The level of insurance of companies has decreased

By: Trademagazin Date: 2023. 09. 26. 09:12

According to the latest series of insurance data published by the MNB, domestic insurance companies handled 186,800 corporate property insurance policies by the end of the first half of the year, 0.6 percent less than a year earlier. The amount of the related half-year fee income amounted to HUF 64 billion, which was only 8 percent higher than the HUF 59.3 billion level registered in the first half of 2022.

In the same period, the number of general liability insurances decreased by 7.5 percent to 57,000, while the number of professional liability insurances decreased by 4.6 percent to 68,000. Despite this, premium income was able to increase by 13 percent for the former insurance group, and 5 percent for the latter.

The increase in property insurance premiums significantly lags behind inflation, which is only partially due to the strengthening of market competition between insurers and the decline in insurance costs due to digitalization. The premium income per contract for SME property insurance amounted to HUF 107,000, while for large companies it was HUF 895,000, the increase in the latter round was only 4.6 percent. This low value shows that the number of underinsured companies may have increased, especially among large companies.

Underinsurance occurs when the insurance amount in the contract falls short of the actual value of the insured property. The most important consequence of this is that the insurance company only compensates the damage in accordance with the ratio of these two amounts. In the current market situation, the primary cause of underinsurance is inflation, which fundamentally increases the risk of companies through rising recovery costs (rise in construction industry prices, rise in prices of parts and raw materials, labor costs).