The Commissariat aux assurances, Luxembourg's insurance regulator, has confirmed today that the insurance market continued its downward trend during the third quarter of 2020: premiums fell by 22.52% for all insurance branches combined, compared to the same period of the previous fiscal year.
Over the first nine months of the 2020 financial year, overall revenues recorded a decrease of 20.78% with premiums falling by 33.99% in the life assurance branches, but increasing by 7.49% in non-life insurance.
The COVID-19 pandemic that erupted towards the end of the first quarter of 2020 continued to significantly impact 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, regarding both new investments and buy-backs, while non-life insurance seems less affected, at least in the short term.
In life insurance, the 33.99% decrease in inflows over the first three quarters of 2020 affected both unit-linked products, whose premiums have fallen by 10.91%, and products with guaranteed returns, whose inflows are declining by 62.51%. Note that the figures for 2019 include a portfolio transfer to Luxembourg for an amount exceeding €2 billion, primarily impacting traditional insurance with guaranteed returns.
The total provisions of life insurers stood at €201.59 billion at the end of September 2020, up 1.04% compared to the end of September 2019 and 0.88% compared to the end of June 2020. The increase of €1.75 billion in the third quarter of 2020 is due to both a positive net inflow (new premiums being €0.21 billion higher than the amount of redemptions) and the revaluation of contracts (up to €1.54 billion), as explained by the recovery of the financial markets. The buy back rate, which already reached an historic low in the second quarter, fell further to 7.28% of provisions.
Non-life insurance grew by 7.49% over the first nine months of 2020. Insurers working mainly if not exclusively on the Luxembourg market recorded growth in their inflows of 4.28%. With a 1.10% increase in their premiums, non-life companies (excluding Brexit and marine insurance and operating abroad) are making much more limited progress. Cash received from companies relocating to Luxembourg as a result of Brexit increased by 10.02% and was the main contributor to overall progress. Marine insurance, for which only the figures for the second quarter are available and which is especially the result of a few large mutuals whose collection reflects the evolution of claims, increased by 3.07% during this period.
