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CEA - Executive Summary Life Insurance in 2009
CEA - Executive Summary Life Insurance in 2009
As a result, life premiums as a proportion of total premiums dropped from 63% in 2007 to 59% in 2008 and then rose
again to 61%. Looking at the breakdown of life premiums, it seems that the financial crisis and the uncertainty in the stock
markets made unit-linked products less attractive since, on average, their share of total life premiums fell from 30% in 2007
to 22% in 2008 and to 18% in 2009. At country level, this ratio ranges from 5% in Bulgaria to 59% in Slovenia.
In terms of the split between individual and group contracts, individual contracts predominate in most countries and on
average accounted for 70% of life premiums in 2009. In the UK, the split is fairly even while in Slovenia, Sweden, Switzerland
and especially Norway and Denmark, group contracts account for the lion’s share.
Following the economic downturn, life insurance penetration dropped from 5.6% in 2007 to 4.6% in 2008 and then
recovered to 4.9% in 20092. Similarly to density, life insurance penetration shows large disparities between markets, varying
in 2009 from 0.2% in Latvia to 9.5% in the UK.
1 Insurance penetration is a commonly recognised indicator of insurance activity. It is expressed here by showing total gross written premiums as a
percentage of GDP
2 Liechtenstein, Luxembourg and Lithuania are not included in the CEA averages, due to missing data
3 Belgium, Iceland, Ireland, Liechtenstein and Lithuania are not included in the CEA aggregate, due to missing data
Gross technical provisions for life insurance in Europe followed a largely similar growth pattern over the period 2000-2007
(ie a steady increase) but then went down by 4.5% at constant exchange rates in 2008, mostly due to the UK. 2009 showed
a recovery (+7.3% at constant exchange rates) to a total amount of more than €5 120bn at the end of the year. The UK and
France together account for almost 60% of overall European provisions. Following the financial crisis, the share of provisions
for unit-linked products in the total declined from 42% in 2007 to 36% in 2008 and then amounted to 37% in 2009. The
UK and France reported ratios of 65% and 17% respectively in 2009.
Investments4
As insurance companies are among the largest institutional investors, the fall in stock markets that followed the financial
crisis and the rise in spreads put insurers’ investment portfolios under pressure in 2008. Since the life insurance industry
accounts for more than 80% of European insurers’ total investment portfolio, life insurers were particularly affected. Their
investment portfolio, estimated at market value, is estimated to have declined from over €5 900bn in 2007 to around
€5 200bn in 2008. This was the first time in the last decade that the year-on-year growth rate was negative.
With the capital markets rebound observed from mid-March 2009, the investment portfolio of European life insurers is
expected to recover to more than €5 500bn in 2009. This corresponds to an increase of more than 8% at constant exchange
rates, compared to a similar drop the previous year. The largest European insurance investors are in the UK, France and
Germany, accounting for almost two thirds of life insurers’ total portfolio.
Premiums
Following the financial crisis, the number of new life contracts in Europe declined substantially in 2008. As a result, premiums
for new business decreased from around €280bn in 2007 to almost €230bn in 2008, the drop being mainly driven by the
UK. In 2009, new business premiums recovered slightly (+4% at constant exchange rates), largely due to an almost 60%
increase in new single premiums in Italy. In France and Germany, new life business premium income grew 33% and 13%
respectively, whereas the UK reported a 26% drop.
Similarly to the business in force, individual policies account for the lion’s share, with more than 80% of European new life
premiums. Among these individual contract premiums, savings contracts predominate, with an average of more than 70%,
whereas annuities and protection contracts account for slightly less than 25% and 2% respectively.
Distribution channels
4 Since the split of the investment portfolio between life and non-life insurers’ is not available for some countries from 2008 onwards, life insurers’
investment portfolio for 2008 and 2009 has been estimated on the assumption that their market share has remained stable at 80%
5 The countries surveyed are Belgium, Estonia, France, Italy, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and the UK
6 The countries surveyed are Belgium, Malta, the Netherlands, Poland, Portugal, Romania, Slovenia, Spain and the UK