Hungary's insurance market regulator aims to enhance competition in the home insurance market
The National Bank of Hungary (NBH), which also fulfills the function of market regulator and supervisor for the non-banking financial markets, considers that, unlike in the car insurance market, in the home insurance field there is not enough competition. The NBH official said the average return on equity in the Hungarian insurance sector was of 24%, a "fairly high" figure which indicates he market lacked sufficient competition. "If more players were competing here, then this type of insurance could become cheaper, or clients could get a higher standard of service for the same expense," he said. Yet, one should note that, even in the current conditions, Hungary may pride itself with one of the highest home insurance coverage rates in the CEE, over 70% of the Hungarian real estate properties being covered by an insurance policy.
KANDRACS told the news website novekedes.hu that the measures intended by the NBH are similar to those taken in 2017 to curb the cost of fixed-rate mortgages, limiting the interest rate spreads that banks could apply on such loans, but offered no additional details. For the time being insurers have not made many public comments on the matter.
Establishing a guarantee system for the insurance sector, similar to the safety nets provided for depositors by the National Deposit Insurance Fund (OBA), or for investors by the Investor Protection Fund (Beva), would be a prudent measure for the insurance market, also said KANDRACS. Such a body could guarantee insurers' liabilities towards their customers up to about HUF 30 million (close to EUR 94.000). Currently Hungary has two guarantee schemes, both protecting the consumers in the motor insurance segment: a compensation guarantee fund under the MID and another scheme under the national act on MTPL which provides "compensation to victims of accidents caused by motor vehicles with sufficient insurance cover under contract in accordance with this Act at the time of the accident at an insurance company undergoing liquidation in the Member State that has authorized the insurance company in question". Insureds out of the compulsory MTPL insurance field are less protected. Yet, to put in place a new guarantee scheme would require the parliamentary approval.