OECD Insurance Statistics

Transcription

1 OECD Insurance Statistics

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3 OECD Insurance Statistics 2013

4 This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2014), OECD Insurance Statistics 2013, OECD Publishing. ISBN (print) ISBN (PDF) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Corrigenda to OECD publications may be found on line at: OECD 2014 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at or the Centre français d exploitation du droit de copie (CFC) at contact@cfcopies.com.

5 FOREWORD Foreword This annual publication contains time series of insurance statistics for OECD member countries. Statistics and indicators are derived from national administrative sources based on a questionnaire prepared under the auspices of the OECD Insurance and Private Pensions Committee, and its Task Force on Insurance Statistics. In addition to statistics and in order to provide an insight on the insurance industry s overall performance and health, the current publication contains a chapter on insurance sector development. This chapter draws on the third edition of the Global Insurance Market Trends, which provides a more global perspective through the addition of a large group of countries from Latin America, achieved through cooperation with the Association of Latin American Insurance Supervisors (ASSAL). Non-OECD countries from Asia and Africa also contribute to this chapter. This publication also includes data on investments by insurance companies, insurance premiums, number of insurance companies and employees, gross claims payments, gross operating expenses and commissions. Recently, key balance sheet and income statement items were also added to the OECD s statistical framework for insurance. The data relate to the period and are broken down under detailed sub-headings. The report has been prepared by the Financial Affairs Division of the OECD Directorate for Financial and Enterprise Affairs. However, it was made possible only by the close co-operation between the OECD and the various national bodies which collect data on insurance. 3

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7 TABLE OF CONTENTS Table of contents Conventional signs and abbreviations... 7 Executive summary Common definitions and notes Insurance market trends Underwriting performance Figure 1. Annual real gross premium growth: sector, Figure 2. Annual real gross premium growth: sector, Figure 3. Growth in gross claims payments: sector, Figure 4. Growth in gross claims payments: sector, Figure 5. Combined ratio for non-life segment, Investment allocation and performance Figure 6. Investment portfolio allocation: insurers, Figure 7. Investment portfolio allocation: insurers, Figure 8. Investment portfolio allocation: Composite insurers, Figure 9. Portfolio allocation to bonds, public and private-sector bonds, Table 1. Insurers portfolio allocation in bonds and shares by type of insurer, Table 2. Average real net investment return by type of insurer, Profitability Table 3. Return on equity by type of insurer, Table 4. Change in equity position by type of insurer, Notes Part I International comparisons Figures I. Market share in OECD, II. and non-life insurance, III. Penetration, IV. Density, Tables 1. Balance sheet and income, direct insurance (All insurance companies) Balance sheet and income, direct insurance ( insurance companies) Balance sheet and income, direct insurance ( insurance companies) Portfolio allocation, direct insurance (All insurance companies) Portfolio allocation, direct insurance ( insurance companies) Portfolio allocation, direct insurance ( insurance companies) gross premiums ( and ) gross premiums () gross premiums () Market share in OECD ( and ) Market share in OECD () Market share in OECD () Density ( and ) Density () Density () Penetration ( and ) Penetration ()

8 TABLE OF CONTENTS 18. Penetration () insurance share Direct total gross premiums per insurance company employee Retention ratio ( and ) Retention ratio () Retention ratio () Ratio of reinsurance accepted ( and ) Ratio of reinsurance accepted () Ratio of reinsurance accepted () Market share of foreign companies in the domestic market () Market share of foreign undertakings in total domestic business () Market share of foreign companies in the domestic market () Market share of foreign undertakings in total domestic business () Part II Tables and methodological notes by country Australia Austria Belgium Canada Chile Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal SlovakRepublic Slovenia Spain Sweden Switzerland Turkey United Kingdom United States Annex A. Business written abroad by EE/EEA insurers through branches and agencies Annex B. Definitions of classes of non-life insurance Annex C. Composite sector in OECD and selected non-oecd economies Annex D. List of administrative sources

9 CONVENTIONAL SIGNS AND ABBREVIATIONS Conventional signs and abbreviations The following abbreviations are used: c Confidential. x Not applicable... Not available. Break in series. - Nil or negligible.. Decimal point. GAAP Generally accepted accounting principles. P&L Profit and loss. ISO country codes and abbreviations for currency ISO code Currency Abbreviation OECD countries Australia AUS dollar AUD Austria AUT euro EUR Belgium BEL euro EUR Canada CAN dollar CAD Chile CHL peso CLP Czech Republic CZE koruna CZK Denmark DNK krone DKK Estonia EST euro EUR Finland FIN euro EUR France FRA euro EUR Germany DEU euro EUR Greece GRC euro EUR Hungary HUN forint HUF Iceland ISL króna ISK Ireland IRL euro EUR Israel ISR sheqel ILS Italy ITA euro EUR Japan JPN yen JPY Korea KOR won KRW Luxembourg LUX euro EUR Mexico MEX peso MXN Netherlands NLD euro EUR New Zealand NZL dollar NZD Norway NOR krone NOK Poland POL zloty PLN Portugal PRT euro EUR Slovak Republic SVK euro EUR Slovenia SVN euro EUR Spain ESP euro EUR Sweden SWE krona SEK Switzerland CHE franc CHF Turkey TUR lira TRY United Kingdom GBR pound GBP United States USA dollar USD 7

10 CONVENTIONAL SIGNS AND ABBREVIATIONS ISO code Currency Abbreviation Selected African and Asian countries Hong Kong (China) HKG dollar HKD India IND rupee INR Indonesia IDN rupiah IDR Malaysia MYS ringgit MYR Russian Federation RUS ruble RUB Singapore SGP dollar SGD South Africa ZAF rand ZAR Thailand THA baht THB Selected Latin American countries Argentina ARG peso ARS Bolivia BOL boliviano BOB Brazil BRA real BRL Colombia COL peso COP Costa Rica CRI colón CRC Cuba CUB peso CUP El Salvador SLV colón SVC Guatemala GTM quetzal GTQ Nicaragua NIC córdoba NIO Panama PAN balboa PAB Paraguay PRY guarani PYG Peru PER nuevo sol PEN Puerto Rico PRI dollar USD Uruguay URY peso UYU 8

11 EXECUTIVE SUMMARY Executive summary The OECD has been collecting insurance statistics for almost two decades, with data on the insurance sector dating back to the early 1980s. In response to the financial crisis, the OECD launched a Global Insurance Statistics (GIS) project as part of its insurance market monitoring activities. The main objective was to expand the scope of the OECD statistical framework for insurance and extend its global reach, with a view to enhancing the transparency of insurance markets. These changes led to the collection of key balance sheet and income statement items for the direct insurance and reinsurance sectors, and to the gradual global expansion of the OECD International Insurance Statistics Database. This publication analyses recent insurance market trends to develop a better understanding of the insurance industry s overall performance and health in OECD countries, and selected non-oecd economies. A number of non-oecd economies from Africa and Asia namely, Hong Kong (China), India, Indonesia, Malaysia, Russian Federation, Singapore, South Africa and Thailand were already contributing to the OECD statistical exercise. A more global perspective is provided this year through the addition of a large group of Latin American countries, achieved through co-operation with the Association of Latin American Insurance Supervisors (ASSAL). The chapter on insurance market trends highlights the underlying reasons for the trends notably in gross premium growth, and claims developments between 2011 and It also presents key performance indicators. This publication also provides detailed historical data, giving users a broader picture of the evolution of the insurance market in the OECD countries over the years. It covers major official insurance data from 2005 to The publication contains important insurance market indicators (e.g., OECD market share, penetration, density, premiums per employee, etc.), as well as data on insurance activities (number of companies, number of employees, gross premiums, etc.). The scope of data collection also includes gross claims payments, gross operating expenses and commissions. Key findings on recent trends Trends in insurance markets continued to be mixed across countries in 2012, reflecting different economic and financial situations, competitive environments, and levels of development. Insurance markets in some countries continued to feel the effects of the financial and economic crisis. The adverse macroeconomic environment low growth, high unemployment rates, economic uncertainty and austerity measures andcompetitive pressures led to continued negative real premium growth in the life and non-life sectors in these countries. In some cases, tax measures on insurance were imposed. By contrast, premiums continued to register growth in other countries, particularly in emerging market economies in Asia and Latin America, as well as some developed 9

12 EXECUTIVE SUMMARY countries where growth was very robust. In a few developed countries, growth rebounded after a negative trend in earlier years. In the non-life insurance sector, the incidence and severity of disasters was reduced in comparison to 2011, although several major events did occur. Indeed, the level of insured losses in 2012 was such that it was the third costliest year on record after 2005 and Insurers have sought to respond to the costs of disasters through increased pricing, an effort that in some countries has reflected attempts to offset increased reinsurance pricing. Heightened competition in motor insurance markets, typically one of the largest segments within the non-life sector, continued in many countries, leading to lower premium rates. This environment, while beneficial for consumers, has raised issues in some countries regarding pricing adequacy and profitability of the sector. Given the constrained environment in the non-life sector and current price competition, the industry in many countries has focussed on generating pure underwriting profit. This has entailed cost-cutting and the development of new distribution channels and marketing strategies. The low interest rate environment continues to present challenges for the life insurance sector: it affects the ability of the sector to offer savings products with competitive interest rates; it renders the provision of explicit or implicit yield guarantees on long-term savings products more costly; and it makes it more difficult for life insurers, with their generally large holdings of fixed-income assets, to earn adequate returns in relation to their obligations. While the industry has largely been able to withstand pressures, the negative impact could increase should the low yield environment prolong itself. Some countries have been less affected by this trend, for instance where yield guarantees are not provided or where yields on domestic government debt are higher. Furthermore, and more specifically, due to persistent market volatility and low interest rates, variable annuity providers have, in some countries, engaged in de-risking their portfolios. The cost of providing financial guarantees is posing challenges to all insurance firms with any form of investment guarantee, not just variable annuity writers. Competitive pressures from the banking sector and other parts of the financial sector for savings and investments, as well as demand for liquidity given the difficult economic circumstances, have served to highlight lapse risk as a risk for the life sector in some countries. In some countries, banks have started to reduce deposit interest rates, which have eased pressures. Sovereign risk remains an important risk for the insurance industry given the large exposure of the sector to government debt due to their portfolio holdings. However, this risk abated somewhat in 2012 given the efforts made to ensure the solidity of the Eurozone. For the sector as a whole, many countries have reported that there is limited or reduced innovation. Insofar as there has been innovation, the trend has been to avoid longterm commitments. The insurance sector, it is reported, appears to be following a survival strategy as opposed to developing new types of products. Many countries have reported their efforts to modernise their solvency regimes, and have noted the positive effects of these reforms on insurer governance and risk management. These developments may thus serve to support the resilience of the sector going forward. 10

13 COMMON DEFINITIONS AND NOTES Common definitions and notes Notes on data sources All the data in the statistical tables of each country have been reported by the relevant national insurance authorities. Regarding comparative tables of indicators, the data are mainly drawn from the tables by country. The economic data on exchange rates, population and GDP are taken from the OECD publication Main Economic Indicators. To achieve greater clarity, the number of variables selected and displayed in this publication has been limited. Data have been extracted from the Global Insurance Statistics Database. The complete database can be accessed online at the following link: OECD Insurance Statistics, A significant effort has been made to achieve comparability among countries. Definitions, classifications, calculation methods, and units have been standardised as far as possible. General notes a) and non-life categories follow the definitions used in national law. However, the premiums for accident and sickness insurance underwritten by companies should be included in non-life figures. b) Up until 2008, the insurance business is broken down between life and non-life business. As of 2009, the insurance business is broken down between the business of pure life, pure non-life and composite undertakings and composite undertakings business is further broken down between life and non-life business. Some countries do not allow for insurance undertakings to be active in both life and non-life insurance business and therefore composite insurance undertakings do not exist in these countries. In other countries (e.g., Austria, Belgium, Hungary, Italy, Mexico, Portugal, Spain) however, the share of employment in composite insurance undertakings accounts for more than half of the whole domestic insurance sector. Therefore, to have comparable data across years for life business data (respectively non-life), one has to sum up the life (respectively nonlife) business of pure life (respectively non-life) undertakings and the life (respectively non-life) business of composite undertakings as of c) Figures provided for the number of companies and for insurance premiums should include all insurance companies licensed or authorised in the reporting country, 11

14 COMMON DEFINITIONS AND NOTES including professional reinsurers, whether or not these are controlled, but excluding any statutory system of social security administered by the State. d) Domestic companies means those companies incorporated under national law, together with those companies in the reporting country which are unincorporated, but excluding the branches and agencies of foreign companies. e) Foreign-controlled companies means those domestic companies controlled by foreign interests, such control being defined according to national law (see the definition of foreign controlled companies in notes by country). The data of foreign-controlled companies are part of those of Domestic companies. f) Foreign companies means companies incorporated outside the reporting country. Insurance market trends Notes on country data This chapter is based on the first phase of responses provided by countries on results from the 2013 Global Insurance Statistics (GIS) exercise (base year: 2012), including qualitative information supplied by countries or sourced from national administrative sources. Given possible divergences in national reporting standards, different methods for compiling data for the GIS exercise, and recent amendments to the OECD statistical framework, caution needs to be exercised in interpreting the data. For this reason, countries are regularly requested to provide methodological information relevant for developing a thorough understanding of their submissions to the Global Insurance Statistics exercise. The country-specific methodological notes below provide some explanations in this respect. Economic data on exchanges rates and the Consumer Price Index (CPI) in countries come from the OECD s Main Economic Indicators (MEI) Database. As per the OECD GIS framework, data normally refer to direct business and include domestically incorporated undertakings (i.e., incorporated under national law) and, where data is available, the branches and agencies of foreign undertakings operating in the country. Some countries, particularly within the EU member states, may not be able to exclude the foreign branches of domestic undertakings. Therefore, data for those countries may include these foreign branches (particularly branches established within the EU). Composite undertakings operate in a number of countries, as shown in Annex C of this publication. Australia changed the reporting framework from a written premium concept to an earned premium concept as of July Given the change in the reporting basis, gross and net earned premiums are used instead of written premiums. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Data on composite insurers from Italy and Portugal include life insurers operating also in accident and sickness line of business. Data from Japan reflect fiscal year instead of calendar year. 12

15 COMMON DEFINITIONS AND NOTES Data from Malaysia cover global business (within and outside Malaysia) including Takaful insurance. Notes on indicators a) The combined ratio is calculated in this chapter as the sum of gross claims payments, changes in outstanding claims provision, gross operating expenses, and gross commissions divided by gross written premiums. i.e., Combined ratio = Loss ratio + Expense ratio, where: Loss ratio: (gross claims paid + changes in outstanding claims provision)/gross written premiums (the latter used as a proxy for gross earned premiums); and Expense ratio = (gross operating expenses + commissions)/gross written premiums. The combined ratio is used in analysing the underwriting performance of insurance companies, especially for non-life insurance where the risk exposure is short-term generally one year. The use of the combined ratio for long-term business such as life insurance is of limited use only. Due to limitations in OECD data, it is not possible to calculate the combined ratio using earned premiums and claims incurred data, which would provide a more accurate depiction of underwriting performance. b) Asset allocations refer to direct business and domestically incorporated undertakings only. Data exclude assets linked to unit-linked products. Part I This part consists of tables by key figures and indicators, which reflect the most significant characteristics of the OECD insurance market. In most cases, the tables contain data of all OECD countries as well as aggregated OECD, European Union (15 countries) (the 15 member countries of the European Union in 1995) and NAFTA data from 2005 to 2012, for the following categories: life insurance, non-life insurance and total. Unless otherwise specified, figures given in this part for the life (respectively non-life) sector include the life (respectively non-life) business of composite undertakings. The premiums amounts are converted from national currencies into US dollar. Exchanges rates used are end-of-period exchanges rates for all variables valued at the end of the year, and periodaverage for variables representing a flow during the year. Some of these indicators are also shown in the graphs. 1. Balance sheet and income (Tables 1to3) The balance sheet and income table gathers key items in the direct insurance business, such as Gross claims paid, Outstanding claims provision, Gross operating expenses and Commissions in Portfolio allocation (Tables 4to6) This item shows the breakdown of investments of direct insurers into main asset classes (real estate, mortgage loans, shares, bonds, loans other than mortgage loans, other investments) in 2012, excluding assets linked to unit-linked products sold to policyholders. These data include only outstanding investment by all direct insurance companies (domestic and foreign undertakings) in the reporting country; investments by reinsurance companies are not included. The evaluation method for investment is defined by each country. 13

16 COMMON DEFINITIONS AND NOTES 3. Gross Premiums (Tables 7to9) Gross premium, which represents total insurance premium written in the reporting country, is a major indicator of the importance of insurance industry in the economy of each country. 4. Market Share in the OECD ( Gross Premiums Basis) (Tables 10 to 12) This indicator measures the importance of the national insurance market of each OECD country as compared to the whole OECD insurance market. 5. Density of Insurance Industry (Tables 13 to 15) This indicator is calculated by dividing direct gross premiums by the population and represents the average insurance spending per capita in a given country. 6. Penetration of Insurance Industry (Tables 16 to 18) This is the ratio of direct gross premiums to Gross Domestic Product (GDP), which represents the relative importance of the insurance industry in the domestic economy. 7. Insurance Share (Table 19) This is the ratio of gross life insurance premium to total gross premium, which measures the relative importance of life insurance as compared to non-life insurance. 8. Premiums per Employee (Table 20) This indicator of the relative efficiency of a national insurance industry is calculated by dividing the direct gross premiums by the number of employees in insurance companies. 9. Retention Ratio (Tables 21 to 23) This is the ratio of net written premiums to total gross premiums. This ratio represents the proportion of retained business and thus, indirectly, the importance of reinsurance for insurance companies. 10. Ratio of Reinsurance Accepted (Tables 24 to 26) This is calculated by dividing reinsurance accepted by total gross premiums and provides an indication of the significance of reinsurance accepted in the national insurance market. 11. Foreign Companies Market Share in the Domestic Market (Tables 27 to 30) This figure describes the importance of foreign companies in the domestic insurance market and is measured through the following indicators: a) Market share of foreign-controlled companies and branches and agencies of foreign companies in total gross premiums. b) Market share of branches and agencies of foreign companies in total gross premiums. Figures for the life (respectively non-life) business include the pure life (respectively nonlife) undertakings and the life (respectively non-life) business of composite undertakings for all the tables in Part I, except for the balance sheet and income of insurance undertakings (Tables 2and3) and their portfolio allocation (Tables 5and6) where the composite sector is excluded, as the split between life and non-life business in composite undertakings is not always available. 14

17 COMMON DEFINITIONS AND NOTES In Tables 7, 10, 13, 16, 21 and 24, the total (life and non-life) may not be equal to the sum of the life and non-life figures if the split for the composite sector is not provided. In this case, no assumption is made about each branch of the composite sector (life and non-life) and the composite part is not included. However, in the total, the aggregate for composites is included. The figures for the three zones ( European Union, NAFTA and OECD ) displayed at the bottom of some tables are calculated for the countries for which information is available. Part II In this part, the main insurance statistics are presented through separate tables for each country. Figures refer to the calendar year. The premiums and other amounts are described in millions of the national currency unit. Premiums are defined as follows: a) Gross premiums are total premiums written, excluding any premium taxes or other charges, but before deduction of commission or reinsurance outwards. It is acknowledged that the inclusion of reinsurance will mean that there is some element of double-counting in the figures provided. Gross premiums are the sum of premiums of direct business and premiums of reinsurance accepted. b) Premiums ceded include all premiums (reinsurance and retrocessions) ceded. c) Normally Net written premiums should equal total Gross premiums less Premiums ceded. If there are special problems in the reporting country which prevent this relationship an appropriate compensatory element should be then included under Premiums ceded. The tables of each country contain the following parts: 1.1. Business written in the reporting country on a gross, ceded and net premium basis in all insurance undertakings. The gross written premiums are then shown in terms of foreign risks, and broken by main life and non-life classification. The life classification is based on the type of contracts: unitlinked, annuities and other life insurance contracts. The precise definitions used for the non-life insurance classification can be found out in Annex B: Definitions of classes of non life insurance. In this classification, the category Treaty Reinsurance is used by countries having difficulty in breaking down Reinsurance Accepted by classes. 1.2, 1.3, 1.4. Gross claims payments, commissions and gross operating expenses in the reporting country, containing a breakdown between domestic companies, foreign-controlled companies and branches and agencies of foreign companies, and by type of sector ( pure life, pure non-life, composite and the split into the life and non-life parts). Gross claims payments, covering all gross payments on claims made during the financial year, are to be used in the calculation of gross claims incurred. Commissions refer to direct business only. Gross operating expenses should normally mean the sum of acquisition costs, change in deferred acquisition costs and administrative expenses Gross premiums written abroad classified by subsidiaries, branches and agencies of domestic companies, and by sector ( pure life, pure non-life, composite and the split into the life and non-life parts). Business written abroad should include all business written outside the reporting country (in both 15

18 COMMON DEFINITIONS AND NOTES OECD and non-oecd countries) by subsidiaries, branches and agencies established abroad of domestic companies. 2.1, 2.2. General information on number of insurance companies and employees within the sector: a) This part provides information about the number of companies and employees in the reporting country. b) Composite: Company which deals with both life and non-life business. c) Insurance companies: Staff (full-time or part-time) employed in the insurance industry. d) Intermediaries: Number of persons (brokers or agents and their staffs), excluding intermediaries who may sell insurance but are not directly involved in the insurance industry (e.g. bank managers, solicitors, garage owners) or those included under c) above. Additional information In Annexes, complementary information is presented: A) Table: Business written abroad by EU/EEA insurers through Branches and Agencies, B) Definitions of Classes of Insurance This includes definitions of categories of non-life insurance, which detail the content of classes listed in the Section insurance payments, by class, gross premiums of the tables by country. C) Composite undertakings This table specifies in which countries composite undertakings operate. D) List of administrative sources This table gives the lists of the national insurance authorities that provided the data displayed in this publication. 16

19 OECD Insurance Statistics 2013 OECD 2014 Insurance market trends Underwriting performance insurance markets continued to contract in real terms in a large number of countries, with some countries experiencing a further downward trend. Meanwhile, other countries saw continued premium growth or witnessed a reversal from earlier negative growth premiums continued to contract significantly in a large number of countries, principally within the European Union. The poor macroeconomic environment and economic uncertainty appear to have dampened demand for life insurance (including unit-linked products), although competition from the banking sector also served to constrain growth. The greatest decline was experienced in the Netherlands which witnessed a large decline in life premiums. This negative trend, driven by declining sales, could be observed for both annuities as well as unit-linked products. In Hungary, the negative growth in life premiums turned more sharply negative in In Spain, premium growth in the life sector turned negative. This decrease was caused by the economic and financial crisis that increased the policy lapse rate in savings insurance. Premiums in traditional life business and unit-linked insurance fell. The fall in the life premiums in France can be explained by the competition of other saving products, which have reached very similar interest rates, and the household preference for short term financial investments in a context of economic uncertainty. In Greece, there was a continued, and increased, contraction of gross written premiums in the life sector. This drop in premiums was the most significant since the beginning of the financial crisis. This downward trend, found also in the non-life sector, is due to the impact of the financial crisis on the real economy, which has led to a downward pressure on wages and salaries, increased taxation, high unemployment levels and continued recessionary conditions in Greece. In Austria, the downward trend in real premium growth continued. The proportion of premiums from unit and index-linked life insurance products continued to decline. In Italy, the negative trend in premiums was confirmed in 2012, although there were signs of recovery the decline in growth was less severe than was the case in risk insurance products displayed negative premium growth as did capital redemption products; by contrast, unit and index-linked products experienced premium growth, reversing the declines experienced in In Portugal, the negative trend in premium growth moderated in comparison with the sharp drop in premiums in Australia experienced a reversal of growth in the life insurance sector, mainly due to a decrease in premiums for investment-linked products. The growing popularity of selfmanaged superannuation funds and industry superannuation are capturing this market. 17

20 INSURANCE MARKET TRENDS By contrast, life risk insurance premiums grew, although this growth was driven materially by contractual age and inflation adjustments. In the Czech Republic, premium growth also continued to be negative, reflecting continued stagnation in the life sector. The negative trend in 2012 was due especially to the large amount of single premium contracts, which expired. Similarly, in Slovenia, premium growth continued to be moderately negative, with for instance declines in premiums in unit-linked business. Real growth was experienced in the life insurance class. In the Slovak Republic, growth in gross written premiums in the life sector continued to be moderately negative, with slow growth experienced in unit-linked insurance and assistanceinsurance.positivetrendscouldbefoundinnewbusinessinalllinesoflife insurance, with the exception of pension insurance. By contrast, there was very strong growth in gross written premiums in the life sector in Chile, Korea and Luxembourg. In Chile, during 2012, this increase was coupled with fewer administrative costs. Significant growth was experienced in other Latin American countries. Costa Rica experienced growth due to maturing domestic insurance markets. In the accident and life insurance sector, the maturing of the markets was enhanced by the recent opening of the insurance market to competition. In Colombia, premiums grew due to growing employment, which favoured demand for coverage of professional risks, group life insurance, and health and accident insurance. In Peru, the sizable increase in total volume of premiums was due largely to increased pension insurance. In Hong Kong (China) and Malaysia, premiums grew substantially for both new and inforce life business. In Hong Kong (China), new insurance business comprised, for a large part, non-linked life insurance business. For in-force business, significant growth was observed in individual life and annuity (non-linked) business and retirement scheme insurance business. In Belgium, life insurance premiums experienced a rebound, reaching their highest level since 2007 and reversing the negative real growth seen in 2011, when premiums levels fell to levels last seen in While this development appears to be related to renewed growth in investment-linked products, most of the growth likely stemmed from anticipation by households of the tax increase on the savings and investment classes of life insurance, which was set to take effect on 1 January This surge in premium growth echoes the pattern found in 2005, when premiums rose sharply in anticipation of a tax and then fell back. In Poland, there was strong real growth in life insurance premiums, reversing the decline registered in Strong growth was experienced in life insurance and unit-linked insurance, or more specifically to increased sales of investment-type products and structured products. In Mexico, premium growth remained strong in the life sector. This growth is primarily explained by the increase in sales of insurance products with a saving component, which include products in traditional life insurance as well as annuities products. In the United States, written premiums generally increased across the board, with growth due primarily payments made into annuities and life insurance revenues. In Iceland, premium growth turned positive in 2012, with the main source of growth coming from traditional term life insurance. 18

21 INSURANCE MARKET TRENDS Figure 1. Annual real gross premium growth: sector, In per cent Selected OECD countries Luxembourg Korea Chile 1 Norway Belgium 1 Poland 1 Ireland Mexico 1 United Kingdom Israel 1 United States OECD weighted average Japan Denmark 1 Switzerland OECD simple average Iceland 1 Germany 1 Slovak Republic Slovenia 1 Czech Republic Sweden 1 Finland 1 Canada Estonia 2 Turkey Australia Italy 2 Portugal 2 Austria Greece France Spain Hungary 1 Netherlands Selected African and Asian countries Malaysia Indonesia Hong Kong (China) South Africa 3 Singapore Selected Latin American countries Costa Rica Uruguay Brazil Colombia Nicaragua El Salvador 3 Peru 1 Guatemala Puerto Rico 1, 4 Panama Note: Premiums refer to gross written premiums for direct insurance only, excluding reinsurance business accepted. Given OECD classification standards, life data does not include accident and health insurance. Real growth rates are calculated using the Consumer Prices Index (CPI) from the OECD s Main Economic Indicators (MEI) and other sources. All OECD reporting countries have been included in the calculations of the simple and weighted averages. 1. Data refer to domestic undertakings only and do not take into account branches and agencies of foreign undertakings. 2. Data refer to undertakings subject to domestic undertakings and branches of insurance undertakings with head office outside EU or EEA countries. 3. Data include reinsurance business accepted. 4. The growth rate is not expressed in real terms but in nominal terms. 5. The split of premiums between the life and non-life segment for composite undertakings in 2011 is assumed to be the same as the one in Source: OECD Global Insurance Statistics. While premiums in the non-life sector enjoyed substantive growth in a wide range of countries, particularly emerging markets, they continued their downward trend in other countries owing to the effects of the financial and economic crisis and heightened competition In Greece, gross written premiums continued to contract, and more severely than was the case in This result was due to the fall in written premiums in motor third party liability insurance, the dominant line of business in the non-life sector, and due to a further 19

22 INSURANCE MARKET TRENDS significant negative decrease in the other non-life classes. The falling number of vehicles in circulation, due to the effects of the financial crisis and austerity programme, is accounting for the drop in motor insurance. In Hungary, the negative trend in non-life gross premium growth continued, driven mainly by motor insurance (including third-party liability). Premium growth in motor insurance has been falling since 2007 due both to decreased underlying risks and increased competition. In 2012, an Accident Tax on compulsory motor liability insurance policies was introduced. In other lines of non-life insurance, premiums have been growing but at less than the rate of inflation. In Portugal, the level of gross written premiums continued to shrink in real terms. Premium levels in workers compensation insurance and, to a lesser extent, motor vehicle insurance were also impacted. The decrease reflected the macroeconomic environment and the fiscal situation. Similarly, in the Slovak Republic, the downward trend in gross written premiums continued in The decline in non-life insurance was caused primarily by a sharp fall in premiums in motor insurance and property insurance. In the Netherlands, premiums declined in real terms. The introduction of tax-efficient bank saving (banksparen) and the fall of confidence in the life sector caused a downward trend in the sales of new policies, which has dropped dramatically. In the Czech Republic, real gross premium growth in the non-life sector continued to be negative. Strong competition within the motor insurance market, which compressed premium levels, was largely responsible for this slowdown. In Slovenia, premium growth continued on a negative trend, with substantial declines evidenced for instance in motor third party liability insurance, with premiums falling due to increased competition in the motor insurance market. Land motor vehicle insurance also witnessed a decline in premiums. Strong growth in non-life premiums was, by comparison, experienced in a large number of reporting Asian, European and Latin American insurance markets. Within Asia, strong growth was witnessed in Singapore and Hong Kong (China). In Hong Kong (China), the driving force behind the increase in non-life insurance premiums was notably an increase in the general liability business (including employee compensation business), and accident and health business. In Europe, in Belgium, premium growth reflected, in part, efforts by insurers to improve profitability, which involved raising premium levels, improving cost controls, and tightening underwriting terms for certain loss-making insurance products. In Latin America, Brazil, Colombia, Costa Rica, Cuba, Nicaragua, Peru and Uruguay achieved strong premium growth. In Colombia, premium growth was linked to increased sales of motor insurance. In Costa Rica, growth in vehicle, fire and other property damage and accident, sickness and life insurance products remained stable; however, there was growth in accident and sickness insurance. In Peru, growth within the non-life market was driven by school and health insurance and fire and motor insurance. In Canada, there was robust growth in property and casualty insurance. Direct premium growth was strongest for motor vehicle, fire and property insurance and other classes of insurance. Although the general trend for non-life insurance in Canada was one 20

23 INSURANCE MARKET TRENDS of growth, there was a slight decrease in growth in transport insurance and accident and sickness insurance. In Australia, premium growth strengthened in Most of this increase was driven by householders and fire and industrial special risk property insurance classes. In particular, personal and commercial property classes saw increases in real premiums as insurers sought to pass on the higher costs of reinsurance following the disaster events of late 2010 and early By contrast, premium growth in long tail classes of non-life insurance continued to be more subdued. In Mexico, premiums grew at a reduced rate in comparison with 2011, owing to the effects of the PEMEX insurance policy, a large multi-year insurance policy. Real growth would otherwise have been more than double the registered real growth. Mexican non-life insurance direct premiums increased particularly due to growth in property and casualty insurance, automobile insurance and health and accident insurance. In the United States, the positive trend in premium growth continued, due to improved economic conditions and higher premium rates, particularly in the commercial market, led by increased pricing in workers compensation insurance. The non-life insurance sector in Switzerland posed robust premium growth. There was a strong increase in fire and property claims with robust construction and a stable economic environment and population growth in Switzerland. Within the motor vehicle industry there was an increasing number of vehicles which led to growth in automobile insurance. In Poland, there was a continued upward trend in premiums in the non-life sector. Market growth was driven mainly by motor third party liability insurance, primarily due to increased pricing. Premium increases also occurred in other third party liability insurance as a result of the introduction of new third party liability insurance products. Growth was also experienced in other physical damage insurance due to the growing number of insurance agreements being concluded. In Iceland, growth in written premiums turned positive in 2012, with strong growth exhibited in the property class of insurance. Motor insurance also grew in terms of written premiums. Claims development Claims development in the life segment was relatively more subdued in 2012 in comparison with Among reporting countries, aside from Luxembourg, countries in Latin America saw the largest increases. Colombia, Costa Rica, Uruguay and Nicaragua all experienced large increases in claims paid (in the per cent range). In Colombia, the largest increase in claims was found in professional risk coverage. The growth in claims payments in Mexico was less strong; it was due to increased claims in traditional life insurance and annuities. In Greece, despite the increase in life surrenders, there is no evidence of a run on insurers. In Slovenia, the increased claims can be linked to an increase in claims of capital redemption policies and outflows from unit-linked products. In the Slovak Republic, there were slight increases in claims due to policy surrenders. There was also an increase in the number of insured who survived beyond the projected age. Portugal saw a large decline in claims payments, following a high level of growth in

24 INSURANCE MARKET TRENDS Figure 2. Annual real gross premium growth: sector, In per cent Selected OECD countries Korea Turkey Ireland Norway Estonia 1 Canada Chile 2 Australia Belgium 2 Israel 2 Mexico 2 United States Germany 2 Switzerland OECD weighted average France Poland 2 OECD simple average Denmark 2 Iceland 2 Austria Netherlands Finland 2 Slovenia 2 Luxembourg Czech Republic United Kingdom Spain Slovak Republic Italy 1 Portugal 1 Hungary 2 Greece Sweden Selected African and Asian countries Singapore Indonesia Hong Kong (China) Malaysia South Africa Selected Latin American countries Colombia Cuba 4 Uruguay Nicaragua Costa Rica Peru 2 Brazil Panama 5 El Salvador 3 Puerto Rico 2, 4 Guatemala Note: Premiums refer to gross written premiums for direct insurance only, excluding reinsurance business accepted. Given OECD classification standards, non-life data includes accident and health insurance. Real growth rates are calculated using the CPI from the OECD s MEI and other sources. All OECD reporting countries have been included in the calculations of the simple and weighted averages. 1. Data refer to undertakings subject to domestic undertakings and branches of insurance undertakings with head office outside EU or EEA countries. 2. Data refer to domestic undertakings only and do not take into account branches and agencies of foreign undertakings. 3. Data include reinsurance business accepted. 4. The growth rate is not expressed in real terms but in nominal terms. 5. The split of premiums between the life and non-life segment for composite undertakings in 2011 is assumed to be the same as the one in Source: OECD Global Insurance Statistics. In the non-life sector, Chile experienced the greatest increase in claims paid. Other notable increases could be found in Sweden, and Turkey. There was strong growth in insurance claims in Latin American countries, for instance in Brazil, Colombia, Costa Rica, Cuba, El Salvador, Peru, Nicaragua and Uruguay. In Nicaragua, there was significant growth in claims for motor insurance as well as for fire and related insurance; moreover, claims for other commercial insurance registered increases. Peru experienced growth in claims payments in fire insurance, motor insurance, civil liability insurance and accident and sickness insurance lines. In Colombia, the largest increase in claims was registered in motor insurance. 22

25 INSURANCE MARKET TRENDS Figure 3. Nominal growth in gross claims payments: sector, In per cent Selected OECD countries Luxembourg Netherlands Chile Czech Republic Sweden Spain Iceland Slovenia Belgium Norway Slovak Republic Denmark Israel Mexico 1 Greece Finland Turkey United Kingdom Canada 1 France 2 Australia United States Italy 3 Japan Korea 1 Hungary Poland Estonia 3 Ireland Austria Switzerland Germany Portugal Selected African and Asian countries Indonesia Singapore 1 Malaysia South Africa Selected Latin American countries Costa Rica Uruguay Nicaragua Colombia Brazil Guatemala Puerto Rico Peru El Salvador Panama Note: The claims payments indicator includes variations in outstanding claims provisions to reflect better the magnitude of the obligations that the industry had in 2012 as a result of insured events that occurred. 1. Outstanding claims provision changes are not taken into account in this chart. 2. Claim payments of the composite undertakings are not included, as the breakdown by type of sub-sector (life, non-life) is not available. 3. Data refer to undertakings subject to domestic undertakings and branches of insurance undertakings with head office outside EU or EEA countries. 4. The split between each segment (life and non-life) of the composite undertakings of changes in outstanding provisions in 2012 is assumed to be the same as the split of gross claims paid in The split between each segment (life and non-life) of the composite undertakings of gross claims paid and changes in outstanding provisions in 2011 is assumed to be the same as in Source: OECD Global Insurance Statistics. In Asia, Indonesia, Hong Kong (China) and Singapore experienced sizable growth in the number of gross claims paid in the non-life insurance sector. The reporting countries which experienced the greatest decline in gross claim payments were Australia, Ireland and Luxembourg. In Australia, the lower severity of disaster events in 2012 led to a reversal of growth in claims, which was unusually high in In Switzerland, there was a strong increase in fire and property insurance claims which corresponded with continued robust construction activities, a stable economic 23