Following the closing of 2020 it is interesting to see the dynamics of the Cypriot insurance market. As expected, there was a slowdown in the overall growth with General business premium income showing some 0,7% reduction as compared to year 2019. However, sustaining the level of premium income in times of a pandemic as well as at the time of the implementation of a General Health System (ΓεΣΥ), it proves that consumers value even more the importance of their insurance at times of uncertainty.
Total premium income reached €506 mln compared to €510 mln in 2019. Most of the €4 mln decrease is attributable to the implementation of the General Health System (ΓεΣΥ). As more consumers trust the new Health System we foresee further reduction in health premiums by cancelling private medical policies, a trend that we expect to continue in the next 2-3 years. We foresee Health insurers to develop top up products to complement the free health care system of the Government.
As expected, Liability business continued to grow (from €49.5 mln to €51.4 mln, a 3,8% rise). This is the result of Cypriot consumers maturing, getting higher awareness of their rights and as a result forcing businesses to buy protection for various contingencies.
Motor business remains the largest segment of the industry with a premium income of €182 mln as compared to €177 mln in 2019, representing some 36% of the total market premium written. Even during the pandemic, the motor account remains to run at a loss. The account clearly continues to be under rated and companies seem to be happy to have it being subsidized by the other classes.
On the claims side, the industry paid €185.6 mln in claims compared to €215.8 mln in 2019. This represents a 14% decrease from last year mainly due to the shrinking of the healthcare class of business as well as the improvement in the performance of the motor account due to Covid19 restrictions.
It is expected that when the pandemic settles down the industry, with the exception of health insurance, will continue to grow in all segments.
Life business on the other hand grew by some 7.5% in 2020 reaching a total premium income of €410 mln compared to €381 mln in 2019. The increase was attributable to several facts as follows:
- As expected, people buy more life insurance at times of uncertainty
- Low interest rates make consumers look for alternative investments, insurance being one of them
- Improved tax relief; consumers can deduct 1/5 of their taxable income as compared to the previously allowed amount of 1/6 of their taxable income.
- In the current lockdown situation, all those consumers with unaffected family income, such as the Civil Servants, have apparently more savings available.
We are of the opinion that the Cyprus Insurance Industry, handling almost a billion of Euros in premiums (€506 mln non-life and €410 mln life, totaling €916 mln) will continue to thrive as in difficult times over the years it proved to be a vital, solid and essential part of the economy.
2020 Cyprus Insurance Market:
- General Business premium income -0,7% at €506mln
- Motor Business premium income – 36% of the market at €182mln
- Liability Business premium income – €51.4 mln, a 3,8% increase
- Insurance Claims down by 14% to €185.6 mln
- Life business premium income – 7.5% increase at €410 mln
- Life insurance improved tax relief – 1/5 of taxable income