Julia CILLIKOVA Director of the Regulation and Financial Analyses Department National Bank of Slovakia

By the end of September 2011, amid fears of a deceleration in global economic growth, the National Bank of Slovakia lowered its GDP growth estimate for 2011 and 2012 by 0.2 and 0.9 percentage points respectivelly. According NBS, Slovakia's economy is now expected to grow by only 3.4 percent in 2011 and by 3.8 percent in 2012. The main reasons for the less optimistic forecast are the lower expected growth in foreign demand and the below the line household consumption. The new prognosis was also affected by measures associated with the consolidation of public finances. Still, even less optimistic than in the beginning of 2011, the Slovak economy perspectives are good, maintaining the upward trend installed in 2010.

As far as the domenstic insurance market is concerned, "although there was a slight increase of premium in the first half of 2011, the indices are much more below those which were before financial crisis. Life insurance stagnated, while non-life insurance experienced a slight increase", Mrs. Julia CILLIKOVA, Director of the Regulation and Financial Analyses Department, National Bank of Slovakia, told XPRIMM. According to JUDr. Jozefina ZAKOVA, Director General of the Slovak Insurance Association, the modest growth of the industry mirrored the business sector's development and slight increase of the private household consumption.

Jozefina ZAKOVA Director General Slovak Insurance Association

More specific, the Slovak insurance market went forward by 0.98%, as compared to 1H/2010. Of course, after years of double digit growth before the economic downturn, the 2011 figures are far from spectacular. Nevertheless, the good news is that the non-life insurace segment re-entered on the growth path. "The largest increase in non-life insurance was recorded in property insurance, where the growth of premium was 4,8%. We have witnessed a growth in claim costs of non-life insurance, but there was recorded also decrease in technical provisions", explaines Julia CILLIKOVA.

On the life insurance side, it seems that we are witnessing a slowdown of the growth pace, from almost 9.5% by the end of 2010, to less than 1% as at end June 2011. "Life insurance continues to be driven mainly by Unit-linked insurance, with a premium growth of 7.3%, while the traditional life insurance declined slightly. This way, Unit-Linked contracts reached a 30% share in the life insurance portfolio. As far as the lapse ratio is concerned, there was a visible increase during the crisis, but remains constant in the recent years", sais the NBR official.

Beside figures, the crisis left visible changes in many aspects of the insurers' business. "The financial crisis pressured on both the product and the marketing strategies of the insurance companies. They focused on core business, reviewed costs and rationalized managing structures. They introduced or improved insurance products which better reflected the crisis - for example bad debts insurance for enterprises and unemployment insurance in retail. The companies also have accommodated to the clients in the case of inability to pay, by providing delays of payments and alterations of contracts. The financial crisis forced the insurance companies to reveal the reserves which presents benefits also in the period of growth", is the picture described by the Head of the Slovak Insurance Association.

All in all, as the market representatives are characterizing the last half year period, no dramatic changes were registered in the Slovak insurance field. Dealing with more careful spending customers and a still volatile economic environment, Slovak insurers are adapting on the fly to the new conditions, managing to push forward their business.