The european insurance sector

• Pages: 19-28

2. THE EUROPEAN INSURANCE SECTOR

Th gst rate environment continues

to challenge the Europ ean insurance s ector. Mo re recent-

ly, the economic slowdown due to political uncertainty

and growing trade tensions has added additional strain

on insurers and asudden repr icing of risk pr emia cannot

be ruled out. Even tho ugh life insurers are tr ying to adapt

to these challenging circumstances by lowering guaran-

teed r ates and focusing on unit-linked products, prof‌ita-

bility remains under pressure. For non-life insurers, the

challenge is mostly r elated to increasing lo sses stemming

from climate-related risks and cyber events, which may

not be ad equately ref‌lected in risk models based o n his-

torical data.

2.1. MARKET SHARE AND

GROWTH

Total GWP grew in 2018, but remained broadly stable

as apercentage of GDP. The sum of GWP for bot h life

and non-life insurance se ctor grew by 4 .2% on an annual

basis and amounts to around EUR 1.3 trillion at the end

of 2018. Over all GWP as apercentage of GDP remained

stable around 9% for the tot al European insurance mar-

ket, while tot al assets as ashare o f GDP slightly decre ased

from 74% to 70%. Life GWP grew most in SE and UK,

whereas asignif‌icant d ecrease in life GWP was o bserved

in IE, LU, PL and SK (Figure 2.1). Non-life GWP increase d in

most countr ies, though asignif‌icant de cline could be ob-

served in FI. The insurance sector r emains large relative to

the econo my in most countries , as measured by the total

assets to GDP ratio (Figure 2 .2).

The share of unit-linked business remains overall con-

stant also in 2018. Although the overall share of unit-

linked business in life GWP decreased from 43% in Q4

2017 to 41% in Q4 201 8, the me dian remains stable aro und

34% (Figure 2.3). Par tly in response to the low-yield envi-

ronment , insurers continue to focus on unit-linke d prod-

ucts as th ese contain few f‌inancial guarantees, and he nce,

are cheaper to provide and have alower capital charge

under So lvency II. Howeve r, considerable die rences re-

main across countrie s (Figure 2.4), due die rences in na-

tional mar kets and p ast misselling issue s.

Figure 2.1: Total Life and Non-Life GWP growth in 2018 (in %, year-on-year)

GWP life % changeGWP non-life % change

AT

BE

BG

HR

CY

CZ

DK

EE

FI

FR

DE

GR

HU

IS

IE

IT

LV

LI

LT

LU

MT

NL

NO

PL

PT

RO

SK

SI

ES

SE

UK

EEA

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Source: EIO PA Quarterl y Solo

Repor ting refere nce date: Q4 2018

Note: Gro wth rat es based o n local/rep orting c urrency. Ple ase note t hat changes in G WP per co untry could also be d ue to st ructural ch anges in the market, such

as arelocat ion of busine ss. This app lies in par ticular for FI and SE.

NANCIAL STABILITY REPORT

19