XPRIMM: How do you comment the results achieved by your market in 2014 in terms of development and profitability?
Anett PANDURICS: In 2014 the premium revenue of non-life insurance market in Hungary increased by 3.9%, in which especially the MTPL insurance played a significant role. The 46% (altogether HUF 392.3 billion) of the premium revenue of 2014 (HUF 844.1 billion) derived from the non-life insurance policies. The amount paid for claims and services in the non-life insurance was up by 1.7%.

Within the non-life insurance market, the household, freight, liability, industry and agriculture insurance products are all told to have started to grow slowly in the market in 2014, this was the first year with such developments since the crisis of 2008. A positive trend can be seen in both the number of contracts and the premium revenue compared to the previous years.

For 2015, data exchange among insurers, according to the insurance law, means a new task and challenge for the insurance companies. The positive effect of the data exchange among the insurance companies is expected to stop/to decrease frauds in the insurance contracts. This will be clearly in the interest of the customers as well, by defending the interests of the risk community.

As an effect of the new Civil Code, insurers look forward to the operation of the compensation for pain and suffering which was paid instead of reimbursement in the non-property claims according to the old Civil Code. The future Court practice will decide if there is any difference between the compensation for pain and suffering and the non-property claim. The degree of compensation for pain and suffering can increase the amount of the reimbursement.     

After the continuous reduction in the previous years, in 2014 was the first time that the premium revenue increased in the MTPL insurance as well as in the casco insurance. The premium revenue from MTPL insurance grew by 9.2%, but the revenue from casco insurance increased to a lesser extent, by only 1.8%. One reason for the growth of premium revenue is the increase of new contracts which is due to the purchases of new and old cars. The number of MTPL insurance contracts increased by 4.8%, and the number of MOD (casco) contracts increased by 1.4%. The increased number of contracts and more frequent use of cars (as a natural consequence of the recovery) resulted in more claims in the field of MTPL insurance. Reimbursement was 4.6% higher than in the previous year. However, surprisingly, casco reimbursement decreased by 6%.

XPRIMM: Which are the most challenging aspects of the insurers' activity, possibly in need of further improvement?
A.P.: The main challenge is the preparation for Solvency II taking effect in 2016. As part of this preparation, insurance companies will have to pay even more attention to improve their risk and compliance management systems as well.

XPRIMM: Which is the current situation of the Hungarian motor insurance market considering the constantly decreasing new car sales?
A.P.: The number of cars increased in 2014 compared to 2006. However, the average age of cars grew from 10.35 years in 2006 to 13.4 years in 2014. In the case of trucks, the mean age grew from 9.1 years 2006 to 12.5 years in 2014. Mean age of autobuses grew from 12.91 years in 2006 to 14.7 years in 2013. We certainly hope to see soon an inflection point in this respect and to see this aging trend slowing or even being reversed.

XPRIMM: Property insurance - especially in what the dwelling insurance and agricultural insurance are concerned - has still a low penetration across the CEE region, although the frequency and intensity of the weather related events are significantly increasing. Please comment on the current situation in your market.
A.P.: Compared to the neighbouring countries in Hungary the penetration in the household insurance market is extremely high, 73-75%. In the period of crisis the number of household insurance contracts decreased temporarily, but at the end of the past year a slight increase began. In Hungary, 15 insurers supply household insurance.

The frequency of claims have increased recently. On the one hand, it is due to more extreme weather and floods events occurring in Hungary. On the other hand, the household insurance products available on the market more and more include additional covers for the clients, resulting in higher customer satisfaction and higher claim frequency as well.

In 2012, in the area of agriculture insurances the government introduced a new damage litigation system to manage the weather and other natural risks. The 2nd pillar of the system is a support to agricultural (plant) insurance premium, to encourage producers to ensure their activities.  

The agricultural insurance market with premium subsidy has increased in the past years. The insurance with premium subsidy influenced the growth of insurance contract numbers. On the other hand, the farmers made contracts with more risk factors increasing the insurers' premium revenue.

XPRIMM: How do you assess the 2015 perspectives? Do you expect some significant changes in the market / legislation etc.?
A.P.: We trust that as the result of improving macroeconomic conditions, the sale of new vehicles will grow which should help to - at least - slow down the above mentioned ageing process.