Signs indicate continued growth in the Central and Eastern European markets
As mentioned above, the macroeconomic environment in CEE is in very fine form. Like in previous years, the Eastern European insurance markets were able to capitalise on this sustained positive economic trend again in 2019. According to the results currently available, total premium volumes rose in Central and Eastern Europe (not including Russia) by around 5.0 per cent to an estimated €35 billion. This equates to growth of some €1.5 billion year on year in absolute terms. All CEE markets posted premium growth in 2019 despite the characteristic diversity between them. Growth rates in the individual countries ranged from just under 2 per cent in Poland to some 17 per cent in Bulgaria and Ukraine and are expected to remain well above the eurozone average in 2020–2021 as well.
Increased demand for insurance products fuelled by the sustained economic growth resulted in a marked rise in premiums in the year just passed – particularly in property insurance, where the figure was over 7 per cent. Stimulus for growth came in particular from the household and homeowner sectors as well as from health insurance and the vehicle insurance business lines. The vehicle business lines experienced substantial premium increases, mainly due to higher vehicle inventories as a result of a significant overall rise in new registrations as well as higher average premiums in certain countries.
Developments in the life insurance markets in Central and Eastern Europe, by contrast, were mixed. Following robust premium growth in 2017 and a fall in 2018, however, life insurance once again posted slight premium growth overall in CEE.
Growth in the region depends largely on the trend of the life insurance market in Poland, where the sharp decline in the insurance business involving short-term, single-premium products – which has fallen by some €600 million in all, i.e. about 50 per cent, over the past two years – has cut aggregate growth on the life insurance markets significantly in recent times. This contrasts with another trend of the past few years, which demonstrates that extraordinary premium growth is very likely in some Southeastern European countries on account of their still-underdeveloped life insurance markets.
The next few years should see demand for life insurance in Eastern Europe recover across the board as people will still need their own, independent provision on top of their state pension. Many insurers have also responded to the persistently low interest rates by launching new provision solutions.
CEE remains a region with high growth potential for UNIQA, as can be seen from the positive performance in the insurance markets overall over the last few years. The sustained positive economic performance in Central and Eastern Europe should lead to further increases in income over the next few years and to higher consumer spending by households. Rising levels of wealth and growing purchasing power also mean greater demand for insurance solutions – and this in a market with some 155 million potential customers (not including Russia).
Both premiums per capita (insurance density) and the share of GDP contributed by the insurance industry (insurance penetration) in CEE are still well below the Western European market average, illustrating quite clearly the immense catch-up potential that these insurance markets continue to offer.