Insurance companies in Hungary have experienced changes that are clearly the result of a struggling economy and a looming double-dip recession.
Investment-linked insurances seem to dominate the market: companies have collected 68% of life insurance revenues from this type of insurance. This also reflects the fact that in a shaky situation such as the present crisis, people favor investments over protection. However, the abolition of tax rebates for life insurance policies has prompted many people to instead invest in private pension funds. Companies that are strong in life insurance are also suffering from uncertainty due the government’s FX loan repayment scheme.
The non-life insurance segment registered a HUF 14 billion, or 5%, decrease in the third quarter, as a result of declining casco and mandatory third-party liability insurance revenues.
Not only households have been cautious with investments: companies have needed to tighten their belts as well. Firms have taken fewer and less comprehensive insurance policies, thus revenues from corporate property insurance has also dropped. The fact that multinational corporations are insured through their parent companies – creating income for insurers based abroad – and that Hungarian SMEs have limited financial possibilities have not helped either.
The prospects for the future are not good in general, but there are some positives changes that may help the market recover. According to a recent government ruling, accident and health insurances will be exempt from tax if the employer deducts them. The popularity of this new ‘cafeteria element’ obviously depends on the support of companies.
In terms of the players on the insurance market, no significant changes have taken place. The market shares of major companies in all segments are likely to remain the same as a year ago, with Allianz, Generali-Providencia and Groupama leading both the life and the non-life segment. Only one new player entered the market this year: CIG Pannónia, a life insurance company founded in 2007, which has began selling non-life products, too.
