During the recent two years, the development observed in the insurance industry was very rapid, a double-digit one. The growth in 2019 is forecasted to be of a one-digit figure, the market growth in Latvia was approximately 7%, said Oskars Hartmanis, Deputy Chairman of the Management Board of BTA Baltic Insurance Company AAS (BTA).

 Lesser growth has been predominantly driven by various types of motor insurance. In comparison to other kinds of insurance, competition here is very fierce, and each insurer on the Latvian market fights for the client. Another aspect, contributing to the reduction of growth, is the decelerating construction pace, in the light of the closing of stage two of financing from the European Union funds in the next two years. There is a somewhat paradox situation in this field: there is a lack of workforce in Latvia, while the large local construction companies are active in exporting work hands to other countries, primarily to Scandinavia and Germany.

Rapid development is also stalled by the ongoing processes in the banking sector, and not concerning just the non-resident deposits in Latvia, but daily business operations as well – the banks have gone from one extreme to another by pulling in the reins. The regulatory framework is now so tight that it is felt also by us as insurers – financial service providers, who often need to make, for instance, travel insurance and health insurance indemnity payments to accounts abroad, situated in sanctioned regions, to include Russia, Crimea, Turkey. At present, it is virtually impossible without going at some lengths by furnishing banks with additional explanations to justify those payments, and it applies to all entrepreneurs doing business with these countries.  

I do look at the year ahead with much anticipation, I truly hope the new director of the Financial and Capital Market Commission will be able to define a clearer outline for these financial transactions, for Latvia to have a uniform approach and businesses wold not be compelled to look for banking services elsewhere, switching to other EU countries. With the overall scope and dynamics of financial deals shrinking, the insurance industry growth deflates as well.

Speaking of competition and insurance types, there is an emerging trend among clients – rather than stopping on just the very basic insurance package, to include insurance of complementary risks in the cover – a trend not distinctly observed previously, for example, to extend the property insurance cover also to mobile phones, computers, household electronic appliances, other devices – something you could but fantasize about some ten years ago. Thus, the competition is felt through expansion of policy covers, offering customers a wider range of options to get insurance indemnity in case of damages or theft. Moreover, customers may take these devices along with them on trips not limited just to the territory of Latvia.

Motor insurance also sees incessant introduction of new types of cover to make customers suffer lesser financial losses and experience less discomfort, to name a few – replacement car, cover of taxi services, and other.

Speaking of this year, one of challenges is to proceed with implementation of internet-related innovations, to include making mobile solutions more comfortable and accessible. We have spotted a tendency that clients, when about to getting insurance for larger amounts, run an online research of its kinds and options, nevertheless making the final decision during a conversation with a consultant over the phone or in person. Smaller, regular insurance premiums are paid online without hesitation, and this practice tends to grow.

In health insurance, one of the future questions awaiting a response is the necessity to revise the tax relief ceiling for those working at government enterprises. The current ceiling of 215 euros were established 11 years ago, while the prices for health care services have considerably increased since that, thus these reliefs to enterprises are heavily lagging behind the actual world outside for quite long already. Meanwhile a health insurance policy as a recruitment tool has become a common constituent of employee benefits package.

About BTA

BTA Baltic Insurance Company is one of the leading insurance companies in the Baltics, offering the broadest range of non-life insurance services in Latvia, Lithuania and Estonia. BTA employs more than 1,000 employees in the Baltics. The largest shareholder of BTA is Vienna Insurance Group AG with close to 200 years of experience in the insurance business. With about 50 companies in 25 countries and more than 25,000 employees, Vienna Insurance Group is a clear market leader in its CEE markets. Vienna Insurance Group is the best-rated company of ATX, the leading index of Vienna Stock Exchange with a rating of A+ with stable outlook from Standard & Poor’s; its share is also listed on the Prague Stock Exchange.

Additional information:

Elīna Rasmane

Marketing and Public Relations Department Director

BTA Baltic Insurance Company AAS

e-mail elina.rasmane@bta.lv