Expanding Insurance Sector Signals Economic Growth
The Hungarian insurance sector saw a record year in 2017, shattering the glass ceiling of a historic figure that dates back a decade. The expanding Hungarian economy means that people can spend more, own more, and therefore have more assets to insured. The growth of the insurance market therefore paints a rosy picture not only for the stakeholders active withit, but also for the entire national economy.
Premium revenues earned by the Hungarian insurance sector in 2017 reached almost HUF 1 trillion: according to the Hungarian Insurers’ Yearbook 2018, a publication issued by MABISZ, the association for Hungarian insurers, the exact number was HUF 989.6 billion.
Such a figure is truly hard to grasp. Considering the ongoing expansion to Hungary’s Paks nuclear plant, the insurance sector’s revenues account for approximately one-third of the giant energy investment, a truly spectacular amount in both cases. Furthermore, last year’s figure is a historic one, as it broke the previous record by more than HUF 50 bln, recorded exactly a decade ago, just before the full effects of the financial crisis kicked in.
The growth of the insurance sector is good not only for the businesses in the sector but also the whole economy, Dániel Molnos, general secretary of MABISZ, points out. “There are things to fear and there are funds to spend to secure what we want to protect,” he says, adding that the growth of the sector is very likely to signal that the last waves of the financial crisis passed.
Life Insurance Could do Better
Examining last year’s data more closely, though, it seems that people are more likely to secure their assets than their own selves. “At least, similarly to the last few years, the non-life business grew more dynamically than the revenues generated by life insurance, and the former has also exceeded the latter in volume, at an increasing rate, since last year,” Molnos says. The life insurance business did at least grow by 5%, compared to the preceding year, but it still represents a modest slice of the overall pie.
Excluding accident, health and travel insurance, the number of life insurance contracts were up by 1% at the end of last year than the preceding year. Pension insurance contracts recorded an 11.6% increase, non-life insurance contracts saw a 4.1% increase, the number of general liability insurance contracts went up by 20.1%, and agricultural insurance contract numbers grew by 15.5% (chiefly boosted by government measures). Despite the relatively small number of contracts, a significant 69.7% growth was seen in health insurance contracts.
Another indicator of a recuperating economy is that travel insurance is on the rise again, a clear indication that more people have money to spare on travelling. During the last year, more than HUF 12.5 bln revenues were generated by the travel insurance sector. The fact that there has been a further 17% growth of the segment in the first quarter of 2018, compared to the same period a year earlier, forecasts even further travel for this year, the MABISZ yearbook shows.
In May 2018, the Insurance Confidence Index (ICI) — a gauge launched by MABISZ to uncovering the confidence of households — stood at 52.6 points on a scale of 100, having steadily grown from 44.6 points in 2015, when the index was first measured.
Allianz Tops Market
According to data published by MABISZ, Allianz had the biggest market share in 2017, boasting 14.63% with a premium revenue of HUF 144.768 bln. Allianz has been on a steady growth path in recent years: its market share was 14.21% with a premium revenue of HUF 130.533 bln in 2016, and 13.76% with a premium revenue of HUF 119.556 bln in 2015.
In terms of market share in 2017, Generali had 13.32% with a premium revenue of HUF 131.838 bln, Groupama had 10.87% with HUF 107.525 bln, Aegon had 10.61% with HUF 104.98 bln and NN had 9.27% at HUF 91.688 bln.
According to MABISZ’s yearbook, the association had 29 members, one being a mutual insurance association registered in Hungary, 21 being insurance limited companies registered in Hungary and seven operating as branch offices. Only three businesses, operating as private limited companies are not part of the association.
Last year’s success is expected to continue, not only because the economy is performing better, but also because some government efforts offer a silver lining. The recently approved strategy for raising financial awareness with the intention of helping citizens become more aware and responsible, has received a warm welcome from the association.
“The emphasis on the importance of self-care is clearly stressed in the strategy, which is a great pleasure to us .… The prestige and acceptance of the insurance sector are increasing. We can and must rely on that,” Anett Pandurics, the president of the association says in the yearbook.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.