According to the Bank of Lithuania, in 2018 gross written premium collected by non-life insurance companies totaled EUR 630 million, representing an increase by 12.2% compared the corresponding period of the previous year.
The market growth rate was largely driven by motor insurance (accounting for 63.3% of the market). Sales of MTPL insurance increased 15.7% and the motor own damage insurance market increased 12.0%, chiefly as a result of the growing sales of new automobiles.
In 2018, there were 12 companies operating in the non-life insurance sector (including 8 branches of insurance companies established in other EU member states).
Lietuvos Draudimas continues to be the largest insurance company in Lithuania in terms of total gross written premium in non-life insurance. The company’s share in the market at yearend 2018 was 30.5%. Considering the recent acquisition transactions, the total shares of top four players in the non-life insurance market was 84.1%.
Gross premium written by Lithuanian life insurance companies was EUR 248 million at yearend 2018, up 7.3% from the previous year. The increase in gross written premium was driven by the continuous and stable increase in regular premium (8.9%), which outweighed the 9.4% decrease in single premium income. The rate of growth of the single premium market is hindered by restrictions on tax credits. At the beginning of 2017, the tax credit was reduced to EUR 2,000. Then, in January 2019, the tax credit was cut again – to EUR 1,500 per year.
In the life insurance structure, unit-linked insurance represented the largest share at 60.9% of the portfolio value. Traditional life insurance accounted for 17.4% of written premium.
At of end of 2018, there were 8 companies operating in the life insurance sector. The Lithuanian life insurance market is highly concentrated. The share held by the four largest life insurers in total gross written premium was 76.6%.
The Latvian non-life insurance market recorded a gross written premium of EUR 280 million in Q1-Q3 2018. This is nearly EUR 43 million (i.e. 18.3%) more than in the same period of the previous year.
The biggest share in the non-life insurance market share, measured in terms of gross written premium, was captured by motor insurance, whose market position was additionally strengthened by a price increase in the market. Motor TPL insurance accounted for 28.2% of the market while motor own damage accounted for 23.5%. Also health insurance (18.8% market share) and property insurance (16.4% market share) had an important position in the product mix.
In 2018, there were 10 insurance companies operating in the Latvian non-life insurance market and 68.6% of the market was in the hands of the biggest 4 insurers.
In 2018, non-life insurance companies operating in Estonia recorded an increase in gross written premium by 35.9%, compared to 11.1% in 20172. In total, gross written premium was EUR 457 million, of which EUR 122 million, i.e. 26.8%, was collected by foreign insurance undertakings operating in Estonia.
The structure of non-life insurance in 2018 was dominated by motor insurance, which accounted for 58.1%, including MOD insurance accounting for 34.6%. Property insurance collected 28.5% of the gross written premium on the market.
At the end of 2018, there were 13 companies operating in the non-life insurance sector (including 4 branches of foreign insurance companies) among which the top 4 held a combined 68.7% market share.
Activity of PZU companies in the Baltic states
As of November 2014, the PZU Group has been operating in the Lithuanian non-life insurance market through Lietuvos Draudimas, which, as of May 2015, is the owner of the PZU Estonia branch.
Lietuvos Draudimas is the leader of the non-life insurance market in Lithuania with a share of 30.5% after 12 months. In 2018 it recorded a 10.9% increase in gross written premium compared to the previous year, reaching EUR 193 million. The biggest increase was recorded in motor insurance (12.1% y/y).
Life insurance operations in Lithuania are conducted through UAB PZU Lietuva Gyvybës Draudimas – “PZU Lithuania Life”. The collected gross written premium was EUR 15 million, which means an increase by 12.3% compared to the previous year. The highest sales growth was recorded in endowment insurance, which increased by 11.9% compared with 2017. The share held by PZU Lithuania Life in the life insurance market at yearend 2018 was 6.2% (compared to 5.9% in the corresponding period of 2017).
In Latvia the PZU Group conducts operations through AAS Balta, which became part of the Group in June 2014, and then (in May 2015) the branch took over the PZU Lithuania branch operating in the Latvian market since 2012. At the end of Q3 2018, the total share of PZU subsidiaries in the non-life insurance market reached 27.8% and gross written premium was EUR 79 million (compared with EUR 105 million in 2018).
Since May 2015 the entity conducting operations in Estonia is a branch of Lietuvos Draudimas and was established as a result of merger of two entities – branch of the Lithuanian PZU company registered in 2012 and the Estonian branch acquired in 2014, which conducted operations under the Codan brand. The company’s share in the Estonian non-life insurance market in 2018 was 16.0%. Accumulated gross written premium was EUR 73 million3.
The Ukrainian insurance market after Q3 2018 posted 11.1% growth in gross written premium reaching UAH 35 billion. The premium written for non-life insurance was UAH 32 billion, signifying 9.4% growth compared to the corresponding period of 2017. Motor insurance (29.3% of the non-life market) recorded an increase in the premium written by 21.9%, including Green Card insurance by 19.6%. In the corresponding period, life insurance undertakings collected gross written premium of UAH 3 billion, signifying 35.6% growth compared to Q3 2017.
The Ukrainian insurance market is highly fragmented – as at the end of September 2018, there were 285 insurance companies operating in the country (31 of which offered life insurance). Despite the number of insurers that continues to be enormous, the top 100 non-life insurance undertakings generated 98% of gross written premium, while the top 20 life insurance undertakings generated nearly 100% of written premium.
On the Ukrainian market, the PZU Group operates insurance business via two companies: PrJSC IC PZU Ukraine (a non-life insurance company), referred to as “PZU Ukraine”, and PrJSC IC PZU Ukraine Life (a life insurance company), referred to as “PZU Ukraine Life”. In addition, LLC SOS Services Ukraine performs assistance functions.
In 2018, gross written premium collected by PZU Ukraine was UAH 1,517 million, 17.8% higher than in the previous year. This increase arose from both the increase in the premium obtained through external entities (banks and travel agencies), as well as through its own distribution channels. In 2018, gross written premium collected by PZU Ukraine Life was UAH 413 million, up 37.8% from 2017. This growth was mainly achieved
in the bancassurance and broker channels, in particular as a result of sales of endowment insurance policies.
In the first three quarters of 2018, PZU Ukraine collected 3.4% (up 0.1 percentage points compared to the first three quarters of 2017) of total gross written premium of the whole Ukrainian non-life insurance sector, whereas in the life insurance market PZU Ukraine Life gained an 11.0% market share (up 0.6 percentage points compared to the previous year), which gave both companies fifth4 place on the market.
Factors, including threats and risks, that may affect the insurance business in the area of foreign companies in 2019
2 As of 1 January 2018, IF P&C Insurance AC (the leader on the Estonian non-life insurance market) started to report total gross written premium, altering the approach taken to date, based on installments and in that manner it significantly distorted market data. The other market participants adopted the same approach to reporting on a non-recurring basis in December 2018.
3 As of 1 January 2018, IF P&C Insurance AC (the leader on the Estonian non-life insurance market) started to report total gross written premium, altering the approach taken to date, based on installments and in that manner it significantly distorted market data. The other market participants adopted the same approach to reporting on a non-recurring basis in December 2018.
4 Insurance TOP, Ukrainian insurance quarterly, #4(64)2018