MOTOR INSURANCE, 3Q2014: Still the ground for a harsh competition

22 January 2015 — Daniela GHETU
The CEE MTPL business fell in 3Q2014 by 1.15% y-o-y, in terms of GWP, the East European specialty market remaining highly competitive. However, one should notice that many of the CEE markets recorded a positive change in GWP, but due to difference in market size all these positive trends couldn't offset the effect of the 4% decrease in GWP recorded in Poland.

On the other hand, Motor Hull remained a challenging business line, most of the markets across the region witnessing a continued negative trend in underwriting. At the regional level GWP for the comprehensive motor insurance class went down by 1.26% y-o-y.

Among the main reasons of the significant decrease of the motor insurance business, the Slovenian TRIGLAV Group was mentioning in this 3Q report "the aggressive price competition among insurance companies, lower premiums due to several sales promotion activities, the introduction of discounts (a bonus programme) and the economic crisis. The effects of the economic crisis are widespread and manifested in lower insurance density of natural persons and legal entities, failure to renew comprehensive car insurance for older vehicles, for vehicles after the expiration of leasing contracts or after loan repayment, stricter borrowing terms and conditions, corporate bankruptcies and in lower sales of motor vehicles in most of the countries where the TRIGLAV Group operates." The same reasons are, in fact, valid the entire region.

The Polish market has by far the strongest influence upon the regional results. Thus, if on the Motor Hull line the scarce growth in GWP recorded by the Polish insurers pushed up a little bit the regional results, on the MTPL line a quite contrary effect was observed. However, beside the obvious decrease on the business volume, Polish insurers' association representatives seem mostly concerned with the technical results. According PIU, the technical result of vehicle liability insurance line amounted to PLN -160 million, while the technical result of motor hull insurance amounted to PLN 253.8 million. "The motor insurance market remained highly competitive, resulting in falling GWP volume and deteriorating technical results because of the competitive pricing," commented Andrew MACIAZEK, Vice President of PIU.

Another example worth mentioning came from Croatia, were the newly liberalized MTPL market saw a 16.85% drop in GWP as a result of an aggressive price war started once the companies were free to establish their own tariffs.

Tariffs and decreasing GWP figures are not the only matter of concern for the CEE motor insurers, as on the claims side many of the markets in the region are still fighting with higher and unpredictable values of the compensations paid for bodily injuries or moral distress. All in all, claims paid for the MTPL line remained fairly stable, while on the Motor Hull side seem to see a slight decrease. However, considered country by country, the results are divergent, reflecting rather an ongoing process of claims expenses optimization than a clear regional trend.

Note: The CEE region includes 17 countries: all the Eastern bloc countries, the independent states in former Yugoslavia and the three Baltic states.

Click here to download the 3Q2014 CEE motor insurance market statistics.

Click on the links below to download the 3Q2014 insurance statistics in the CEE countries.
Czech Rep.