The economic slowdown in Austria was mild in 2019. The domestic economy was showing a solid development with an expected GDP increase of 1.6 per cent, and towards the end of the year there were increasing signs of stabilisation on a moderate growth path. Nevertheless, Austria is not completely immune to the international economic risks. For example, a decline in international trade and the demand for industrial goods are curbing growth in the manufacturing sector. By contrast, the trend in the service sector was still very pleasing, and the demand amongst private consumers remained brisk thanks to the robust labour market: Austria recorded both employment and wage growth, and the unemployment rate was at a very low level of 4.5 per cent at the beginning of 2020. Austria has also been profiting from the continuing favourable economic situation in the neighbouring countries of Central and Eastern Europe.
Economic growth in UNIQA’s core markets in CEE (not including Russia) stood at 3.7 per cent in 2019 according to forecasts and has thus slowed down compared with 2018. Nevertheless, CEE is amongst the growth regions enjoying the most rapid expansion and has so far shown itself to be highly resistant to the economic slowdown in the eurozone – an important trading partner.
At the beginning of 2020, economic growth in Austria was expected to be comparable to that of the previous year, although the massive spread of the coronavirus is overshadowing developments. Disruptions of economic activities caused by people not working, interrupted supply chains, slumps in sectors directly affected by the impact of the coronavirus such as tourism and transport, and the influence of government measures to contain the further spread of the disease are expected to have a major, albeit temporary, effect on the development of the Austrian economy.
Outlook for the insurance industry
According to forecasts by the Austrian Insurance Association, total premium revenues in Austria are expected to increase again by 1.9 per cent to around €18 billion in 2020. Growth of 3.5 per cent is forecast for property insurance; personal insurance is only likely to grow by 0.3 per cent. Life insurance continues to hold back performance with a decline of an estimated –1.6 per cent, especially in the area of single premiums (–4.0 per cent). Health insurance, on the other hand, is expected to grow by 3.5 per cent.
The sustained positive economic performance in Central and Eastern Europe should also lead to further increases in income over the next few years and to increased consumer spending by households. The fact that the insurance industry still needs to catch up in CEE is reflected in the so-called insurance density (annual per capita spending on insurance products). In Ukraine, per capita insurance spending is just €36; in the countries of Southeastern Europe this number is around €130, and in Central Europe it is around €400. In comparison, the insurance density in Austria is just under €2,000 and is at €2,150 for the EU as a whole.
UNIQA expects long-term growth dynamism in the CEE markets and therefore assumes that the insurance industry in this region will continue to develop more dynamically in 2020 than in Western Europe and Austria.
At the beginning of 2020, the coronavirus (COVID-19) spread rapidly throughout Europe. The impact on public health systems, public life, macroeconomic development and global capital markets is enormous. The consequences for the insurance industry cannot be estimated at the moment. Due to the uncertainties associated with the current situation and the ongoing development of the UNIQA 3.0 strategic programme, UNIQA is not giving a profit outlook for 2020 at present.