Europe’s insurance markets show recovery signs

Europe’s largest insurance markets have continued to show some signs of recovery, with many experiencing top-line growth, a new report by A.M. Best has shown.

According to the report, the increases in total gross written premium (GWP) come in general following a number of years of muted development and even decline, and there is a sense of optimism that this momentum will continue.

A.M. Best’s in-depth analysis of the key European markets shows Italy has experienced a second consecutive year of double-digit growth with a 20.7 per cent jump in total GWP in 2014. France posted a 6.1 per cent increase, while Germany recorded a more modest 2.7 per cent rise. Spain’s total premium volume fell by 0.4 per cent in 2014, although this was its smallest decline in three years and despite its continued contraction, the country’s insurance market remains very resilient and profitable.

In the same vein, French insurance market confirms recovery, yet challenges remain.

The market grew strongly in 2014, experiencing a 6.1 per cent rise in gross written premium (GWP) to EUR 200.0 billion according to data from the Fédération Française des Sociétés d’Assurances (FFSA), thereby accelerating the recovery observed in 2013.

The growth recorded in 2014 was driven by the dynamism of the life and savings segment, with GWP increasing by 8.4 per cent to EUR 128.8 billion, a sign of the solid recovery from the challenging years that followed the global economic crisis. In comparison, the health sector recorded a more modest growth of 3.2 per cent to EUR 20.1 billion, whilst the non-life segment remained relatively stable, recording GWP of EUR 51.1 billion, up two per cent compared with EUR 50.1 billion in 2013.

Whilst premium revenue continued to grow in 2015, the French insurance industry has not appeared as buoyant as in 2014, with GWP rising by four per cent in the first five months of the year compared to the same period in 2014.

This was again chiefly driven by the life and savings segment reporting a more normalised growth of five per cent over the period, whilst the health and non-life segments confirmed the trends observed in 2014.

A.M. Best considers the French insurance sector to remain solid, although it continues to face a challenging operating environment. The French market is indeed mature and remains highly competitive, with a total insurance penetration rate of 9.3 per cent compared to 6.6 per cent for Germany and 5.3 per cent for Spain.

Furthermore, the low interest rate environment continues to pressure insurers’ operating earnings and bonus rates credited to life products. Economic growth in France has been sluggish and remained below 0.4 per cent from 2012 to 2014 due to tighter fiscal policies and high unemployment of about 10 per cent.

However, the Organisation for Economic Co-operation and Development (OECD) expects growth to gain momentum in 2015 and 2016 as lower commodity prices and a weaker Euro should strengthen the demand for French goods and services.

source: The Nation