LATVIA: The MTPL insurance line will most probably remain unprofitable also in 2018, despite increasing tariffs
In his opinion, the impact of the increase in MTPL tariffs recorded in 2017 will be visible this year. Nevertheless, although the 2018 results will be most probable better than those of the last year, the line will remain unprofitable. In fact, ABASINS has pointed out, "there is hardly a country in Europe where MTPL insurance is stable and profitable."
"I do not see grounds for further rise of MTPL insurance prices. Our prices have neared Lithuania and Estonia. Should our prices be higher than in the neighboring countries? I don't think so," he said, also mentioning that the Competition Council is looking into the recent steep growth of the MTPL insurance prices.
According to data provided by the country's Central Statistical Bureau for December 2017, road vehicles insurance tariffs went up by 64.1% y-o-y. At the same time, the aggregated loss recorded by the Latvian MTPL insurers amounted to EUR 7.045 million in the first 3Q of 2017, 21% less y-o-y.
According to LETA, asked whether the growth of MTPL insurance prices does not affect the Motor Hull (CASCO) line by draining too much of the the financial resources that people can allocate to insurance, ABASINS said that although such cases were reported, overall the impact will be negligible. "Just about one fourth of all vehicles has CASCO insurance. This share is growing very slowly as CASCO is targeted at newer cars. Therefore we should not expect a significant drop in CASCO insurance because of the rise of MTPL insurance prices," he said, adding that as overall welfare level is increasing, the number of cars purchased on a leasing agreement is also rising, and KASKO insurance is mandatory on leasing agreements.