The european insurance sector

• Author: European Insurance and Occupational Pensions Authority (EU body or agency)
• Pages: 24-36

2. THE EUROPEAN INSURANCE SECTOR

The recent market development, discussed in Chapter 1,

poses dicult challenges in the immediate future to the

insurance sector, both in terms of navigating the turbu-

lent market conditions and in maintaining operations. It

is clear that both capital and solvency positions will be

signif‌icantly aected by the current situation. The latest

available Solvency II data do not capture the impact of

the coronavirus outbreak as they refer to Q4 2019. How-

ever, they can provide an overview of the initial resilience

of the European insurance sector before being hit by the

current crisis. In this respec t, high insurers’ solvenc y ra-

tios and improved asset valuations over 2019 due to the

rebound in equity prices and declining yields in the f‌irst

half of 2019 provide abuer to withstand the impact of

macro-f‌inancial shocks on the sector. Furthermore, dif-

ferences in initial positions and specif‌icities across coun-

tries, along with dierences in the severity of the spread

of the virus, suggests dierent abilities among the EEA

countries to absorb the hit. An analysis of the potential

impacts of Covid-19 will be presented in the risk assess-

ment chapter 5.

2.1. MARKET SHARE AND GROWTH

The European insurance sector gross written premi-

ums were increased, both for life and non-life business

in Q4 2019. Non-life-business gross written premiums in-

creased from Q4 2018 to Q4 2019 by 12% mainly driven by

Luxembourg (94%), Malta (49%) and Belgium (46%) that

displayed the highest GWP growth in Q4 2019 (y-o-y) for

non-life. Likewise life-business increased by 6% mainly

driven by Latvia (147%) and Finland (42%) (Figure 2.1). The

increase observed in Luxembourg in the Non-life gross

written premiums sector is mainly driven by the reloca-

tion of non-life companies from the UK to Luxembourg.

In the case of Latvia, the signif‌icant increase is driven by

the consolidation of one group with several branches in

Lithuania and Estonia, where avariation in the opposite

direction, linked to the same circumstance, is observed.

On the other side, the ongoing low yield environment

challenges the insurer’s growth, in particular for life busi-

ness of certain countries that show areduction of GWP

from Q4 2018 to Q4 2019. Overall GWP as apercentage

of GDP remained unchanged at 9% from Q4 2018 for the

Figure 2.1: Total Life and Non-Life GWP growth in Q4 2019 (year-on-year)

GWP non-life % change GWP life % change

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

94%

147%

AT BE BG CY CZ DE EE ES FI FR GR HR HU IE IS IT LI LT LU LV MT NL NO PL PT RO SK SE SI UKEEA

Source: EIOPA QRS.

Reference date: Q4 2018 and Q4 201 9.

URO AN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY

24