ArmInfo Financial rating: Health insurance fees stagnate, and travel  insurance is in the deep red

ArmInfo. In Armenia, health insurance fees approached stagnation in the first quarter of 2021, narrowing the annual growth rate from 8.2% to 1.1%, to a volume of  7.4 billion drams ($13.8 million).

However, despite the weak growth, the share of health insurance in the total portfolio of premiums continues to dominate-45%. This is evidenced by the Financial Rating  of insurance companies in Armenia, prepared by the IC ArmInfo on the  basis of the reports of the IC portfolios according to the standards  of the Central Bank of the Republic of Armenia.

According to analysts of the national rating agency AmRating: "The  relevance and advantageous position of medical insurance, which was  assumed against the background of the coronavirus pandemic, did not  work in reality due to a number of unforeseen factors. This is the  undulating course of the virus with mutation into new strains, an  unprecedented situation of uncertainty, the late appearance of  vaccines and the too slow vaccination process. The political and  economic instability in the country, the decline in real incomes of  the population and, as a result, the decline in aggregate demand,  including for medical services, played an equally decisive role. And  of course, the negative impact was caused by the freezing of travel  insurance during the pandemic, the main component of which is health  insurance for those traveling abroad. The situation may change for  the better only with the recovery of the economy, expected at best in  2022, but judging by the low rate of vaccination and the rapid  mutation of the virus into new strains, the recovery of the previous  rate of economic growth is more likely not earlier than 2025."

Medical insurance payments turned the dynamics from 17.3% growth to  6.9% decline, amounting to 1.8 billion drams ($3.5 million) in the  first quarter of 2021, which reduced their share in the portfolio of  total reimbursements from 31.1% to 26.4% (2nd position in the  dominant position). And against this background, the growth of  reinsurance transfers for medical insurance significantly narrowed -  from 50.8% to 13.9%, amounting to 473.5 million drams ($891.4  thousand).

According to the ArmInfo financial rating, the high demand for  medical insurance is evidenced by the retained 3rd position in the  number of contracts, of which there are 69.9 thousand by April 1 this  year, of which 64.2 thousand were concluded in the first quarter. And  the annual growth of these indicators remains in the range of  6.9-5.2%.

Nevertheless, the situation with medical insurance is still "flowers"  compared to the" berries " of the troubles of travel insurance, which  turned out to be in a deplorable state due to the suspension of  tourist traffic during the coronavirus pandemic. As a result, fees  for this class sank in the first quarter of 2021 by 40.4% per annum  (from 7.1% growth in the first quarter of 2020), amounting to a  modest 66.7 million drams ($125.5 thousand), with a reduction in the  already meager share in the total portfolio of insurance premiums  from 0.7% to 0.4%. The ongoing undulating course of the virus and the  too slow vaccination process, which prevent the restoration of the  flow of tourists, suggest that travel insurance will not soon reach  its former volumes.

Travel insurance reimbursements, which were already in a 15.4%  decline in the first quarter of 2020, sank by 71.3% a year later,  amounting to only 6.1 million drams ($11.6 thousand), and the share  of total reimbursements in the portfolio decreased by a meager 0.1%  (from 0.3% a year earlier). This, in turn, turned the dynamics of  reinsurance transfers into almost 40% minus, which a year ago showed  an increase of 2.5 times.

The reduction in the number of travel insurance contracts is no less  impressive - by 86%, or a decrease in absolute terms from 18.2  thousand to 2.5 thousand, i.e. the existing contracts decreased by  almost 16 thousand.

The first two positions on premiums in the segments of medical  insurance and travel insurance are held by IC " INGO Armenia "and  IC"Rosgosstrakh Armenia". Their combined share in the total volumes  of medical insurance and travel insurance in the market is 61% and  63%, respectively. Moreover, the same companies take the lead in the  number of existing contracts: Rosgosstrakh Armenia - for medical  insurance (39.8 thousand or 57% of the total number on the market),  and INGO Armenia - for travel insurance (1.1 thousand or 44% of the  total number on the market).

According to the ArmInfo financial rating, 6 insurance companies  operating in Armenia collected a total of 16.4 billion drams ($30.8  million) in premiums in the first quarter of 2021, with the annual  dynamics being taken from a 4.2% decline to a 3.4% increase. The  total volume of insurance claims amounted to 6.99 billion drams  ($13.2 million), with an acceleration in annual growth from 7.1% to  9.6%. The volume of premiums transferred for reinsurance expanded  from a 33.1% decline to a 39.1% increase, amounting to 2.6 billion  drams ($4.98 million). In terms of premiums, medical insurance is the  leader in terms of volume, taking the second position in  reimbursements and reinsurance transfers. The leader in total  premiums and reimbursements is Rosgosstrakh Armenia Insurance Company  - 4.9 billion and 2.1 billion drams, respectively, and INGO Armenia  Insurance Company - 1.4 billion drams in terms of reinsurance   transfers.