Insurance sector records inflow of €40.2bn in 2022

Insurance industry premiums fell by 4.3% in 2022, while total assets under management fell by 6.5%. The post-covid period, marked by a strong rebound, is now far behind.

After a record premium income of €42bn in 2021 driven by the dynamism of both life insurance activities–+30% to €27.5bn–and non-life insurance–+14% to €14.9bn–and a level of assets under management up by 9% to €232bn, 2022 appears to be a year of strong slowdown.

According to figures collected from members of Aca, Luxembourg’s insurance and reinsurance association, the insurance sector recorded an inflow of €40.2bn, a decline of 4.3%. The 15.7% increase in non-life insurance premium income, i.e., €17.2bn, was not enough to compensate for the 16.3% fall in life insurance premium income, which amounted to €23 billion. The amount of assets under management is also down: -6.5% to €217.4bn. This year’s fall should not, however, mask the steady increase since 2018. In five years, it has reached 22.9%.

Non-life insurance business as a growth driver

Since 2018, life insurance premiums have fallen by 3% while those of the non-life sector have exploded by +295%. This explosion was driven by the dynamism of international activities, whose premium income rose from €3.1bn in 2018 to €15.2bn in 2022.

“The non-life insurance sector confirms that it is playing an increasing role in the international growth of the Luxembourg insurance market,” comments Aca. General liability and property insurance lines, which account for 80% of direct premiums collected as at 31 December 2022, have recorded an increase of 18% compared to 2021.

The Luxembourg life insurance market is by nature an international market. Of the €21.3bn in premiums collected, €20bn come from the EU and €10.8bn from France. The share of products with a guaranteed return is decreasing, representing 16% of invested assets in 2022, compared with 20% in 2021 and 23% in 2019. On the other hand, and in proportion, unit-linked policies now represent 78% of invested assets as at 31 December 2022.

A local market that is slowing down
The local market has also seen a decline in premiums: from €3bn in 2021 to €2.8bn in 2022.

Life insurance has seen a 20% drop in premiums collected, dropping to €1.6bn. “This decline is more marked for unit-linked products (-28%) than for guaranteed return products (-14%),” notes Aca.

Local growth in non-life insurance remained solid, with an overall performance of +7% and €1.2bn of direct insurance premiums as of 31 December 2022. The two main insurance branches, motor and property, recorded increases of 4% and 13% respectively.