ARMENIA: at the end of October, the MTPL loss ratio decreased to 64%

21 November 2022 —
For 10 months of 2022, the MTPL loss ratio in Armenia decreased to 64% from 78% in the same period last year, being even lower than the pre-Covid 72% in January-October 2019, ArmInfo reports.

It is noted that this was due to an annual increase in the number of concluded contracts by 18.1%, which led to an increase in premiums by 17.3%, while at the same time there was a decrease in paid claims by 5.7%, according to the data of the Motor Insurers' Bureau of Armenia.

According to the Bureau, growth in the number of vehicles with MTPL policy accelerated in January-October 2022 to 6.2% (vs 4.9% in the same period of 2021). And in quantitative terms, the number of vehicles with MTPL policy exceeded not only last year, but also the pre-Covid indicator - 596.456 thousand units by November 2022 vs 582.790 thousand units as of November 2019.

The number of MTPL agreements concluded over the reporting period increased by 18.1%, much less than the pre-Covid 34.7%, but in quantitative terms, more MTPL agreements were concluded in January-October of 2022 than in the same period of 2019 (950,225 thousand vs 940,574 thousand). GWP collected on them increased by 17.3% y-o-y, reaching AMD 20.6 billion drams (+26.2%)/~EUR 51.53 million.

In January-October 2022, 59,750 thousand applications for insurance compensation were submitted, which is 6% less y-o-y. Total paid claims on them amounted to AMD 12.7 billion drams (-5.7%).

Among insurers, ROSGOSSTRAKH Armenia continues to be the leader in terms of the number of vehicles with MTPL policy (165.965 thousand units), NAIRI Insurance ranks second (158.511 thousand units), and INGO Armenia ranks third. ROSGOSSTRAKH Armenia also holds the lead in terms of the share in MTPL premiums (28.7%) and in terms of the company's share in MTPL paid claims (30.76%).

Armenian insurance companies began to receive fewer applications for simplified registration of road accidents (European Accident Statement). For 10 months of the current year, the volume of payments under the European Accident Statement also decreased - by 41.2% to AMD 1.7 billion.

According to experts, development of the MTPL market is becoming undesirable and uncontrollable. The decrease in paid claims cannot be explained either by improved discipline of drivers or a decrease in the number of accidents, since statistics show the opposite. Furthermore. the number of cars per year in the country increased by almost 35 thousand units. The problem is that the European Statement is losing popularity due to a drop in confidence in insurers. According to experts, the main reason for the fall of the market is often-unreasonable underestimation of compensation amounts in case of minor accidents.

Experts believe that the MTPL market in Armenia today is taking on rather adventurous features. One of its participants noted that despite the decrease in the loss ratio from 78% to 64% after 10 months of the current year, MTPL still remains a loss-making type of insurance activity, insurers incur significant infrastructure costs and therefore saving on paid claims has become the main goal of their work.

*EUR 1 = AMD 399.76 (01.11.2022)