Low Financial Returns Undermine the Life Insurance Business. Trends in the Austrian Private Insurance Industry in 2011

With a modest increase of premium revenues by 1.1 percent in 2011, growth of Austria's private insurance companies remained below that of nominal GDP (+5 percent). Performance within the sector was uneven: while premium revenues in property-liability and accident insurance rose by a hefty 7.2 percent, they fell by a surprisingly strong 7.3 percent in the life insurance branch. Private health insurance showed the customary smooth development (+3.6 percent), such that the composition of premium revenues among the three major insurance branches shifted further towards the non-life insurance business. Austria thereby followed the general trend in Europe of receding demand for life insurance and slowly-expanding non-life insurance business. Accordingly, insurance intensity declined to a ratio of 5.5 percent of GDP in 2011, the lowest reading in more than a decade. Current projections assume this trend to continue in 2012.