ArmInfo.In Armenia, fees on travel insurance reached a significant 70% growth in the first half of 2021 (from a significant 46.4% decline a year earlier), reaching a volume of 235.9 million drams ($ 475.8 thousand). Such growth, associated with some activation of outbound tourism, allowed not only to approach the volume of two years ago, but also to return the 1% share of travel insurance in the total portfolio of premiums.
This is evidenced by the Financial Rating of Insurance Companies of Armenia, prepared by ArmInfo IC on the basis of the reports of IC portfolios according to the standards of the Central Bank of Armenia.
At the same time, premiums on health insurance in the first half of 2021 lingered in moderate growth with a modest acceleration of annual rates from 5.6% to 6.8%, to a volume of 9.75 billion drams ($ 19.7 million). This moderate growth somewhat reduced the share of medical insurance in the total portfolio of premiums - from 37.6% to 36.7%, nevertheless, retaining the second position for this class (after CTPML), which dominates in premiums.
According to analysts of the national rating agency AmRating: "Now, in the wake of the formidable delta strain of the coronavirus, with too slow vaccination, the likelihood of a resumption of the lockdown is not excluded if the applied restrictive measures turn out to be ineffective. As a result, the tourism industry may again be negatively affected. Even medical insurance is unlikely to take an advantageous position in such a situation, like the one that did not work in 2020 due to a number of unforeseen factors of the relevance of this class. A change for the better is possible only with a full economic recovery, which is expected at best in 2023, but judging by the current low growth rates, slower vaccination and rapid mutation of the virus, it will most likely be possible to return to the previous rates of economic growth no earlier than 2025. "
Meanwhile, the dynamics of reimbursements for these two classes is multidirectional. Thus, payments for travel insurance lingered in the decline, accelerating the pace from 45.4% to 79.3%, and for medical insurance, they accelerated growth from 1.2% to 12%, amounting to 6.1 million drams and 4.1 billion drams in the first half of 2021, respectively. As a result, the share of travel insurance in the total volume of indemnities decreased in y-o-y terms from 0.3% to 0.04%, and the share of medical insurance, even having decreased from 32.5% to 30.3%, retained its 2nd position (following dominant CTPML).
Against this background, the growth of reinsurance transfers on medical insurance has noticeably narrowed - from 31% to 15.7%, amounting to 494.3 million drams, and on travel insurance came out of the 29.4% decline by 3.5-fold growth- to 110.1 million drams.
According to the FinRating of ArmInfo, the high demand for medical insurance is evidenced by the held 3rd position in terms of the number of acting agreements, which by July 1 of this year totaled 66.6 thousand, of which only 4.3 thousand were concluded in Q2. And y-o-y dynamics of these indicators are multidirectional: the decline in existing contracts by 0.3% is accompanied by an increase in the quarterly concluded by 23.8%.
And for travel insurance, the number of existing contracts is still in decline, with an acceleration of y-o-y rates from 29% to 58.9%, i.e. decreased from 13.3 thousand to 5.5 thousand. At the same time, the quarterly concluded contracts reversed the y-o-y dynamics from 87.7% decline to growth by 4-fold, i.e. grew from 2.4 thousand to 9.7 thousand.
To answer the question when international tourism will fully recover, UN WTO experts conducted a survey in 2021, based on the results of which they concluded that it would take from 2.5 to 4 years to reach the 2019 levels. Among the obstacles to the recovery of the industry, they name - the slow containment of the coronavirus, the lack of coordination between countries in the introduction of restrictions to combat the pandemic, as well as the deteriorating economic situation. "2020 was the worst year in the history of international tourism - the decline in activity was 74%, or more than 1 billion tourists compared to 2019. In monetary terms, the industry lost $ 1.3 trillion. The pandemic also called into question the existence of more than 100 million jobs in the tourism industry, since the majority of employers in tourism are small businesses that do not have a margin of safety and are not ready for significant costs.
In early 2021, due to the increase in the number of diseases, many countries began to introduce repeated restrictions, including mandatory testing, quarantines for entry and even complete closure of borders. On the other hand, the gradual spread of vaccination against COVID-19 restores confidence among consumers and market participants in the imminent relaxation of bans and the restoration of international tourism, "the UN WTO experts say.
The tourist flow in Armenia is also far from the pre- COVID level. According to statistics, in the first half of 2021, 239,263 tourists visited Armenia, which is 22.2% less than a year ago. The flow of domestic tourism also decreased - by 28.4% per annum to 59,497 people. The number of people who left Armenia for the purpose of tourism decreased even more - by 42.1% per annum to 115,546 people. As a comparison, we note that in the first half of 2019, 770,055 tourists visited Armenia, and 684,808 people left for tourism, and the annual growth in both cases turned out to be almost the same - 12.3% and 12.1%, respectively. "And judging by the resumption of quarantine measures and slowly proceeding vaccination, which will become mandatory only from October of this year, but only for state agencies and economic entities, no rapid changes in the tourism industry towards improvement should be expected, which means that travel insurance will not soon restore its former volumes ", AmRating analysts believe.
The first two positions in premiums in the segments of medical insurance and travel insurance are held by INGO Armenia IC and Rosgosstrakh Armenia IC. Their combined share in the total volumes of medical insurance and travel insurance in the market is 61.4% and 74.1%, respectively. Moreover, the same companies take the lead in terms of the number of existing contracts: Rosgosstrakh Armenia - in medical insurance (37.8 thousand or 56.8% of the total number on the market), and INGO Armenia - in travel insurance (1.8 thousand or 32, 7% of the total on the market).
According to the FinRating of ArmInfo, 6 insurance companies operating in Armenia in total collected premiums in the amount of 26.6 billion drams ($ 53.6 million) in the first half of 2021, with the annual dynamics of the 7.9% decline by 9.4% growth. The total volume of insurance claims amounted to 13.6 billion drams ($ 27.4 million), with the output of the annual dynamics from the 4.7% decline to 20.1% growth. The volume of premiums transferred for reinsurance reversed the annual dynamics from 23% decline to 36.8th growth, exceeding AMD 4.2 billion ($ 8.6 million). In premiums, indemnities and reinsurance transfers, medical insurance takes the second position. Rosgosstrakh Armenia IC is the leader in terms of total premiums and indemnities - AMD 7.6 billion and AMD 4.3 billion, respectively, and in terms of reinsurance transfers, INGO Armenia IC- 2.2 billion AMD.