Spanish non-life and life insurers remain profitable, despite the country’s ongoing economic difficulties which have caused the insurance market to contract, according to a new report from A.M. Best Co. The non-life sector has benefited from a reduction in motor claims, reflecting lower usage of vehicles. To an extent, policyholders have a sense of loyalty to insurers for personal lines products, although this sentiment is beginning to change given the influence of the aggregator market.
The report, titled “Spain’s Insurance Market Withstands Pressure as Insurers Remain Profitable”, notes that Spain is not considered highly exposed to natural catastrophes, although in the event of any such activity, insurers are protected by the Insurance Compensation Consortium (Consorcio de Compensación de Seguros). Consequently, the primary market does not assume significant and volatile claims of this type.
The Spanish insurance sector remained profitable in 2012, despite total gross premiums written (GPW) falling, according to the regulator, the Dirección General de Seguros y Fondos de Pensiones (DGSFP). In 2012, premiums dropped by 5.5% to EUR 57.7 billion, primarily as a result of a contraction in non-life risks, notably for motor insurance. Data from Investigación Cooperativa entre Entidades Aseguradoras y Fondos de Pensiones (ICEA), the research arm of the Spanish insurance sector, show for January through June 2013, non-life GPW decreased 2.9%, while life premiums increased 0.7%. Overall, total premiums underwritten were down 1.3% compared with the first half of 2012.
Carlos Wong-Fupuy, senior director, analytics, said: “A.M. Best considers financial indicators for Spanish insurers more robust than those in many other European markets. Profit margins remain healthy, despite the country’s challenging economic conditions and the emergence of alternative distribution channels such as the Internet. On a standard basis, capitalisation of companies is strong, with no debt leverage issues”.
As Spain’s non-life and life insurance sectors remain profitable, intense competition is likely to continue, although some industry consolidation is anticipated. Yvette Essen, director, industry research - Europe and emerging markets, and author of the report, said: “The country continues to draw international interest from companies attempting to underwrite domestic risks, as well as from insurers seeking access to Latin America. However, while Spain is attracting international insurers, A.M. Best believes the sector faces significant challenges. The competitive environment, excess capacity and favourable loss history of the market are keeping pressure on rates”.
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=216513.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
- Singapore International News
Senior Director, Analytics
Yvette Essen, +(44) 20 7397 0322
Director, Industry Research
Europe & Emerging Markets
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations