Czech Republic

Czech insurance market

The insurance market in the Czech Republic is dominated by two insurance groups, which together hold a share of over 60% of total premium volume.

Premiums written in the Czech insurance market rose 1.8% in local currency terms during the first nine months of 2016.

The increase was primarily due to good growth in non-life insurance, which recorded a 4.2% increase in local currency terms in the 1^st to 3^rd quarters of 2016. Premiums rose 5.7% in the motor area, mainly due to a 9.4% increase in own damage insurance. Motor third party liability insurance recorded a gain of 2.9%. However, since average premiums remain unchanged or have even decreased slightly, this line of business continues to generate losses.

In local currency terms, life insurance premium volume decreased 2.1% year-on-year in the 1^st to 3^rd quarters of 2016.

This included a decrease of 30.5% in single-premium business. Regular premium life insurance also decreased slightly, recording a drop of 0.8% in the first nine months of 2016.

The average per capita expenditure for insurance was EUR 516 in the Czech Republic in 2015. Of this, EUR 291 was spent on non-life insurance and EUR 225 on life insurance.

VIG companies in the Czech Republic

Vienna Insurance Group is represented by three insurance companies in the Czech Republic: Kooperativa, ČPP and PČS. The Group’s own reinsurance company, VIG Re, has also been operating in Prague since 2008 – this company is, however, assigned to the “Central Functions”.

VIG’s market share of 31.8% makes it the leading insurance group in the Czech market. VIG has a market share of 33.5% in the life insurance area, which also makes it the leader there. In non-life insurance, the Group is in second place with a market share of 30.9%.

Business development in the Czech Republic in 2016

Premium development

The Czech insurance companies generated premium volume of EUR 1,529.09 million in 2016 (2015: EUR 1,554.82 million), a decrease of 1.7% compared to the level in the previous year. This decrease was solely due to the decrease in single-premium life insurance business. When adjusted for this, strong premium growth of 6.4% was achieved. Net earned premiums were EUR 1,151.47 million in 2016 (2015: EUR 1,204.78 million).

Expenses for claims and insurance benefits

Expenses for claims and insurance benefits less reinsurance were EUR 738.42 million in 2016. The year-on-year decrease of 9.6% was due to the significant reduction in single-premium life business, with the loss ratio remaining essentially constant for property and casualty insurance.

Acquisition and administrative expenses

Acquisition and administrative expenses for the Czech Group companies increased 10.9% to EUR 350.78 million in 2016. Acquisition and administrative expenses were EUR 316.28 million in 2015. The main reason for the increase was higher commission expenses due to the increase in motor insurance premiums and the increase in new business for regular premium life insurance.

Result before taxes

Due to the drop in the financial result, the profit before taxes generated by the Czech Group companies declined 6.3% year-on-year to EUR 152.77 million in 2016.

Combined ratio

The combined ratio improved to an excellent 90.5% in 2016, in spite of the increase in commission rates (2015: 90.7%).