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Slovakia Insurance Report Q4 2011
Business Monitor International, Sep 2011, Pages: 69
Business Monitor International's (BMI) Slovakia Insurance Report (Q4 2011) provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Slovakia's insurance industry.
At the time of writing, in August 2011, what is not being said about Slovakia’s insurance sector is probably as important as what is being said. Unlike Hungary and Romania, for example, non-life premiums do not appear to be suffering as a result of downwards pressure on prices in auto-related lines. However, non-life premiums are not clearly growing in the way that they are in Russia or that they were in Poland in Q111. Similarly, life premiums are holding their own but are not growing as rapidly as they are in nearby Czech Republic.
In the non-life segment, one of the key changes in the last year or so is that non-life penetration appears to have stopped falling. There may have been intense competition in the past – particularly in the auto related lines that still dominate the non-life segment – but there is little evidence of this at the moment. The other key development is that profitability has improved, mainly as a result of a sharp fall in catastrophe claims in H111.
BMI forecasts life density to increase slowly and steadily through to the end of the forecast period. In this respect, the life segment’s expansion will be quite different to what it was prior to global financial crisis in late 2008 when density was raising quickly. Nevertheless, the strong growth of life insurance in the Czech Republic shows what can happen if it becomes central to households’ organised savings. For the life segment, the upside risks are significantly greater in Slovakia than the downside risks.
The Slovakian economy is very export-dependent and as such has been enjoying a good recovery in industrial production since early 2010 in response to economic recoveries taking place in its main trading partners in Europe, including Germany. As such, an economic recovery is under way in Slovakia, which should assist revenue in the insurance sector. However unemployment in Slovakia remains relatively high at 12.5% and with a more cautious consumer after the global financial crisis, the outlook for household spending is muted.
The corporate results available show that there was some recovery in the life segment in 2010, though overall revenue was only up by 2.2%. BMI expects pricing will stabilise in the non-life segment.
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