Private Insurance Industry Masters the Financial Crisis with Moderate Losses
For the Austrian private insurance industry, 2008 was another year of sluggishly rising premium income. Since 2006 the growth rates of the industry as a whole fluctuated within a narrow band between 1.4 percent (in 2008) and 2.1 percent (in 2007). At the same time the accrued gross premiums increased by less than nominal gross domestic product, and the penetration rate of insurance decreased further (5.7 percent). Life insurance proved the engine of growth of the industry (+2.2 percent), whereas non-life insurance almost stagnated (+0.4 percent). Accordingly the weights of the three large insurance segments shifted slightly in favour of life insurance. Health insurance grew robustly (+3.5 percent) and equally increased its share in the premium income. Direct incomes of foreign insurers from the European Economic Area amounted to 4.9 percent (in 2006) of the total market. Due to the shift towards life insurance the Austrian insurance market differs significantly from those in other West European countries. There, by contrast, life insurance – particularly unit-linked and index-linked products – contributed to a shrinking market (–6.9 percent in real terms based on US dollars), while non-life insurance remained considerably more stable. In Western Europe this was due to the drop in single premiums in unit-linked products, which turned out particularly sharp in the large markets such as France, the UK, Ireland and Italy. For the current year 2009, the industry has a pessimistic outlook. On average premium income is expected to decline by 0.3 percent, with life insurance dominating the trend at a decrease of 2.5 percent.