English, Article edition: Private Insurers Report Declining Revenues from Premiums in the Wake of the Austerity Package Thomas Url

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Physical Description
  • article
Language
  • English

Edition details

Title
  • Private Insurers Report Declining Revenues from Premiums in the Wake of the Austerity Package
Author
  • Thomas Url
Physical Description
  • article
Notes
  • In 1997, Austrian private insurance companies saw their revenues from domestic and foreign premiums decline by 4.4 percent to ATS 156 billion. They registered a fall of 6.3 percent in their domestic direct business, but successful acquisitions of indirect business enabled them to compensate for part of the loss. Their volume of direct business in the Internal Market continues to be relatively small, but revenues could be boosted by more than half in 1997, reaching ATS 153 million. The decline of premiums for life insurance coverage (15.9 percent) was primarily the result of flagging sales of lump-sum insurance products. Private old-age insurance products based on regular premium payments continued to be highly popular in 1997. Annuity and endowment insurance products had their premium volume pushed up by almost 46 percent, thanks to 215,000 new contracts and a rise in average annual premiums to ATS 14,700. Next to the general uncertainty about developments in the public old-age insurance system, a key factor for the upward trend appears to have been a successful drive to sell life insurance policies across the bank counter. Banks were the preferred distribution channel for Austrian life insurers (Fig. 1), in contrast to their European competitors with the exception of France where banks play a similarly dominant role. In Greece, Finland, Sweden, Germany and – surprisingly – the U.K., on the other hand, insurers used own agents as their chief distribution channel. For their indemnity and personal accident insurance products, Austrian insurers, like those in Sweden, bet on their traditional distribution channel: sales by their own agents. In other European countries sales through insurance brokers are a more important factor. Indeed, private insurers responded to the Internal Market by strengthening distribution through banks and through direct channels, although telephone sales were successful only in the U.K. and the Netherlands. The Internet is still a negligible factor, achieving a market share of about 1 percent only in Finland. The two remaining lines were unable to compensate losses from life insurance business in 1997: with regard to supplementary health insurance, cost cuts achieved through exemption from VAT for medical and hospital services and through exemption of subsidies to the general hospital maintenance costs were partly passed on to policyholders by way of lower rates. Another factor contributing to the decline of 2.1 percent was the decreasing number of policies. In the property and liability insurance sector, the fight for market shares in motor insurance resulted in weak growth of the premium volume (0.7 percent).
  • Prämieneinnahmen der Privatversicherungen sinken im Gefolge der Budgetsanierung; Private Insurers Report Declining Revenues from Premiums in the Wake of the Austerity Package
  • RePEc:wfo:monber:y:1998:i:10:p:679-685
Language
  • English
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