Spain: Insurers overcome obstacles and see revenue grow in 2022

The 38th Western Hemisphere Insurance Conference will bring together representatives of private sector insurers from 20 Latin American countries, as well as the United States and Spain, from September 24 to 26, 2023 in Rio de Janeiro. To present a little of the reality of the Spanish insurance market, the president of Unespa (Spanish Union of Insurance and Reinsurance Entities), Pilar González de Frutos, provides some data.

Even in a context of high inflation, rising interest rates and cuts in tax incentives for individual private pension plans, the Spanish insurance market overcame difficulties and advanced in 2022. Figures from the Unespa reveal that last year Spain’s insurers generated US$68.2 billion of total premiums (US$42.3 billion in non-life insurance areas and US$25.8 billion in life insurance).

“The insurance market grew 4.8% in 2022 (4.2% in the case of life insurance and 5.2% for other types of insurance),” says the president of UNEPSA, Pilar González de Frutos. She adds that last year, the sector managed to recover all the ground lost due to the pandemic, as its nominal turnover surpassed that of 2019. The most dynamic areas were health, business and multi-risk insurance.

The Spanish Association of Insurers and Reinsurers (UNESPA) represents just over 230 insurance companies, making up more than 97% of Spain’s insurance market.

Check out our full interview with Pilar de Frutos below
  1. What is your assessment of the behavior of the insurance market in your country in 2022? What was the market’s nominal growth in relation to 2021, both projected and actual? In U.S. dollars, what were total premium revenues?

The Spanish insurance market generated around US$68.2 billion of total premiums in 2022. Life insurance accounted for US$25.8 billion of this and non-life insurance accounted for the other US$42.3 billion. The insurance market grew 4.8% between 2021 and 2022 (4.2% in the case of life insurance and 5.2% for other types of insurance).

  1. In the current more adverse situation for the insurance sector (with high inflation, interest rates and input costs across the world), which lines of insurance performed better or worse and what were the reasons for this good or bad performance?

In 2022, the sector managed to recover all the ground lost due to the pandemic, as its nominal turnover surpassed that of 2019. The most dynamic areas were health, business and multi-risk insurance.
Within the non-life area, health insurance grew 7% year-over-year and generated revenue of €10.543 billion, an all-time high. This growth partly reflected some consequences of the pandemic and above all growing public appreciation of health insurance, which is characterized by efficient management and services in Spain.
Another highlight was the growth of multi-risk insurance, which expanded 5.69% compared to the previous year (a very solid figure), particularly in home and industrial insurance. This type of insurance also benefited from a relatively benign year in terms of weather-related claims. In addition, business policies, which are included in the “other non-life” category, increased 5.14%.
Auto insurance grew 3.3%. Although this increase was slightly lower than the rest of the non-life insurance market, due to the high level of competition, it should be appreciated that the segment managed to grow in a very difficult year marked by high inflation.
As for areas that performed more modestly, it is worth mentioning the savings aspect of life insurance, as is still below the pre-pandemic level. In any case, it should be noted that life insurance was already experiencing weakness before the pandemic, due to the low interest rate environment. However, some indicators point to a significant and rapid recovery in 2023.

  1. How did inflation, the base interest rate and workers’ income behave in 2022 and what were their effects on the insurance market in Spain?

The Consumer Price Index rose 8.4% in 2022. Interest rates are clearly rising, given the policy adopted by the European Central Bank to react to price pressures through monetary discipline. As for family income, the 2022 data is not yet complete, but figures up to September indicate that households’ disposable income expanded 3.35%, although this result would be double (6.6%) if we only consider wage earners.

  1. Did any specific problem impact the local market (regulation, extreme weather events, litigation, etc) in 2022?

One of the main obstacles to the development of insurance in Spain is the inexplicable decision of the Spanish government to withdraw tax incentives for individual retirement savings. Individual pension products used to have a special taxation regime, with tax exemption at source and on redemption or in the decumulation process. This treatment has now noticeably worsened and this decision has been very detrimental for pension savings in Spain. Retirement savings contributions have declined significantly in recent years, just when they needed to increase.