quinta-feira, 27 de novembro de 2014


Insurance is a contract by which one party, in consideration of a price paid to him adequate to the risk, becomes secure by the other that he shall not suffer loss, damage or prejudice by the happening of the perils specified to certain things which he may be exposed to.

At the end of 2013, insurance services in the Lithuanian market were provided by 24 insurers, of which 10 are insurance undertaking registered in Lithuania and 14 are branches of insurance undertakings established in other EU countries. Insurance licences of two insurance undertakings, i.e. UAB Būsto paskolų draudimas and UADB Industrijos garantas, were suspended. 
The share of Lithuania’s overall insurance market held by branches expanded to 49 per cent, from 40 per cent (53% of non-life insurance market, 42% of life assurance market), primarily due to a merger between three non-life insurance undertakings of ERGO in the Baltic countries early in 2013 and the continuation of the insurer’s operations in Lithuania through a branch of ERGO Insurance SE. 
In 2013, Lithuania’s insurance market continued to grow steadily: the insurance undertakings registered in the country and the branches of insurance undertakings established in Lithuania by other EU countries last year grew to LTL 1.946 billion in insurance premiums, 8.8 per cent more versus 2012. Growth rates of life assurance and non-life insurance markets were broadly similar, in particular, the life assurance market expanded by 8.9 per cent, or LTL 626.0 million, and the non-life insurance market — by 8.7 per cent, or LTL 1,319.5 million. 
However, neither life assurance nor non-life insurance segments managed to match the highest scopes seen in previous years. Record premiums written in traditional life assurance by the life assurance segment reflect increased demand for more conservative investment products. At the same time, a rather significant increase (of 9%) in the scope of unit-linked insurance has shown that, despite higher investment risks, policyholders also choose investments in riskier products of life assurance undertakings in the environment of low interest rates. 
For the non-life insurance market, 2013 was a year of record volumes. Last year, the scope of compulsory motor third-party liability (MTPL), status, general civil liability, financial loss, railway rolling stock and assistance insurance classes was the largest in a decade. However, the amounts paid by the latter insurance groups in claims were record high as well, thus, the loss ratio of non-life insurance market  (excluding claims handling expenses and subrogation amounts) decreased marginally by meagre 3 percentage points (to 58%). 
According to unaudited data, insurance undertakings registered in Lithuania earned LTL 61.2 million in profit in 2013, i.e. LTL 15.5 million less than in 2012. In contrast to previous periods, profitability of insurance undertakings was mostly driven by successful core, i.e., insurance operations. The prevailing environment of low interest rates affected investment performance of insurance undertakings’ last year, in particular, the return on investment (ROI) decreased by 2.7 percentage points to 2.6 per cent, and investment performance was one of the weakest as compared with performance in the past five years. In line with the previous periods, undertakings pursuing life assurance activities scored better in terms of the aggregate performance than non-life insurance undertakings. 
In 2013, as compared to 2012, assets of insurance undertakings grew by 8 per cent and amounted to LTL 2.8 billion. Growth was driven by a 3.7 per cent increase in the value of insurance undertakings’ investments and by an increase of as much as 14.7 per cent in the amount of life assurance investments, where the investment risk is borne by insurance policyholders. The composition of the insurers’ investment portfolio remained virtually unchanged, i.e., it remained conservative with the biggest amounts invested in government securities, corporate bonds and term deposits with banks. At the same time, insurance undertakings started looking for more profitable, albeit riskier, investments. As a result, investments in shares and other variable-yield securities increased by 14 per cent (to LTL 105.6 million) to account for 6.6 per cent of total investments. 
One of the major indicators of financial stability in the insurance market (solvency margin coefficient) was rather high, of 2.6 (solvency margin requirements are met where the solvency coefficient is above 1). Sufficient coverage of technical provisions of the insurance market with assets and a high solvency margin mean a financially stable market. 
In 2013, two planned inspections of insurance undertakings were carried out with focus on the adequacy of reserves formed by insurance undertakings, i.e. insurance technical provisions, as well as on the assessment of other areas relevant to the financial standing of the undertakings and the quality of their management system.

In my opinion, insurance is very important because it contributes a lot to the general economic growth of the society by providing stability to the functioning process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources. Insurance generate funds by collecting premium. These funds are invested in Lithuanian government securities and stock. These funds are gainfully employed in industrial development of the Lithuania for generating more funds and utilised for the economic development of the country. Employment opportunities are increased by big investments leading to capital formation. Insurance generates significant impact on the economy by mobilizing domestic savings. It turns accumulated capital into productive investments, enables to mitigate loss, financial stability and promotes trade and commerce activities those results into economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy.


[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho] 

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