LATVIA: the market is growing yet risk insurance still accounts for only 1.3% of GDP

17 January 2020 — Marina MAGNAVAL
The insurance market has been growing over the past couple of years, recently showing a double-digit increase, despite a smaller growth rate at the end of 2019, according to Uldis DZINTARS, member of the board of BALTA (leader of Latvian non-life sector, which belongs to the PZU group), LETA news agency writes.

DZINTARS emphasized that the total number of insured objects, the number of active insurers and the number of insurance customers is growing. The existing customers are also buying more insurance products. As he noted, risk insurance in Latvia accounts for only 1.3% of GDP, whereas in developed European countries it is about 2.5-3%. However, he believes that as people are striving for greater financial stability, insurance market is expected to grow faster than the economy as a whole.

He noted that the insurance industry is becoming more mature and this is confirmed by the decreasing share of motor products (Motor Hull and MTPL) in risk insurance portfolio. A few years ago, they accounted for about 60% of the total market, but now they are keeping about 50% (while in Europe motor share is below 40% on average). "The greater the maturity of the industry and the greater the consumers' awareness over insurance are, the more insurance products they buy", he explained.

DZINTARS also noted that voluntary insurance is growing fast. Speaking about the biggest insured risks in Latvia and Europe, he pointed to the dominance of property, motor vehicle (Motor Hull), accidents and general liability insurance. Besides business lines, he underlined that corporate insurance has a bigger share than that of individuals, since legal entities insure real estate and transport more often. He also mentioned that a lot of property in the private sector remains uninsured. "We estimate that two thirds, or 550,000, of households have not yet been insured - a shocking figure. If we look at income levels, at least half of these owners can afford insurance", he said.

According to him, other insurance products, including health insurance, which used to grow by nearly 10% in recent years, slowed their trends in 2019. However, among the Baltic countries, Latvia is leader in terms of health insurance business line. A few of the reasons for the thriving of health insurance are the long queues for state-paid services, shortage of qualified medical stuff and availability, he mentioned.

DZINTARS pointed out the importance of digitalization and the development of sales channels. Now, the number of sales channels is expanding beyond insurers' offices and financial institutions. "Modern people want to get things done as easily, quickly and conveniently as possible, and insurers are following these trends," he added.

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