The Austrian insurance industry is set to be hit by disruption to the service sector and financial markets as expected growth will be reduced, says GlobalData, a leading data and analytics company. The company has revised up its overall growth estimates for the sector to 2023 from a compound annual growth rate (CAGR) of 2.8% to 1.7%, in terms of GWP, following the outbreak of COVID-19.

Deblina Mitra, Insurance Analyst at GlobalData, comments: “GlobalData’s updated forecasts for the Austrian insurance market sees the life insurance sector rise at a CAGR of 0.3% in GWP. However, the larger concern for life insurers will be profits. The financial markets across Europe have plummeted, meaning it will be harder for them to invest these premiums.”

GlobalData expects the general insurance market to increase GWP at a CAGR of 2.2% to 2023, down from 3.6%. Its forecasts show the overall insurance market declining in GWP in 2020, by a CAGR of -1%.

Mitra continued: “The rating outlook of Austrian insurers remains significantly clouded, as the health, life and travel lines are expected to record a rise in claims. Premiums falling in 2020, while claims are expected to spike across the board, means insurers are in for a very tough year. However, forecasts premiums are expected to return to positive growth in 2021.

“Growth has been revised down largely due to the service sector grinding to a halt. It makes up an estimated 70% of GDP in the Austrian economy, so the lockdown’s impact on tourism, hospitality and aviation is likely to be severe on the overall economy and insurance sector. The manufacturing sector and supply chains have also been heavily disrupting, which will have severe knock-on impacts on various insurance products.

“Premiums of motor insurance are expected to decline, due to plant closures and subdued demand. New car registrations fell by 66.5% year-on-year in March 2020. A lack of demand and total closure of plants will hit the motor insurance sector  in the immediate future.”