Insurance in the Baltics – growth is expected, but there are quite a few challenges
Insurance in the Baltic States – Latvia, Lithuania and Estonia – is developing quite similarly and has successfully coped with the consequences of the Covid-19 crisis so far compared to other European countries. Insurers have been able to adapt their products, services and customer service channels to the new Covid-19 situation, but the industry must not stop and prepare for future challenges such as cyber insurance, sustainability and social responsibility issues, changes in transport regulations, and the region also has great potential for the growth of life insurance, industry experts concluded at the 18th International Conference “Insurance and Reinsurance in the Baltics 2021”, which took place in Riga on September 23.
Comparing the insurance markets of Central and Eastern Europe, including the Baltic States, with those of Western Europe, the conference clearly highlighted the growth potential of life insurance – in the Baltic States, life insurance still has a much smaller market share than it would have. In turn, in non-life or risk insurance experts see the greatest growth opportunities outside transport (CASCO, MTPL) insurance – it could be property and general liability insurance.
“Specifically for Latvia, I would add the growth potential of health insurance, which is related to both the situation in Covid-19 and the low availability of state funded health care services,” says Jānis Abāšins, President of the Latvian Insurers Association.
The cyber insurance industry in Latvia, Lithuania and Estonia is still developing slowly, although in Europe and the USA, according to Jean Bayon De La Tour, Marsh’s Head of Cyber in continental Europe, this industry is experiencing rapid growth. The participants of the discussion at the conference emphasized that none of the Baltic States has yet experienced a major data or other cybercrime attack, due to which there is not enough interest and concern about cyber security and cyber risk insurance. It is also not yet clear who will create the initial pull and drive the growth of cyber insurance in the Baltics – demand or supply, because insurers are not currently particularly focused on new offers in this area.
During the discussions on motor insurance in the context of the revision of the Motor Insurance Directive (MID REFIT), the conference participants pointed out that there is still a lot of uncertainty about the content of this document, but the deadlines for implementation are quite ambitious. After the adoption of the new directive, serious amendments to the Latvian MTPL Law will be necessary, as well as it is already clear that an additional burden will be imposed on the Guarantee Fund.
Interesting discussions and positions were expressed in the conference presentations and discussions on sustainability issues. There is no doubt that the financial sector, including insurance, can have a ‘money’ effect on many processes, helping to address various sustainability issues. However, the role of the ‘bad policeman’ in the financial sector is now slowly changing at European level, with the aim of raising awareness and involving all sectors in sustainability issues. Moreover, sustainability is no longer limited to ‘green’ and climate change initiatives, but it means a much wider range of topics of social and political responsibility.