CZECH Rep. 1H2013: life pushed GWP down, floods inflate claims

17 October 2013 — Daniela GHETU
At a slow pace, the Czech insurance market in 1H2013 also recorded the descending trend established in late 2011. The life insurance sector, accounting for more than 40% of the overall premium production, was responsible for the negative change recorded by the market turnover in the first half of the year. Thus GWP for the life insurance lines fell by 5.8%, to CZK 35 billion (EUR 1.35 billion). According to the representatives of CAP - the Czech insurers' association, the main reason of this trend is a significant drop in premiums for single premium life insurance, by 17%, mainly due to lower revenues of financial markets in the second quarter of this year. However, a positive development seemed to occur for the contracts with premiums paid in instalments (+1.1%). On the other hand, the market recorded for several reporting periods an ever decreasing number of new life insurance policies. "The decline in the sales of life insurance and an increase in regular premiums also suggest a possible slowdown trend in what the surrender of existing contracts is concerned. If this If these indications will be confirmed, new positive trend may be expected for the following periods," says executive director EAP Tomas SIKORA.

On the non-life side, although at a slow pace, the Czech market followed a positive trend. Motor insurance lines went up by 2.97%, mostly driven by the MTPL line for which the number of contracts increased by about 8% y-o-y. Also, according to data published by the Czech National Bank, a slight increase in the average price of MTPL insurance is visible, as the average price for the new contracts concluded in 1H2012 was of CZK 2,190, while in 1H2013 it went up to CZK 2,225.

On the property insurance segment, probably the most interesting fact worth mentioning is the evolution of the paid claims following the weather events of this summer. Insured damage from the 2013 floods in the Czech Republic, considered the worst in more than a decade, could cost the insurance industry CZK 7.5 billion (~EUR 290 million), according to estimates. In fact, as indicated by the Czech National Bank's statistics on June 30th, the number of claims for the "fire and other perils" class amounted to 83,266, almost 30,000 units up as compared with 1H2012. Out of this number, by the end of June there were still about 47,000 unsettled claims. A similar evolution was also recorded for the "other damages to property" class, for which the total number of claims increased from 71,589 in 1H2012, to 82,274 in 1H2013, out of which ~28,500 are still waiting for a resolution. Yet, even at the end of the reporting period there were still many unsettled claims related to the summer floods. In financial terms the effects were already visible, as the total expenses of Czech insurance with property claims already grew by almost 16% y-o-y.

Read more in the forthcoming edition of XPRIMM Insurance Report - CEE, Russia&CIS, SE 1H2013, to be released on October 20th, on the occasion of the XPRIMM Reception in Baden-Baden.

Access and download the 1H2013 Czech Republic insurance market statistics.

Market portfolio (in EUR and CZK) according to the Czech National Bank (CNB):
  • Gross written premiums
  • Growth rates
  • Paid claims
Market rankings in EUR and CZK (GWP/Market shares/Growth rates) according to the Czech Insurance Association (CAP):
  • Overall market ranking
  • Life insurance ranking
  • Non-life insurance ranking
  • MTPL insurance ranking
  • Motor hull insurance ranking

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