How has the insurance industry been affected by the pandemic and how will future challenges impact it? Latvian Radio spoke to experts in the sector on September 29 to find out.
Insurance markets are similar in the Baltic States because many insurance companies work in all three countries and offer similar products and services to customers. The head of the Insurers’ Association, Jānis Abāšins, said the biggest differences were in the field of health insurance.
“Health care has been poorly funded by the state for many years, so we have a relatively developed health insurance [system], which only started developing in Lithuania and Estonia in recent years. Insurance as an industry is unique because it works with virtually all industries. Consequently, as insurers, we do not depend solely on tourism or air transport.
“As a result, some business went down, but at the same time another went up as there was a demand for products that weren’t there before. Let’s say, more specific travel insurance for Covid-19, more specific health insurance,” explained Abāšins.
The insurance company’s “Balta” board member Uldis Dzintars said health insurance grew by 8% in the eight months of this year.
“But in health insurance, the changes are smaller than in travel insurance. Customers are paying a more expensive price. But if we look at the rewards, they have doubled this year and now nearly every tenth case is reimbursed — Covid-19 coverage because of the cancellation of travel,” Dzintars said.
He said that overall, non-life insurance grew only 2.6% this year, which is less than a year earlier. But during the pandemic, the number of people insuring their properties increased by 11.9%.
“People are doing various housing improvement jobs this year because they work at home and are aware of the value of their property. The Covid-19 crisis helped people to better understand the risks we face and proactively try to eliminate the effects of risks, so it is certainly a very favorable trend. If before we were more careless than the people of Western Europe, then we are now coming to this,” the Balta representative said.
Last week, an international conference on insurance in the Baltic was held. It also discussed the challenges for the future of the sector. Abāšins, head of the Latvian Insurers Association, said the industry will think much more about sustainability and ‘green’ investments in the future.
“The life insurer must show to its client that these funds are ‘green’. Estonians have firestone that is similar to coal for them. Gradually, this firestone must be replaced with something greener. We are lucky in this respect, we are already quite green in electricity extraction with our HES. But there’s certainly something to think about. The financial sector – both banks and insurers – will be one of the European instruments through which this sustainability and green thinking process will certainly take place,” Abāšins said.