According to data from the Austrian Association of Insurance Companies (Verband der Versicherungsunternehmen Österreichs – VVO), the Austrian insurance market grew by 1.9% in 2007. The relatively small increase in premiums last year was due to weak growth in the life and motor vehicle insurance segments. Volatility in single-premium products led to a drop in premium growth in the life insurance segment and increased competition in the motor vehicle insur ance segment led to a reduction in premium revenues.
According to an analysis by the VVO, the rate of growth in premiums is expected to increase by a total of 1.9% in 2008. The VVO is projecting a premium increase of 1% in the life insurance area in 2008. The low rate of growth for life insurance is based on the volatility of income from single-premium products. Regular premiums are expected to increase by 4.6% in 2008. Annual growth rates of 5.5% are expected to return between 2008 and 2011.
Property/casualty insurance grew by 3.1% in 2007 according to the VVO, and an increase of 2.4% is expected for 2008.
The VVO projects premium growth of 3.1% in the health insurance area in 2008 (3.2% in 2007).
Central and Eastern Europe
The markets in Central and Eastern Europe, along with other emerging markets, form one of the most important and most dynamic economic areas for the insurance sector. They continue to offer enormous growth potential, as reflected by the GDP growth in these markets, which has been far above the EU-15 average in recent years. The highly dynamic economies and continued strong economic growth of countries in this region are creating a general increase in prosperity, and the development of a consumption-oriented middle class with an increasing need for insurance services.
Insurance density is used as a key indicator of the state of development of an insurance market. It indicates how much each person in a country spends each year on insurance services. In 2006, average per capita expenditures for insurance were USD 212 in the CEE countries, of which USD 132 was for non-life insurance and USD 80 for life insurance. In comparison, insurance density in the EU-15 countries was USD 3,305, with each person paying USD 1,107 for non-life insurance and USD 2,198 for life insurance.
The economies of the Eastern European countries are growing quickly, and this strong economic growth opens up the prospect of high growth rates for insurance in coming years. There is a great need for insurance services. Based on economic growth and the good position held by the company in the CEE region, the Vienna Insurance Group expects that it will be able to continue on its profitable growth path in 2008 as well.