The Commissariat aux assurances, Luxembourg's insurance regulator, has confirmed today that, after an already weak start to the year, the insurance market continued its downward trend during the second quarter of 2020: premiums fell by 19.54% for all insurance branches combined, compared to the same period of the previous fiscal year.
Over the first six months of the 2020 financial year, overall revenues recorded a decrease of 20.04% with premiums falling by 33.78% in the life assurance branches, but increasing by 8.81% in non-life insurance.
The COVID-19 pandemic that erupted towards the end of the 1st quarter of 2020 has had a significant impact on life insurance where uncertainties relating to the economic outlook, together with the development of the financial markets, are leading investors to adopt a wait-and-see attitude, also regarding new investments rather than buy-backs, while non-life insurance seems less affected, at least in the short term.
As already seen in the first quarter, the drop in revenues affected (very unevenly) the different branches of activity: the premiums of products with guaranteed returns fell by 65.71% while those of unit-linked products only experienced a decrease of 5.24%. Part of this decline is attributable to a portfolio transfer to Luxembourg for an amount exceeding €2 billion made during the 1st quarter of 2019 and impacting above all on traditional guaranteed yield insurance.
The total provisions of life insurers stood at €199.84 billion at the end of June 2020, up 2.89% compared to the end of June 2019 and 4.23% compared to the end of March 2020. The increase of €8.10 billion in the 2nd quarter of 2020 is mainly due to the recovery in the financial markets and can only be attributed to a positive net inflow of around €0.71 billion. New premiums exceed surrenders only for unit-linked products. The annualised surrender rate is at 7.82% of technical provisions, which is lower than the 8.99% recorded in the first quarter.
Non-life insurance grew by 8.81% over the first six months of 2020. This increase is no longer almost exclusively attributable to the impact of the approval of companies which have chosen Luxembourg as their place of installation following the decision of the United Kingdom to leave the European Union, these companies having now reached their "cruising speed". However, their inflows increased by 9.33%, while other companies operating outside Luxembourg in non-life insurance branches - other than marine insurance - saw an increase in their revenues of 9.58%. Marine insurance, for which only the figures for the first quarter are available and which is essentially the result of a few large mutuals whose collection reflects the evolution of claims, increased by 7.87% during this period.
