Hungary's recession most probably ended in the fourth quarter of 2009 due to export-driven growth in industrial production, the European Bank for Reconstruction and Development (EBRD) said in its regional forecast published on 15 May. However, domestic demand was still depressed due to high unemployment and slack crediting. The EBRD report predicted Hungarian economic growth of 1.0% in 2010, an improvement on its previous forecast of a 0.6% decline, and a 2.3% expansion by next year. In other words, out of recession but still far from concerns.
Hungarian insurers suffered a 9.3% decline in premium revenue in 2009 to EUR3.05bn after a fall of 4% in 2008. Revenue from Life insurance premiums fell 12.57% to EUR1.53bn and Non-life premium income reached EUR1.51bn.
Mandatory motor insurance premiums totalled EUR454.6m, almost unchanged from 2008. Of the 4m holders of Mandatory motor insurance in Hungary, 952,000 changed provider at the end of the year having been attracted by lower premiums, and another 500,000 cancelled their policies only to return to their former provider after getting a better deal, the head of insurance association MABISz, Barnabás Trunkó, told MTI-Econews.
The most affected Non-life insurance line was Motor Hull, which saw a 11% drop in GWP to EUR330.3m The reduction came both from a 5% drop of the number of Motor Hull policies and a 7% decrease of the average premium/policy level to EUR384 from EUR411 the previous year.
Distribution makes the difference
With very few exceptions, Hungarian insurers recorded lower outcomes compared to 2008. In the Life insurance segment, MAGYAR POSTA Elet managed a 20.7% hike in GWP to EUR95.88m, while on the Non-life market UNION Biztosito's posted a surprising 58% rise to EUR68.97m. Both are middlesized players and both also have large distribution channels.
For MAGYAR POSTA Elet it is the postal services network but UNION Biztosito gained its 500,000 policyholders through a wider combination of distribution channels. The most interesting results were the sales of household insurance over ING Bank counters. The company also expanded its sales channels with Magyar Telekom , which sells the insurance products using its telephone customer service, and in the autumn established Union 24, an internet division through which it sells compulsory motor insurance with a view to diversifying its products range.
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Third-party insurance to be based on vehicle power From 2011 compulsory third-party motor-insurance tariffs will be based on vehicle power instead of engine size measured in cubic centimetres, according to new Finance Ministry regulations. Cars will be classified into six groups in which those with a maximum output of 37 kilowatts will be in the first, cheapest, category and those with output of 180 kilowatts or more will be in the sixth, most expensive, category. The new system will probably make insurance more expensive in general, analysts say. There are almost no new cars with an output less than 37 kilowatts on the market, and cars with a 1,400cc engine, presently in one of the lowest categories, will be in the fourth group from 2011 if their output is at least 71 kilowatts, as is the case with many new cars. Explaining the move, the Finance Ministry said that newer cars put out more power with fewer cubic centimetres, and more output meant more risks on the road. Each October insurance companies must publish their tariffs for following year. ( MTI-Econews)
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Hungarian success stories of 2009
GROUPAMA Garancia Biztosito, the Hungarian unit of France's Groupama , reported premiums of EUR321.28m, making it the third-biggest player on the market. The company has 150 sales points around the country, but its products are also offered at some 400 branches of OTP Bank. Groupama bought OTP Bank's insurance unit Garancia in 2008 and merged it with Groupama in 2009.
ALLIANZ Hungaria's revenue from premiums fell 8.7% to EUR484.52m in 2009, although operating profit rose 7% to EUR73.84m. Life insurance GWP fell 26% to EUR126.55m, while its Non-life underwritings fell 8.7% to EUR484.5m. ALLIANZ Hungaria is the Hungarian market leader.
