CZECH Rep. 1H2012: growth in life insurance not enough to keep the whole market in black

27 September 2012 — Daniela GHETU
czech-statisticsThe Czech insurance market reported a steady evolution in 1H2012. According to the first available information released by the Czech Insurers Association (CAP), GWP amounted 58.8 billion (~EUR 2.3 billion). Denominated in national currency, the GWP overall figure shows almost no change as compared to 1H2011. Yet, following the 5% weakening of the Czech kroon (CZK) in proportion to the European currency, the total GWP denominated in euro recorded a 4.85% y-o-y fall.

Similarly to prior years, Czech life insurance was a key positive factor in the insurance industry results. Yet the slower pace of the segment did not suffice to keep the whole sector in the black. Although life insurance of the Czech Insurance Association's members increased, the non-life insurance segment fell, as a CAP's representative commented for XPRIMM.

Thus, life insurance GWP amounted CZK 23.15 billion (EUR 903 million), 2.57% up y-o-y in national currency. A positive trend is growth in regular premium insurance (3%), building a stable foundations for the long-term development of the insurance market. Conversely, single-premium life insurance - usually attracting customers as a savings product rather than as a quality coverage of insurance risks - decreased by about 4%. According CAP's representatives, low life insurance covers that stay well below the level needed to secure a family in the event of unforeseen circumstances continue to represent a challenge, and also potential, of the Czech insurance market.

The non-life insurance segment has stagnated or even decreased for several years and 1H2012 results do nothing else than confirm this trend. Thus, GWP for non-life insurance reached CZK 35.68 billion (EUR 1.39 billion), 1.2% less y-o-y in national currency. Yet, non-life insurance continues to hold the largest share of the Czech insurance portfolio (60.6%), loosing only 1pp in the last 12 months.

Motor insurance remains the main line of business, accounting for 30% of the market's total underwritings. In 1H2012 GWP for motor insurance amounted CZK 17.74 billion (EUR 692 million), 4.4% less than in 1H2011. Premiums written in third-party liability insurance fell about 6% y-o-y, and a similar trend was reported for the Motor Hull insurance line (2% down y-o-y) despite continued growth in the number of insured vehicles. At this point, as the association representatives told us, "at the current price level, the segment is teetering on the brink of economic sustainability and, in some respects, below that. A critical factor in this development is that costs of insurance benefits as well as average damage claims keep climbing in spite of falling prices. This is evident in particular in damage to health that has doubled in the last decade".

Finally, the segment of business and industrial insurance showed an upturn, as GWP for this lines of business grew by about 2.7% y-o-y. At a time of the economic crisis, companies are more acutely aware of risks that may threaten their business and opt for a better-quality insurance protection, commented the association representative.

Additional information will be published as soon as the official 1H2012 statistics of the Czech National Bank will be released.

Access and download the 1H2012 Czech Republic insurance market statistics.

Market portfolio (in EUR and CZK) according to the Czech Insurance Association (CAP):
•    Gross written premiums
•    Growth rates

Market rankings in EUR and CZK (GWP/Market shares/Growth rates) according to the Czech Insurance Association (CAP):
•    Overall market ranking
•    Life insurance ranking
•    Non-life insurance ranking
•    MTPL insurance ranking
•    Motor hull insurance ranking

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