Recently published research from Business Monitor International, "Greece Insurance Report Q1 2013", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 02/22/2013 -- Key Insights And Key Risks
The Greece Insurance Report considers the prospects for both life and non-life insurers in the country. For a long time, it had appeared that the non-life segment had enjoyed some protection from the bleak economic conditions. In essence, the non-discretionary element of motor-related lines, which dominate the non-life segment in Greece meant that gross written premiums fell by less than nominal GDP. The result had been a gradual increase in non-life penetration over time, even as successive Greek governments wrestled with the country's complex financial problems. Sadly, this trend is no longer in place. Figures published by the EAEE, the insurers' trade association, indicate that non-life premiums fell by 11.4% in H112. The fall is mostly due to a 22.8% contraction in CASCO premiums and a 13.8% drop in CMTPL premiums relative to H111. In essence, Greece's non-life insurers have, over the last few months, finally arrived at the point where they can no longer resist the brutal effects of the economic depression in the country.
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Interestingly, Greece's life insurers appear to have fared much better in the recent past. The EAEE noted that life premiums were EUR2.8% lower in H112 than they were in H111. We think that two factors are at work. One is that the banks have continued to distribute life insurance products, presumably because they can make good money from doing so. There is no evidence that they have stopped distributing products in order to try to attract money that would otherwise have been spent on life insurance as deposits. This is what has happened in Portugal, for instance, with the result that there has been an extraordinarily brutal contraction in life premiums. The other factor is that there has been an extraordinary surge in unit-linked sales. It would appear that particular players have leveraged their distribution networks and brands to reach customers who are still keen to buy life insurance. If these products have been able to exploit the general improvement in investor risk sentiment from Q312, they should have delivered good results to the people that bought them earlier in the year.
A new wildcard has emerged in Q412. This is the movement by Greece's troubled banking sector towards a wholesale consolidation. October 2012, for instance, saw a takeover bid by National Bank of Greece for Eurobank. As of the time of writing, it is not clear whether this deal will go ahead or what will be the implications for the insurance companies that both parties own. A consolidation of the insurance sector would probably be good news, in that it would provide greater economies of scale and, for some players at least, more pricing power.
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