Safe indicators (source APS, Associação Portuguesa de Seguradores, except when others are indicated)
Evolução jan-set2020/jan-set2019
Conjuntura - GdP -4.71 Qt3 (Jun) / CPI + 0.041 Qt3 / Unemployment 7.31 Qt3
Production of the insurance sector - 23,3% / + 4.3% in Non-Life / - 43.3% in Life
activity in Portugal; written premiums, excluding reinsurance activity
O Life branch accounts for more than 50% of the sector's output. It is strongly influenced by capital allocation decisions by Banking, which accounts for more than 80% of this branch's production. This is largely made up of savings insurance (+85%). In view of the low interest rates of lower risk instruments, in recent years Banking has been focusing on alternatives other than insurance for placing the savings of households and investors. Already in 2019 Life had fallen by 13.8%.
It should be noted that in the case of Life Risk insurance, this grew by 3.6% up to September, compared to the same period in 2019.
For its part, the Non-Life branch is a more direct reflection of the country's economic activity, although with a time lag, given that large corporate contracts mature (or suffer adjustments) at the beginning of each year. It should be noted that we were coming from a positive 2019 in economic terms, which in turn reflected the even better environment of 2018, so last year the Non-Life sector evidenced the highest growth rate since 2004: 7.5%
Thus, despite the general drop in activity caused by Covid, the aforementioned lag, as well as a run on health insurance, allowed Non-Life production - which cooled sharply in the months of a more sluggish economy - to accumulate a positive balance sheet by 4.3% until September.
It should be noted that the indicators shown here refer to premiums issued and this year there is, unfortunately, a big difference between issued and actually collected (see in this issue "the Sector and Covid").
Health is the only branch that has been growing in the last decade, mainly due to effective demand, and regardless of the economic climate, driven by the less positive image of public Health that is so well publicised. Already in compulsory classes - Automobile and Occupational Accident -, in addition to the effect of the economy, growth has been strongly based on the increase in average rates that has been carried out by the sector in recent years, due to corrections to the profitability of each branch imposed by the European Solvency II Legislation.
The sharpest fall in production in the Non-Life business will occur in 2021...
Car
September 20/September 19
Production +5.8%
Loss Ratio -6.9pp
Motor is the largest segment of the Non-Life business, representing 39% of it and, after many years of continuous decline in the average premium*, in 2016 it began to reverse this trend at the expense of upward tariff corrections, especially in renewals. This reality and the greater demand for Property Damage (fear of vandalism...), allowed the branch to show growth, in the ballast of the 7% recorded in 2019 compared to 2018.
* The average premium has fallen from approx. EUR 340 in 2006 to around EUR 210 after a decademainly due to unbridled competition in the sector
The overall claims rate for the branch is down again, now significantly, due to the "paralisation" of the country during the months of confinement. The % of vehicles without claims will make it possible for the next renewals to enjoy a reduction of the price by Bonus/malus.
If the covid slowed activity, the economic downturn increases fraud:
Vehicles without compulsory insurance:
"Automotive Guarantee Fund (AMF) spent 4.7 million with road accidents involving uninsured vehicles in the first half of 2020.
Still, that was €2.2 million less compensation compared to the same period last year."
Accidents of Work (AT)
September 20 / September 19
Production+4.3%
Loss Ratio -9.1pp
We were coming from another year of above double-digit growth - strength of the boost in the economy and strong average fare increases initiated in 2013* - which made it possible to maintain a still positive growth. The general decline in the country's wage bill will be more deeply reflected in 2021.
* The average premium rate went from around 2.3% in 2004 to around 1.2% in 2013, when it started to rise in the sense of rescuing the result of the branch from very negative values, ending 2019 at 1.6%
The overall technical results of the modality after reinsurance, which had finally seen positive values in 2018, turned negative again in 2019, which penalised competition in renewals. The sharp drop in claims recorded this year due to the forced drop in activity in many sectors could naturally favour the results of the branch at the close of the year, but it is nevertheless noted that there is a increasing selectivity of activities and risks by insurers, reflected in their pricing and acceptance policies.
Fire and Other Damage (IOD)
September 20 / September 19
Production +4.7%
Loss Ratio +10.5pp
After a growth of 6.8% in 2019, particularly driven by the Industry, Engineering and Agriculture and Livestock branches, in 2020 the evolution of production sustained at 4.7% until September. The moratoria and the wave of closures caused by the epidemic, will strongly influence actual collections and production 2021.
The branch's result had rebalanced in 2019, following the tragic fires of 2017, and hurricane Leslei in the central zone in Oct 2018 (the strongest in Portugal since 1842).
In 2020, unlike the other major Non-Life sub-branches, through September the IOD claims worsened by 10.5 percentage points, mainly due to notable industrial claims and showing a worrying trend (see article in this issue), but it is below 50% which a good health for the branch.
Health
September 20 / September 19
Production +8.9%
Loss Ratio -4.4 pp
3.2 million Portuguese were covered by health insurance as of jun20!!! + of 80% than in 2015; growth was already around 10% in recent years, but since talk of coronavirus began until March - when the emergency was in place in the face of Covid-19 - 570,000 more people joined health insurance: a growth of 22% compared to December 2019!!!
The delay in routine clinical follow-up, prevention and treatment/intervention that has been seen due to the epidemic will unfortunately be paid for later and, as everything indicates, with a significant worsening. Insurers will closely monitor this issue and so are not reflecting the good performance of the branch in immediate price cuts. It should be noted that claims would have fallen even more significantly if the Companies had not decided to pay for covid tests for their clients with symptoms, something that was an exclusion in practically all policies.
Recently, Multicare has exceptionally come to cover Covid treatment costs, including hospitalisations for policies over 180 days old.
findings of the ECSI survey EUROPEAN CUSTOMER SATISFACTION INDEX Portugal 2020
The Insurance Sector
