The FINANCIAL — The European non-life insurance sector is approaching critical moments, with economic, regulatory and market forces set to severely test individual companies and the industry as a whole.
Ongoing recession in many countries, volatile financial markets and the sovereign debt crisis have buffeted the industry. Companies are racing to meet changing solvency and accounting rules. Soft markets persist, dampening pricing and profitability.
- Stubbornly low interest rates are placing pressure on insurers' results, offering no relief from weak underwriting results driven by flat to downward pricing trends.
- More economic twists, such as inflation spawned by an expansion of the money supply by central banks and governments as a tacit form of default on significant and, in some cases, unsustainable sovereign debts, could trouble non-life insurers.
- The slow-moving implementation of the European Union's Solvency II directive has been costly already and promises to further strain insurers with its potentially stricter risk-based capital requirements.
- Germany has fared better economically than many of its neighbours, and German non-life insurers saw premiums increase in 2010 by 0.9% to EUR 55.2 billion, though technical results deteriorated.
- Results for 2010 improved in the French non-life sector, and 2011 is developing favorably with rate increases in both personal and commercial lines and low catastrophe-related losses.
- The Italian non-life sector has sustained legislative, regulatory and judicial blows that directly cut into insurers' results.
- Despite economic and pricing pressures, Spanish non-life gross premiums written rose slightly in 2010, ending two years of shrinkage.
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