Hungarian Insurance Market Struggles, but Travel Insurance Soars in Budapest

Published: December 05 2023

The Hungarian insurance market has been struggling in the first nine months of the year, with overall profitability decreasing and additional taxes impacting the industry. However, travel insurance has seen a significant increase in demand, surpassing previous records as the vacation season came to an end.

The sector's profitability has decreased by 42% compared to the previous year, reaching only 12 billion Hungarian forints. The third quarter was particularly negative in terms of profitability, with a deficit of 4.6 billion Hungarian forints mainly due to non-insurance technical settlements. Additional taxes have also posed challenges for the insurance sector, with an expected further decrease in profitability by 2023.

The number of life insurance contracts has decreased in the past year, particularly with a significant decline in single-premium contracts and cancellations of regular premium mixed life insurance policies. Property insurance, including home insurance, has also faced a decrease in contracts, possibly due to cost-saving measures by the population.

While the number of compulsory motor liability insurance contracts has increased, comprehensive vehicle insurance contracts have decreased, indicating that fewer vehicles are opting for full coverage. The collected premiums reflect the challenging market conditions, with a 10% decrease in life insurance premiums and a significant decline in unit-linked and investment-linked policies.

In contrast to other insurance sectors, travel insurance has experienced a significant boost in demand. The number of single-premium travel insurance contracts has exceeded previous records, surpassing the results from the pre-COVID year of 2019. The total premium revenue has also increased by 28% compared to the previous year, reaching nearly 16 billion Hungarian forints in just nine months.

Overall, the Hungarian insurance market has faced various difficulties, including decreased profitability and additional taxes. However, travel insurance has emerged as a sector that has thrived, indicating a strong demand for coverage during vacations and trips.

What is the current state of the insurance market in Hungary? The insurance market in Hungary has been struggling in the first nine months of the year. The sector's taxed profit was significantly lower than last year, and the third quarter ended with a negative result. The industry has been negatively affected by additional taxes, and some market players predict that the sector's profitability may disappear completely in 2023.

Which type of insurance is performing well in Budapest? Travel insurance, specifically, travel health insurance, is thriving in Budapest. The number of single premium travel insurance contracts has increased, surpassing even pre-pandemic levels.

How are life insurance policies faring in Hungary? The number of life insurance contracts has decreased in the past year, particularly the single premium contracts and regular premium mixed life insurance contracts. However, pension insurance policies are still popular, thanks to tax benefits, and it is expected to remain lively in the last quarter of the year.

Have people in Hungary been cutting back on non-life insurance policies? Yes, there has been a decrease in the number of household insurance policies, especially those related to mortgage coverage. Additionally, there has been a decline in comprehensive car insurance policies, indicating that fewer vehicles on the road are fully insured.

How have the premium revenues been affected in Hungary? Premium revenues reflect the crisis in the insurance market. In life insurance, there has been a decline in premiums for mixed life insurance contracts and investment-linked policies. While pension insurance premium revenues have increased, it is not significantly higher than the average inflation rate. For non-life insurance, premium revenues have grown in line with inflation, with increases seen in home insurance and compulsory motor liability insurance (kgfb). However, the increase in comprehensive car insurance premium revenues was higher than the inflation rate.

What has been the performance of travel insurance in Hungary? Travel insurance, specifically travel health insurance, has performed exceptionally well in Hungary, setting new records. The number of single premium travel insurance contracts has increased compared to previous years, and the premium revenues have also grown significantly.

How much is the premium revenue for travel insurance in Hungary? The premium revenue for travel insurance in Hungary has reached nearly 16 billion forints in the first nine months of the year. This represents a 28% increase compared to the previous year and a 23% increase compared to 2019.

Have Hungarians been cutting back on insurance policies? Yes, many people in Hungary have been cutting back on insurance policies. There has been a decrease in the number of life insurance contracts, household insurance policies, and comprehensive car insurance policies.

Are there any taxes or additional fees affecting the insurance market in Hungary? Yes, the insurance market in Hungary has been negatively affected by additional taxes, including the extraprofit tax. These taxes have significantly reduced the sector's profit, and it is estimated that the sector's profitability may disappear entirely in 2023.

Is the insurance market expected to improve in the future? The future of the insurance market in Hungary is uncertain, given the current struggles and the impact of additional taxes. However, certain segments, such as travel insurance, have shown resilience and potential for growth.