Life insurance GWP went up by 4.75% in 2014, to HUF 457.12 billion (EUR 1.45 billion). The "assurance on death" class recorded a spectacular growth in GWP, by almost 78%, increasing its share in the market portfolio to 6.2%, from 3.6% at the end of 2013, a positive evolution which seems to be the result of the fiscal incentives applied starting last year for both for life and pensions insurance. Still, the unit-linked insurance line, the most consistent segment of the Hungarian life insurance business, continued to record a negative trend, with GWP decreasing y-o-y by 1.65% and loosing about 2pp of its portfolio share.
In the first half of 2015, continued to loose ground in relation to the other lines, currently accounting for 31.6% of the market's GWP, but the "assurance on death" line managed to maintain the extra weight gained in the previous year. "The life insurance business decreased mainly due to the single premium segment's shrinking. The good news is that the customers seem to prefer long term regular premium investment products, which shows in our opinion that people are increasingly aware of the need to take personal action to provide for their own financial security in the future," stated Daniel MOLNOS, Secretary General of the MABISZ.
However, it is worth noting that according to the National Bank of Hungary (MNB) data, the number of unit-linked policies went up by almost 39 thousand throughout 2014, while the "assurance on death" line saw an extra 33 thousand policies at the end of 2014, as compared with the end of 2013. The trend also continued in 2015, the first semester adding some extra 23 thousand units to the total number of UL policies in force.
"The increasing popularity of pension insurance has given a new momentum to the market, and we must admit that having a level playing field has had an important role in the reversal of market trends. The possibility of receiving tax benefits for pension insurance could be a major driver in the market. We should not forget that in the last year when a non-restricted tax benefit could be obtained on life insurance, 800,000 people - almost 20 percent of all the working-age population - took advantage of this option in the Hungarian market. Obviously, this new opportunity imposes more stringent conditions than before. Nevertheless, we have the insight - now markedly reflected in every opinion poll - that the state pension will not be capable of ensuring a carefree old age to the current working population in itself, supplementary pension schemes should play a larger role, to ensure the living standard we all aim for,' stated Anett PANDURICS, CEO of the Hungarian Post Life Insurance Company in an interview published by World Finance.
Of course, the low yields environment hinders in a certain degree insurers' efforts because, after years of high inflation and double digit nominal returns, Hungarian customers "do not find yields of one, two, or three percent very attractive. However, in real terms these yields can be higher than those of the former years," she added.
Transparency and comparability are some of features that insurers are trying to bring at the table in order to stimulate customer's interest. The insurance companies operating in Hungary took the obligation to develop a uniform information system on the costs of life insurance products incorporating investment elements (unit-linked products) that are borne by customers. In accordance with that, the Life Insurance Department of MABISZ, the Hungarian Association of Insurance Companies, with the contribution of and support from HFSA, compiled the regulations for TKM (Total Cost Indicator). "The duty of the industry is that while showing proactive cooperation - since fair competition is in our interest as well - with the help of professional arguments that any proposals for overregulation might result in unintended and harmful possible consequences. I believe that an excellent result of this approach and joint effort is the regulation of the total cost indicator (TKM) of pension insurance, where, by means of combining the self-regulating concepts of the market and the intentions of the supervisory authority and consumer protection, a solution that is capable of increasing the trust of the customer was provided, which helps insurers to obtain new contracts.
The regulatory agencies could rest assured that the tax benefit granted by the state will, in fact, increase the wealth of the customer and support their old-age security. The Association of Hungarian Insurance Companies (MABISZ) agrees, and volunteers as a partner in the efforts of the Hungarian National Bank to extend the TKM regulation to the entire sector of life insurance on the basis of the TKM figure of pension insurance" said PANDURICS.
8857 views
