Loss ratio under MTPL insurance contracts shows further upward trend 

ArmInfo. In the insurance market of Armenia, the loss ratio for compulsory motor third-party  liability insurance increased to 79.1% by September 1, 2024 from 65% last year. This is evidenced by the data of the Bureau of Motor Insurers of Armenia.

The growth of the ratio in January-August 2024 was observed against  the background of a deterioration in the annual dynamics of the  number of active contracts - from 13.3% growth to 1.1% decline, an  imperceptible acceleration of the already moderate growth of  insurance premiums - from 3.7% to 6.9%, in parallel with which an  acceleration of double-digit growth in compensation was recorded from  11.9% to 23.7%.

According to the Bureau, the number of vehicles with a compulsory  motor third-party liability insurance policy in January-August 2024  increased slightly - by 5.6% y/y (the same as a year earlier). In  quantitative terms, by the beginning of September 2024, there were  670,546 thousand vehicles with MTPL contracts in the country, but the  number of active contracts was 851,665 thousand (minus terminated  ones - 772,165 thousand). The excess of contracts over the number of  cars is explained by the large number of quarterly (short-term)  contracts. In the total number of MTPL contracts, the share of  E-policies increased over the year from 24% to 32% or 265,660  thousand, with an acceleration of the annual growth in the number of  such contracts from 11.2% to 27.5%.

According to the results of 8 months of this year, the volume of  insurance premiums collected under current contracts reached 18.9  billion drams ($48.6 million), and the volume of insurance  compensation amounted to 13.9 billion drams ($35.9 million).  Moreover, the volume of compensation paid in cases of simplified  registration of accidents (Europrotocol) increased by 27.2% over the  year (with an exit from last year's 10.4% decline) - to 1.6 billion  drams, and the average size of one payment accelerated in annual  growth from 8.1% to 11.4%, reaching 93,356 thousand drams ($241,  against $217 a year ago). In terms of total insurance compensation,  the average size of one payment also accelerated in annual growth  from 9.2% to 11.6%, amounting to 257,603 thousand drams ($665,  compared to $598 a year ago).

According to the Bureau, the largest number of vehicles with an MTPL  policy are covered by LIGA Insurance Insurance Company - 165.1  thousand units, which also has the highest loss ratio for MTPL at  89%. A slightly smaller number of vehicles with an MTPL policy are  covered by Nairi Insurance and Sil Insurance - 138.9 thousand units  and 121.6 thousand units, respectively, for which the loss ratio for  MTPL is 70% and 84%. The largest volume of insurance premiums under  current MTPL contracts are also provided by Nairi Insurance and LIGA  Insurance - 4.3-4.1 billion drams (23-22% of the total volume), and  they are also leaders in the volume of compensation in this class -  3.2-3.9 billion drams (23-28% of the total volume). LIGA Insurance  and Nairi Insurance also have the highest payouts for simplified  accident registration (Europrotocol) - 31-22% of the total market  volume.

Since April 2023, the transition to liberalization of tariffs for  compulsory motor third party liability insurance (CMTPLI) has started  in the Armenian insurance market, and after a quarter, the loss ratio  for this class began to grow.

Since the end of July 2023, 7 insurance companies have already been  operating in Armenia, as EFES Insurance Company has returned to the  market, which is currently preparing to enter the compulsory motor  third party liability insurance (CMTPLI) segment. (The calculated  exchange rate of the dram against the US dollar as of 31.08.2024 was  387.53 drams/$1, compared to 385.78 drams/$1 a year earlier on the  same date).