Loss ratio under MPTL insurance contracts showing continued upward  trend in Armenian insurance market

ArmInfo. In the insurance  market of Armenia, the loss ratio for compulsory motor third-party  insurance increased to the 81.5%  by December 2024, from last year's  70%.  This is evidenced by data from the Bureau of Motor Insurers of  Armenia. The growth of the ratio in January-November 2024 was  observed against the background of a deterioration in the annual  dynamics of the number of active contracts - from 12.8% growth to  0.8% decline, an imperceptible acceleration of the already moderate  growth of insurance premiums - from 3.4% to 9.4%, in parallel with  which a pronounced acceleration of double-digit growth in  compensation was recorded from 15.7% to 21.9%. According to the  Bureau, the number of vehicles with OSAGO policies in  January-November 2024 increased slightly - by only 1.7% y/y, while a  year ago the growth was 9.9%. In quantitative terms, by the beginning  of December 2024, there were 670,527 vehicles with MTPL contracts in  the country, but the number of active contracts was 1.192 million  (minus terminated ones - 1.081 million). 

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 25% to 31%, amounting to 372,932 thousand, with an acceleration  of annual growth from 16.3% to 23.7%.  According to the results of 11  months of this year, the volume of insurance premiums collected under  current contracts reached 26.6 billion drams ($67.4 million), and the  volume of insurance compensation exceeded 19.9 billion drams ($50.5  million). Moreover, the volume of compensation paid in cases of  simplified registration of road accidents (Europrotocol) increased by  32.9% over the year (with an exit from last year's 3.7% decline) - to  2.34 billion drams ($5.9 million), and the average size of one  payment accelerated in annual growth from 8.5% to 16.8%, reaching  99,018 thousand drams ($251, against $211 a year ago). In terms of   total insurance compensation, the average size of one payment  accelerated in annual growth less noticeably - from 10.1% to 12.2%,  totaling 262,383 thousand drams ($665, against $581 a year ago). 

According to the Bureau, the largest number of vehicles with an MTPL  policy are covered by LIGA Insurance Insurance Company - 142,946  thousand units, which also has the highest loss ratio for MTPL at  90%. A slightly smaller number of vehicles with an MTPL policy are  covered by Nairi Insurance and Sil Insurance - 134.1 thousand units  and 131.3 thousand units, respectively, for which the loss ratio for  MTPL is 72% and 84%. The largest volume of insurance premiums under  current MTPL contracts are also provided by Nairi Insurance and LIGA  Insurance - 5.9-5.5 billion drams (22-21% of the total volume).  They  are also leaders in the volume of compensation in this class -  4.4-5.3 billion drams (22-27% of the total volume). LIGA Insurance  and Nairi Insurance also have the highest payouts for simplified  accident registration cases (Europrotocol) - 29-22% of the total  market volume. Armenia Insurance leads in the number of E-policies  with 123.8 thousand or 33% of the total number of such contracts in  the market. It also ranks first in the total number of active  contracts - 242.3 thousand or 20% of the total number of active  contracts in the market.

It should be noted that since April 2023, the transition to  liberalization of tariffs for compulsory motor third party liability  insurance has started  in Armenian insurance market has started, and  after a quarter, the loss ratio for this class began to grow.  Note  that since the end of July 2023, 7 insurance companies have already  been operating in Armenia, since EFES Insurance Company has returned  to the market. It is currently preparing to enter the compulsory  motor third party liability insurance (SMTPLI) segment. (The  calculated exchange rate of the dram against the US dollar as of  30.11.2024 was AMD394.64 $1, compared to AMD 402.65/$1 the previous  year).