Drop in car use bolsters insurers’ gains

Insurance companies may have experienced a 30 percent decline in turnover in recent years, but they are enjoying a rise in profits and a significant increase in their capital yields, a study by the Association of Insurance Companies for the period between 2010 and 2013 has shown.

Profit margins in the sector soared from 1.9 percent in 2010 to 13.2 percent in 2013, while capital returns rose from 6.8 percent to 24.9 percent and asset yields climbed from 0.6 to 3.6 percent. This took place during a period when the drop in activity and the PSI debt restructuring hurt many insurers’ capital adequacy.

The improvement in the sector’s financial picture is attributed to the reduction in the sector’s losses, mostly thanks to the drop in car use during the economic crisis – after all, car insurance has always been the main drain on insurers’ funds.