ArmInfo.In the insurance market of Armenia, the loss ratio for Compulsory Motor Third Party Liability (CMPTL) is slowly starting to increase year-on- year, from 63% to 65% by September 1, 2023, noticeably higher than the pre-Covid 69% in Jan-August 2019.
This trend was observed against the background of the tariff liberalization of CMPTL from April of this year, under the conditions of which, in Jan-August, a slight slowdown in the y-o-y double-digit growth rate of the number of signed contracts was recorded, from 18.3% to 13.8%, and a more noticeable slowdown in the growth of insurance premiums, from 17.7% to 3.7%, and the compensation trend changed from 8.7% decline to 11.9% growth, according to the data of the Motor Insurers' Bureau of Armenia.
Thus, according to the Motor Insurers' Bureau of Armenia, the number of vehicles with a CMTPL policy increased in Jan-Aug 2023 more modestly than in the pre-Covid comparable period, which greatly slowed down the growth in the volume of insurance premiums not only on a y-o-y terms, but also in comparison with the pre-Covid period. In particular, the number of vehicles with a CMTPL policy in Jan-Aug 2023increased by 5.6% per annum, which was much more subdued not only last year's pace (8.1% y/y), but also the pre- Covid upward trend of 13% in 2019. However, in quantitative terms, by September 2023 there were already 635.057 thousand such vehicles, against 601.134 thousand pcs in 2022 and 567.483 thousand pcs in pre-Covid 2019.
A slowdown in the growth rate compared to the pre-Covid upward pace was also observed in the number of CMTPL agreements concluded. Thus, during the reporting period, y-o-y growth slowed from 18.3% to 13.8%, very much lower than the 33.5% pre-Covid growth in 2019. But in quantitative terms, in Jan- Aug 2023, more CMPTL contracts were signed than a year ago and even in the pre-Covid period - 853.295 thousand pcs, against 749.896 thousand pcs in 2022 and 721.821 thousand pcs in 2019. And the volume of insurance premiums collected for them increased by 3.7% per annum alone, slowing down from 17.7% in 2022 and from 25.2% in 2019, reaching 17 billion drams ($44 million). The average insurance premium per CMTPL contract amounted to 37.913 drams during the reporting period, with the decline accelerating from 0.5% to 3.3% (versus a 6.2% decline in 2019).
A slower growth was also observed for CMTPL contracts that came into effect during the reporting period - by 13.3% (versus 17.6% in 2022 and 32.6% in 2019), amounting to 860.897 thousand pcs. Under these contracts, the volume of insurance premiums exceeded 17.6 billion drams ($45.7 million), with y-o-y growth slowing to 3.7% from 16.1% in 2022 and 16.2% in 2019.
At the same time, the number of terminated CMTPL contracts began to decrease - by 20.7% (after an increase of 87.3% in 2022), amounting to 64.852 thousand pcs, thereby returning to the downward dynamics of pre-Covid 2019 (25.3%) . And the same trend reversal was observed in the volume of returned or refundable premiums - from an 80.6% increase to a 19.4% decrease - to 792.9 million ($2.1 million).
Against this background, the activity of sales of E-policies for CMPTL has noticeably decreased to 208.421 thousand pcs for Jan-Aug 2023, with a slowdown in y-o-y growth from 38.6% to 11.2%. Moreover, in comparison with pre-Covid indicators of the comparable period (Jan-Aug 2019), the growth rate slowed down even more significantly (from 3.6-fold), but in quantitative terms a 6.4-fold increase was recorded (from 32.761 thousand pcs.). As a result, the share of E-policies in the total number of CMTPL contracts over the year decreased from 25% to 24%, while significantly exceeding the meager 5% in pre-Covid 2019. A significant slowdown in dynamics is likely due to expectations from the CMPTL tariffs, which also provides for more noticeable (than the previously existing 5%) discounts on E-policies for compulsory motor liability insurance.
48,682 applications for insurance compensation were submitted in Jan-Aug 2023, which is 2.5% more than a year ago (versus a 7% decline in 2022 and a 17.7% increase in 2019) . And the volume of payments on them exceeded 11.2 billion drams ($29.1 million), with the y-o-y dynamics from an 8.7% decline to a double-digit 11.9% growth, exceeding even the pre-Covid 8.8% growth in 2019 . Moreover, 14,569 of the applications were related to the cases of simplified registration of road accidents (according to the European protocol), with a slowdown in the y-o-y decline from 25.5% to 17.1% (versus 4.3% growth in 2019). The volume of compensation paid under the European protocol exceeded 1.2 billion drams with a slowdown in the y-o-y decline from 26.3% to 10.4% (after the dynamics changed from 0.6% decline to 46.2% growth in 2019-2021), and the average size of one payment amounted to 83.806 thousand drams, with the y-o-y dynamics from a 1% decline to 8.1% growth, which was observed at a higher rate in 2019- 2021 - from a 4.7% decline to 10.3% growth. For general insurance claims, the average size of one payment was 230,812 thousand drams, with the y-o-y trend from a 1.9% decline to a 9.2% increase (against the slowdown in the decline from 7.6% to 1 .5% in 2019-2021).
In Jan-Aug 2023, compared to the same period in 2022, the number of vehicles with a valid CMTPL agreement increased by 33.923 thousand. In particular, 4 insurance companies recorded an increase in this indicator by a total of 57.5 thousand pcs, and 2 insurance companies, on the contrary, had a decline of 23.6 thousand pcs. At the same time, REGO Insurance recorded the biggest decrease (former RESO) - by 21,046 thousand pcs, and LIGA Insurance recorded the greatest growth - by 26,242 thousand pcs. And LIGA Insurance (formerly Rosgosstrakh Armenia) continues to be the leader in the number of vehicles with a valid CMTPL policy - 194,740 thousand pcs (with an annual growth of 15.6%), the second position is held by Nairi Insurance - 159.418 thousand pcs (with a y-o-y growth of 3.1% or 4.8 thousand pcs), SIL Insurance moved to third place - 94.324 thousand pcs (with a y-o-y growth of 23.1% or 17.7 thousand pcs), displacing INGO Armenia to fourth place - 82.546 thousand pcs (with a y-o-y decline of 3% or 2.6 thousand pcs), REGO Insurance ranks fifth - 52.121 thousand pcs. (with a y-o-y decline of 28.8%), and Armenia-Insurance as before ranks sixth, - 51.908 thousand pcs(with a y-o-ygrowth of 20.4% or 8.8 thousand pcs).
Six Armenian insurance companies are operating 18 of 20 classes of insurance, except for the Railway Third Party Liability Insurance and legal and extra-judicial expenses insurance. INGO Armenia (the only company providing water transport insurance) and Armenia Insurance (the only company providing rail transport insurance) are the leaders in the number of classes of insurance - 16. Last December, RECO and Rosgosstrakh companies implemented rebranding projects: the RECO company was renamed REGO, with new shareholders, and the Rosgosstrakh company was renamed LIGA Insurance. As regards INGO Armenia, which is indirectly owned by the Russia-based Ingosstrakh, the company continues working in Armenia's market, adapted to the sanctions imposed on Ingosstrakh, under the regulator's supervision. (the AMD/USD exchange rate was 386.06/$1 on June 30, 2023). (As of August 31, 2023, the estimated exchange rate of the dram against the dollar is 385.78 AMD/$1).