LATVIA: Tax reform slowed down life insurance in 2018
Life insurance in Latvia maintained its first place in terms of GWP. According to the Latvian Insurers Association (LAA), life insurance in Latvia recorded a total of EUR 115.6 million (a 22.4% market share) in 2018, followed by MTPL insurance with EUR 106.4 million (20.6% market share), health insurance with EUR 88.9 million (17.2%), motor hull with EUR 87.8 million (17%), and property insurance with EUR 65.7 million (12.7%).
However, the growth rate of life insurance premiums was far behind other classes. While MTPL grew by +30.2%, health insurance with +9.3%, motor hull with +11% and property with 10.3%, life insurance premiums rose by only +0.3%.
According to Dienas BIZNESS, most life insurance premiums came from previous years contracts. Newly issued life insurance policies in 2018 have decreased with an alarming rate. In 2018, there were 92% fewer newly emitted life contracts compared to those in 2017.
"Insurance industry growth continued at a slightly slower pace last year than in 2017. It was mainly influenced by the stagnation of premiums written in the largest type of insurance category - life insurance. For comparison, the rate of growth from previous years of the life insurance business lines was on average 10%," says Janis ABASINS, president of LAA. "The reason for this phenomenon is ongoing tax reform, which significantly reduced the fiscal benefits for companies that offered life insurance for employees as part of their internal motivation system," concluded ABASINS.