Ken research announced recent publication on, “Non-Life Insurance in Hungary, Key Trends and Opportunities to 2020“. The report provides a detailed outlook by product category for the Hungarian non-life insurance segment, and a comparison of the Hungarian insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets and total investment income during the review period (2011-2015) and forecast period (2015-2020). The report also analyses distribution channels operating in the segment, gives a comprehensive overview of the Hungarian economy and demographics, explains the various types of natural hazards and their impact on the Hungarian insurance industry, and provides detailed information on the competitive landscape in the country. The report brings research, modelling and analysis expertise, giving insurers’ access to information on segment dynamics and competitive advantages, and profiles of insurers operating in the country. The report also includes details of insurance regulations, and recent changes in the regulatory structure.
The Hungarian non-life segment accounted for 44.1% of the insurance industry’s overall gross written premium in 2015. The Hungarian non-life insurance segment expanded during the review period at a review-period CAGR of 2.1%. The Insurance Companies and Insurance Activities Act was introduced in December 2014, and came into force on January 1, 2016. Property insurance was the largest category, accounting for 46.9% of the segment’s gross written premium. Agencies are a highly preferred channel because of their detailed understanding of risks and products related to their field and region. The Hungarian non-life insurance segment is highly concentrated, with the 10 leading companies accounting for 91.8% of its gross written premium in 2015.
If compared to its regional counterparts, in Europe the trend of non-life premium revenues, the impact of the economic crisis was felt later, typically through a general decline in demand; consequently, a significant decrease in the premium revenues was seen in 2009 for the first time with a slight delay while 2008 still saw a moderate expansion. The CEE-10 countries performed better, with the changes resulting from the price changes in the premium revenues filtered. The market dynamics in the member states showed a significant dispersion in 2009: in the Baltic States, for instance.
The domestic market under performed in both years in comparison with the regional average. It may considerably stem from the fact that the crisis affected the Hungarian economy more than the regional average. Examination of the distribution of the premium revenues among business lines, it can be established that the greatest weight in the European market is that of the accident and health insurance branch. This is approximately level with the motor insurance branches in terms of premium revenues, followed by insurance against fire, natural disasters and other property insurance as the third most significant branch. The CCE-10 group is characterised by a product mix considerably different from the foregoing, mostly due to the underdevelopment of the health insurance segment. Hungary’s market characterizes another major feature-the high ratio of home insurances.
In spite of Europe’s economic slowdown, the Hungarian non life insurance sector continues to strengthen as more and more of the population seek greater protection. During the financial crisis, Hungary’s insurance sector proved itself crisis-resistant. In another sign of its robustness, the market has shown impressive annual growth over the last three years: according to the Hungarian Insurers’ Association, in 2015 the number of total written premiums had increased. Non-life insurance written premiums were the strongest basis of this growth, having increased tremendously. Revenue expansion in non-life insurance can be attributed to the fact that after a long period of time, the fierce premium competition in the field of compulsory third party liability motor insurance did not continue. This in turn has caused the written premiums of this line of business to increase in 2015. Nonetheless, average insurance premiums are still far below the premium level of neighbouring countries. Therefore, although the market continues to show signs of stability, there is scope for considerable growth. Following negotiations, the Insurance Act has been amended in several stages: as of this year, the act now centrally regulates the minimum levels of investment and surrender values while limiting the commission rate payable for life insurance. To further strengthen insurance rules, it has also become mandatory to involve depositaries, and from next January, only those units that have been invested by the insurance company may be shown.
An even more ambitious change is that, uniquely in Hungary, the total expense ratio (TER) – which was introduced in 2010 remains applicable as a legislative provision. Regarding our short-term plans, we understand current economic trends are more beneficial for the development of non-life insurances. We are witnessing organic market development in this field, where both written premiums and penetration are increasing, therefore we are investing significant professional resources into it. Although a stronger regulatory environment does not favour life insurance policies, we can find niche markets in terms of product portfolio and sales channels, in which our company may gain significant advantages. Likewise, we benefit from our flexibility, which enables us to provide services that harmonise with the increasingly rapid pace of life and the habit of planning for the shorter term. Our overall aim is to have people consider Post Insurance – after a year or two, as well as after 10 years – as an easily accessible, reliable and useful partner in many occupations, just as more than three million Hungarian customers have considered us for almost 1.5 decades.