Deregulation of the European Insurance Market. Austria's Insurance Sector in 1994-95
Austria's access to the European Economic Area substantially changed the competition rules governing the Austrian insurance business. Since the third generation of Directives on Insurance Services was issued, the principle of the single insurance license has been in force in the EU and the EEA, respectively. The consequence of this change is that an insurance company authorized to operate in any signatory of the EEA treaty has the right to establish and offer services in any member country. By the end of April 1996, a total of 167 enterprises from the EEA had filed 227 registrations for cross-border services in Austria. A quantitative assessment of the changes in the competition rules is difficult because registering to establish and to offer services by a company from the EEA does not, in contrast to the rules governing domestic and non-EEA enterprises, require that the company offer services in Austria. In the short to medium term, the supply and demand effects to be expected from membership in the EU and the EEA, respectively, may be small in the large volume business. In the long term it is likely that business by EEA insurance companies will pick up, mainly in life and damage and accident insurance. The intensified competition is likely to put pressure on insurance companies to cut operating expenses. By the end of April 1996, 34 Austrian companies had filed 213 registrations to offer insurance services in the EEA. As expected however, access to this larger market had no discernible effect on business in 1994. Only in damage and accident insurance was a small portion of premium income earned directly in the EEA (0.05 percent). According to the Austrian Insurance Association (VVÖ), domestic direct premium revenues rose by only 3.9 percent to ATS 121.3 billion in 1994. The period of slow growth has continued with rates of 6.7 percent and 4.4 percent in 1995 and 1996. Life insurance premium revenues rose by a meager 1.4 percent in 1994, but the strong increase in lump-sum payments (by about 50 percent) will boost the growth rate to 14 percent in 1995. As a result of the business cycle developments and the effects of the government's consolidation drive, the outlook for 1996 is rather subdued. The private health insurance sector recorded a growth in premium revenues of 3.6 percent in 1994 (1995 +3.9 percent, 1996 –0.7 percent). In the damage and accident sector, premium revenues directly earned from domestic customers rose by only 5.6 percent, less than the average increase. The surge in the re-insurance business by 31.5 percent was quite remarkable, however: companies in damage and accident insurance posted an increase in premium revenues by 9.8 percent, the second highest gain since 1981. Premium revenues from damage and accident insurance may have risen by 2.9 percent in 1995 and are expected to increase by 3.2 percent in 1996.
Weitreichende Deregulierung des europäischen Versicherungsmarktes. Die Lage der österreichischen Versicherungswirtschaft 1994/95; Deregulation of the European Insurance Market. Austria's Insurance Sector in 1994-95
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