12° Nicosia,
23 June, 2024

Insurance premiums expected to rise slightly

In the upcoming quarter, general insurance policies and insurance companies' claim costs are rising.

Panayiotis Rougalas

Panayiotis Rougalas

Inflation-related losses are also occurring for general insurance policies. Cyprus' insurance policies will specifically follow the broad pattern of other nations and other international insurance companies, which have been raising premiums over the past year, primarily for home and auto insurance. The pre-inflationary pricing is no longer able to cover customer claims, which is the cause. In the coming three months, particularly starting in the new year, increases in general insurance should be anticipated. Cyprus' insurance firms have been trying for a very long time to make up for the difference brought on by inflation.  When the inflationary trends were first noticed, the insurance companies in Cyprus did not immediately increase their premiums. Inflation (Harmonised Index of Consumer Prices) increased by 8.6% in October 2022, compared to 9% in September 2022, and 8.2% between January and October 2022. As a result, all "claims" should fall below the denominator of 8.2%. For example, consider a vehicle accident in which the customer requested 500 euros in insurance coverage for one claim; this cost has now increased by about 50 euros (about 10% of 500 euros) due to increases in raw materials, parts, and construction materials.

Andreas Athanasiadis, President of the Cyprus Insurance Companies Association, confirmed a percentage increase in insurance policies in the coming months. As he confirmed to "K," insurance companies are unable to cover the additional costs that have been incurred, forcing insurance companies in Cyprus to follow a trend that other countries have already followed. He was forced to admit that the increase will not be dramatic, but there will undoubtedly be a slight increase in general insurance policies due to inflation in the coming months.

Andreas Athanasiadis, President of the Cyprus Insurance Companies Association, confirmed a percentage increase in insurance policies in the coming months.

No additional payments are required

Returning to the "practical" side of the argument, it is impossible to demand additional payment from someone who has already paid, for instance, the annual policy for his car. The increases are for policies that will primarily be implemented in 2023, and they won't be prohibitively expensive; instead, they will simply correspond to increases in line with inflationary trends. If someone paid 200 euros for their auto insurance policy in November, for instance, they won't get a visit from their insurer in March asking for another 8 euros. There won't be a uniform increase for all insurance companies; instead, each will make its own adjustments.

Claims for the first nine months of the year

According to the Cyprus Insurance Association's quarterly publication of insurance data covering the first nine months of 2022, there were a total of EUR 169.4 million in "small claims incurred" (gross claims incurred) in the non-life sectors. The corresponding amount for the same period in 2021, or the nine-month period, was EUR 161.7 million. The difference, as can be seen, is 4.7%. The total amount for claims pertaining to industries other than the "life sector," specifically the "gross premium earned" industry, in the first nine months of 2022 was EUR 385.4 million, as opposed to EUR 369.1 million in the same period of 2021. 4.4% of the two amounts are different from one another.  Finally, the "gross claims ratio" reached 44% in the first nine months of 2022 and 43.8% in the first nine months of 2021.

Data for "non-life net claims incurred" and specifically "net claims incurred" in the first nine months of 2022 indicate that the sum has now reached EUR 135.4 million. It had reached EUR 129.5 million in the corresponding period of 2021. 4.5% more money will be made between 2022 and 2021. In the first nine months of 2022, "net premiums earned" of "non-life net claims incurred" totaled EUR 266.7 million. They had a nine-month revenue of EUR 257 million in 2021; 3.8% more revenue was generated in 2022 than in 2021. For the first nine months of 2022, the "net claims ratio" was 50.8%. It was at 50.4% in the corresponding period of 2021.

11,200 life insurance claims

Even more intriguing are the statistics provided by the Association on "life gross claims incurred" (life gross claims incurred) in the first nine months of 2022. The data show that 11,288 claims totaling EUR 163.6 million were filed in the life insurance sector. The amount was EUR 152.2 million in the corresponding period of 2021, and there were 10,999 claims. In terms of money, the difference between the two is 7.4%, and in terms of claims, it is 2.6%. The aforementioned information only pertains to SAEK member companies' activities on the domestic market. It is worth noting that SAIC member companies account for approximately 98% of the total data. 

[This article was originally published in Kathimerini's 'Oikonomiki' and translated from its Greek original]

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