ESTONIA 1H2013: impressive GWP growth rates, but scarce profitability

The Estonian insurance market ended the first half of 2013 with impressive growth rates in terms of GWP, but with less impressive results as far as profitability is concerned. Thus, according to data provided by the Financial Supervision Authority in Estonia, the total GWP amounted to EUR 217.55 million, 23.6% up y-o-y. At the same time, the consolidated net profit for life insurance decreased from EUR 12.73 million in 1H2012 to EUR 4.11 million in 1H2013, while the same indicator for non-life insurance fell from EUR 31.45 million in 1H2012.

"Regrettably, the market performance has worsened in both life and non- life segments when looking at the bottom-line. Half- year profits are the lowest during the last five years on the life side and second lowest in the non- life insurance area. It is difficult to disclose all the reasons at this stage, but due to the central online registry in the MTPL, which makes about 1/3 of the market total volume, we can assume that in the non-life the reason lies, to a big extent, in too low a pricing in the market environment, where the loss density is still going down, whereas the average loss level has already stabilized and the costs have increased," told us Andres PIIRSALU, Board member of the insurance association (EKsL), motor bureau and guarantee fund (LKF).

Talking about the most interesting aspects of the Estonian market development, Andres PIIRSALU emphasized the successful experience achieved by the local insurance dispute mediation body. "More than half of all the insurance disputes are handled successfully there. As a result, the insurance industry gets: 1) insight on the areas of service improvement; 2) a tool for public relations: we can explain the situation about the insurance service quality and it is difficult to attack the insurance industry with the unjustified and unfair criticism targeted to the quality of service; 3) it is a wonderful example of a well- working PPP- cooperation." Other positive changes are expected for the motor insurance business' legislation for the first half of 2014, once the Law on MTPL will be adopted. Compensations are calculated transparently and paid out smoothly on a fair and transparent basis. Lump sums are not allowed. The system works very similarly to the ones in Finland and Sweden."

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 www.xprimm.com and download the 1H2013 Estonian insurance market.

Market portfolio (in EUR):
  • Gross written premiums
  • Paid claims 
  • Growth rates
Life and non-life insurance lines insurance companies ranking (in EUR):
  • Gross written premiums
  • Paid claims 
  • Market shares
  • Growth rates

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