Estonia Insurance Report 2013
Business Monitor International, October 2012, Pages: 72
The Estonia Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Estonia's insurance industry.
There are many positive aspects to Estonia's insurance sector. Development has benefited from macroeconomic conditions over the long-term that have, in general, been more positive and stable than in Latvia or Lithuania. The regulator is effective and well regarded. The overwhelming majority of the activity is accounted for by local subsidiaries or branches of major multi-nationals. Examples include Swedbank Life Insurance, SEB Life & Pensions International and Mandatum Life in the life segment, RSA, Seesam, Gjensidige and If Property & Casualty in the non-life segment, and ERGO and Vienna Insurance Group (VIG – through its Compensa operation) in both.
In the non-life segment, a key development through H112 is that the non-life segment has returned to double-digit growth in terms of premiums. This has been substantially the result of higher premiums for compulsory motorists' third-party liability (CMTPL) cover and various property insurance lines. In addition, technical results have improved, thanks to lower claims and expenses. As is the case in Latvia and Lithuania, non-life companies have been investing heavily in market research and new systems
(especially for handling of claims) in order to lift their service levels.
However, there remain a number of causes for concern. One is that the growth has been driven entirely by a (sharp) rise in CMTPL and property contracts in force. Price competition, long the bane of non-life insurance companies in Estonia, remains intense. The numbers published by the regulator in relation to H112 suggest that pressure on prices and rates for motor CASCO insurance has also been in a downwards direction. The fundamental problem remains excess capacity. In early 2012, QBE took the view that it would focus on opportunities in other markets and placed its Estonian operation into run-off: an arrangement was made with RSA whereby that insurer, the largest non-life underwriter across the Baltic states, may approach QBE's former clients. It is possible that other multi-nationals are reconsidering their commitment to the non-life market.
In the life market, the main problem is one of stagnation. The data suggests to us that more or less all Estonians who appreciate the benefits of life insurance and who have the means to buy it are using it.
(Interestingly, supplementary life insurance contracts – which are mainly accident insurance riders –
account for about 45% of all in-force contracts.) Through H112, premiums for unit-linked products have continued to fall by around 30% (as they did through 2011). As is the case elsewhere in the Baltic states,
policy holders suffered as a result of the volatility in financial markets. However, the contraction in unitlinked premiums has been offset by growth elsewhere. Another development over the last year has been an improvement in technical results of the life insurance companies.
In spite of the fairly uninspiring prospects for Estonia's life segment, we would be surprised if any of the players followed the lead of QBE in the non-life segment and sought to leave. The reason for this is that,
to a greater extent than most of the non-life companies, presence in Estonia is essential to the life companies' general strategies for greater Scandinavia (for want of a better phrase) or Central and Eastern Europe. The details, of course, differ from company to company.
In this report we have incorporated:
- BMI's latest forecasts for the Estonian economy.
- Official data, published by the regulator in relation to developments in the sector through H112.
- Comments from several of the leading players in relation to conditions in late 2011 and H112.
Executive Summary 5
Table: Total Premiums, 2010-2017 5
Key Insights And Key Risks 5
SWOT Analysis 7
Estonia Insurance Industry SWOT 7
Estonia Political SWOT 8
Estonia Economic SWOT 8
Estonia Business Environment SWOT 9
Life Sector Overview 10
Central And Eastern Europe Life Sector Overview 10
Table: Central And Eastern European Life Premiums, 2010-2017 (US$mn) 10
Estonia Life Sector Update 13
Life Industry Forecast Scenario 14
Table: Life Premiums, 2010-2017 14
Growth Drivers And Risk Management Projections 14
Population 14
Table: Insurance Key Drivers, Demographics, 2010-2017 15
Non-Life Sector Overview 17
Central And Eastern Europe Non-Life Sector Overview 17
Table: Central And Eastern European Non-Life Premiums, 2010-2017 (US$mn) 17
Estonia Non-Life Sector Update 20
Non-Life Industry Forecast Scenario 22
Table: Non-Life Premiums, 2010-2017 22
Growth Drivers And Risk Management Projections 22
Macroeconomic Outlook 22
Table: Estonia Economic Activity 25
Political Stability Outlook 25
Healthcare 26
Healthcare Insurance 27
Table: Reimbursement Spending By Key Therapeutic Area, 2010-2011 (EURmn) 28
Table: Medicinal Products Reimbursed For Insured Patients, 2009-2011 (EURmn) 29
Table: Healthcare Expenditure By The HIF, 2006-2011 (EURmn) 30
Epidemiology 30
Table: Insurance Key Drivers, Disability-Adjusted Life Years, 2010-2017 31
Motor 32
Insurance Risk/Reward Ratings 34
Table: Estonia's Insurance Risk/Reward Ratings 34
Table: Central And Eastern Europe Insurance Risk/Reward Ratings 35
Competitive Landscape 36
Competitive Landscape Analysis 36
Major Players In Estonia's Insurance Sector 37
Estonia Insurance Report 2013
© Business Monitor International Ltd
Page 4
Company Profiles 39
BTA Insurance Company SE 39
ERGO 41
Gjensidige Baltic 44
QBE Insurance Group 46
RSA 49
Salva 52
Sampo Group (P&C and Mandatum Life) 54
SEB Life & Pension International 57
Seesam 59
Swedbank Life Insurance 61
Vienna Insurance Group 63
BMI Methodology 67
Insurance Risk/Reward Ratings 69
Table: Insurance Risk/Reward Indicators And Rationale 70
Table: Weighting Of Indicators 71
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