There are increases in car insurance premiums.

By Leonidas Stergiou

Big profits in the car insurance industry, smaller in the health sector and high demand for bank insurance products are the main points of the insurance companies’ report for the first 18 months of the pandemic.

From early 2020 to April 2021, lockdowns and travel restrictions due to the pandemic significantly reduced the number of accidents. This resulted in the creation for the first time in the vehicle insurance industry which is considered one of the traditional losers. According to insurance market executives, the main indicator that reflects the profit margin is the so-called loss ratio, which decreased to 50%, reaching 60-70%, along with commissions. During this period there was a sharp decrease in the number of accidents, but an increase in damage per accident, as the average vehicle traffic increased.

During this period, the competition, starting mainly with the smaller insurance companies, dropped the prices on the insurance policies. As the production of insurance premiums decreased, due to the immobility of the vehicles, the larger insurance companies also entered the discounts. Thus, it is estimated that the average reduction in vehicle insurance premiums since the beginning of the pandemic ranged in the territory between 15% -20%.

However, since the third quarter of 2021, there has been a sharp increase in vehicle traffic, with the latest data from insurance companies recording a significant reduction in average speed, to levels that tend to be lower than in 2019. Already, the number of accidents has increased to pre-covid levels.

This data puts pressure on insurance companies to proceed with increases in car insurance premiums in order to return at least to previous price levels. For this to happen, increases of at least 20-25% are required, which are estimated to be gradual. The biggest deterrent to delaying increases is the sluggish production of premiums.

According to data from the Association of Insurance Companies, in the nine months of January-September 2021, the production of insurance premiums in the automotive sector amounted to 531 million euros, recording an annual decrease of 1.9%. The estimates of the insurance companies predict that the sector will close with a larger reduction of 4%, with the production of insurance premiums hovering around 470-490 million euros.

Life branch

Restrictive and protective measures against coronavirus have also benefited the life sector in a twofold way. On the one hand, viral infections have been drastically reduced, resulting in significantly reduced hospitalizations. These are cases that would lead to hospitals either from the infection itself or from complications or prevention of complications (very young and old, heart patients, cancer patients, people with a burdened cardiorespiratory system and other diseases). At the same time, the pandemic raised awareness among more people and so there was an increase in premium production. Indicatively, in the nine months of 2021, the increase was over 14%, while in the year it is expected to rise higher, over 15-16%.

Bank insurance products

The conditions of low interest rates and zero yields on deposits and bonds, combined with the increase in savings due to the pandemic, led to the development of the banking insurance industry. According to market estimates and based on the results of insurance companies for the first half of the year, there are companies where the growth of bank insurance products exceeded 30%.

Thus, the insurance industry, as a whole, is expected to close in 2021 with profits and a significant increase in the production of premiums, close to 10%.