Saturday, February 27 2021 14:49
Karine Melikyan

FinRating ArmInfo: Fees on travel insurance dropped by 74% in 2020

FinRating ArmInfo: Fees on travel insurance dropped by 74% in 2020

ArmInfo.At the end of 2020, premiums in the insurance market of Armenia turned their annual dynamics from 19.1% growth to 2.6% decline, which was also observed  along the trend of indemnities - from 17% growth to 13.2% decline. 

Moreover, only in the IV quarter, premiums retained 13.1% growth,  with a deterioration in the dynamics of refunds from 29% growth to  10.8% decline, while a year earlier in the same quarter, the growth  of premiums accelerated from 4 % to 25.2% with a reversal of the  trend of refunds from 46.4% ascending to 30.6% descending.  In 2020,  the total volume of insurance premiums amounted to 43.3 billion drams  ($ 82.8 million), and insurance claims - 23 billion drams or $ 44  million (figures are given from the reports of the IC according to  IFRS standards). According to the Financial Rating of Insurance   Companies of Armenia, prepared by ArmInfo IC, as a result, the   insurance system summed up 2020 with a net profit of 4.4 billion   drams ($ 8.5 million), ensuring annual growth of almost 5 times, but   at the same time, quarterly profit continues to decline due to a low   increase in premiums with a decline in refunds.

According to the reports of IC portfolios according to the standards  of the Central Bank of Armenia, insurance premiums at the end of 2020  exceeded 44.5 billion drams (with a reversal of the annual dynamics   from 19.8% growth to 9.3% decline), and reimbursement - 23.2 billion  drams (from reversal of annual dynamics from 9.7% growth to 7.3%  decline). A decline in fees for the reporting year was recorded in   five companies (INGO Armenia, Rosgosstrakh Armenia, Sil Insurance,  RESO, Armenia Insurance), and the only meager growth was recorded in  Nairi Insurance. As a comparison, we note that in 2019 these five  companies have seriously increased their premium portfolio (by   18-41%), and Nairi Insurance was the only one with a decline in fees   (by 6.3%).

The leader in the amount of collected premiums is held by   Rosgosstrakh Armenia IC - 13.3 billion drams, the second position is   held by INGO Armenia IC - 11 billion drams. The third position is  held by IC "Nairi Insurance" - 7.9 billion drams, followed by IC "Sil  Insurance" - 4.9 billion drams, IC "RESO" - 3.9 billion drams and IC   "Armenia Insurance" - 3.6 billion. . drams.

According to analysts of the national rating agency AmRating: "The   State of Emergency that was in force in Armenia from March 16 to   September 12, 2020 as part of measures to prevent the coronavirus  pandemic was accompanied by the imposition of a temporary ban on many  types of economic activities, which greatly influenced the  performance of the financial system as a whole and insurance  companies.  In particular, the suspension of public transport  (including the metro) and interregional bus communication for the  first two months of the emergency, and the restriction of  international air, rail and bus communication led to a deterioration  in the dynamics of fees and payments for the respective classes of   insurance. this affected travel insurance, and a little later, with  the reduction of transactions in the real estate market, the dynamics  of fees for property insurance also worsened.Under these conditions,  it would seem that medical insurance was becoming relevant, but not  the unlimited possibilities of insurance companies and the narrowing  of turnover was reinsured They signaled the likelihood of further  deterioration in positions and this class, which actually began to   appear from the middle of the year. The protracted coronavirus   crisis, with an indefinite time frame for curbing the pandemic and   accelerating the vaccination process, does not allow us to  accurately predict the period of improvement in financial indicators.  But the most likely stage of economic regeneration is seen, at best,   in the second half of 2021, and a return to pre-crisis growth rates   may occur at the beginning of 2022. 

"The concrete picture in figures indicates the greatest drawdown in   fees for travel insurance in 2020 - by 74%, against a 22% growth in   2019. At the same time, premiums on air transport insurance, on the   contrary, reversed the dynamics from a 47% decline to 37% - growth,  but in terms of liability arising from the use of air transport, the  dues lingered in the decline with a slowdown from 27.3% to 7%.   liability also sagged significantly - by 37%, while a 48% growth was  recorded in the previous year.  The reduction in transactions in the  real estate market reversed the trend in property insurance premiums   from 30.8% growth to 15% decline. in the direction of subsidence,   but in comparison with the above classes to the least extent, was   also observed in: accident insurance - from 29.6% growth to 14.2%  decline, OSAGO - from 21.4% growth to 12.8% decline, CASCO - from  27.4% growth to 8.4% decline, and liability insurance against the use  of land transport - from 44.1% growth to 3.6% decline.  Against the  background of the epidemiological crisis, it would seem that health   insurance should have been in the most advantageous position, but   premiums for this class also weakened growth - to 5.2% from 11.6% a   year earlier. The growth of premiums on financial loss insurance  also significantly slowed down - from 31.4% to 10.9%, and in credit  risk insurance - to 4.4 once after a jump of 38 times in 2019.  The   news of 2020 for the insurance market was agricultural insurance,  under which three insurance companies operate (RGS Armenia, INGO  Armenia and Sil Insurance), which collected premiums in the amount of  131 million drams. Moreover, this volume almost entirely fell in the  second quarter, when 1,420 contracts were concluded, and the number  of existing ones was 1547, with a reduction to 1 by December 31 (no   contracts were concluded for the 3rd and 4th quarters). It is  pertinent to note that the agricultural insurance project is still in  pilot mode, and the purchase of policies is subsidized by the state  in the amount of 50-60%.

At the end of 2020, the dominant share in the structure of insurance   fees is occupied by OSAGO - 47.6% (against 49.5% a year earlier) or   21.2 billion.

drams. Medical insurance ranks second - 28.1% (against 24.2% a year  earlier) or 12.5 billion drams.  The third position is occupied by  property insurance (against fires, natural disasters, and other   damages) - 8.8% (against 9.4% a year earlier) or 3.9 billion drams.   The fourth position is held by CASCO - 5.3% (against 5.2% a year  earlier) or 2.3 billion drams. And the fifth position, as before, is   taken by accident insurance - 3.5% (against 3.7% a year earlier) or   1.6 billion drams. In addition, Armenian insurers collected AMD 3  billion for 8 insurance classes. There are no concluded contracts for   3 insurance classes (insurance of water transport, insurance of   liability from the use of water transport and insurance of provided  guarantees).

It should be reminded that there are 6 companies on the insurance   market of Armenia, operating out of the available 20 classes of   insurance, 17 each, with the exception of insurance of railway   transport, liability from the use of railway transport, insurance of   judicial and extrajudicial expenses. Moreover, since 2019, at the  request of the Central Bank of Armenia, a line has been added to  financial reports on the portfolio of all 6 ICs - insurance of  seismic risks (against earthquakes), data on which are also included   in the corresponding classes of insurance. And since the II quarter  of 2020, a line has been added to the portfolio financial reports -  insurance of agricultural risks (agricultural insurance), the data on   which are also included in two other classes of insurance: property   against fires and natural disasters; property from other damages.   The largest number of classes is licensed by IC "INGO Armenia" - 16  (the only one operating in the class of water transport insurance)   and IC "Rosgosstrakh Armenia"- 15.  (The estimated exchange rate of   the dram to the dollar as of 12/31/2020 was 522.59 AMD / $ 1).

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