2014 by negative exchange rate trends in some of the major markets in Eastern Europe, such as in Russia, the Czech Republic, Ukraine and in Hungary.
The improvements in the economic situation should have a greater impact on consumer spending and investment activity by companies in 2015. The insurance markets in Central and Eastern Europe should therefore benefit from good growth figures and improved export opportunities. However, the additional effects of the current political crisis between Ukraine and Russia on the insurance industries of both these countries are extremely difficult to assess at the present time.
Despite the patchy development, the CEE region remains a growth region with high potential. The need to catch up for insurance products can also be seen, among other things, from the indicators which are still seriously lagging behind, such as those for insurance density and insurance penetration in the region: while the annual insurance premium in Southeastern Europe is only around €100 per capita for instance, it is more than €2,000 per person in Western Europe. Many people in CEE remain underinsured or have no insurance at all. Yet the higher economic growth in CEE as compared with Western Europe with the resulting increased prosperity in the population offers very good growth opportunities for the insurance industry that significantly surpass those in the already saturated insurance markets of Western Europe.