(MENAFN Press) The Portuguese life insurance segment accounted for the largest share of 66.7% of the written premium of the overall insurance industry in 2011.
The written premium of the life insurance segment recorded a CAGR of ·“5.7% during the review period (2007’2011).
The depressed economic environment and a decline in household disposable income ’ on account of global financial crisis and subsequent European debt crisis ’ led to decline in the sale of life insurance products during the review period.
Endowment, the largest category in life insurance segment, recorded a decline of 3.4%.
The gross written premium of the life insurance segment is expected to increase at a projected CAGR of 2.2% over the forecast period (2012’2016).
Life insurance segment recorded a decline during the review period
The Portuguese insurance industry rebounded in 2010 and was supported by a rise in demand for low-risk investment coverage such as general annuity and pension products.
However in 2011, the segment contracted sharply by 37.6% in terms of gross written premium and fell below its 2006 levels.
The contraction in 2011 was mainly led by the high withdrawal rate of pension and endowment products.
The increase in redemption in these products was on account of a reduction in tax incentive proposed in the nation's 2011 budget.
This negatively affected the demand for life insurance investment products and consequently gross written premiums declined from 76.2% of the industry total in 2010 to 66.7% in 2011.
Bancassurance channel continues to lead the distribution channels in Portugal
Over the review period the Portuguese life insurance segment has been significantly dependent on the bancassurance channel for the sale of life insurance policies.
The increasing demand for insurance products from this distribution channel has encouraged life insurers to make further agreements with banks.
The channel accounted for 85.5% of the written premium new business in 2011.
The cost effectiveness of the channel is expected to make it the largest distribution channel in the country, although its share of total life insurance written premiums is projected to decline marginally to 85% in 2016.
Expanding aging population to support growth in life insurance segment
Portugal's aging population is expected to notably contribute to the growth of country's life insurance segment over the forecast period.
The older population has a tendency to purchase more life insurance products than the younger population as they are planning for their retirement.
According to The United Nations Department of Economic and Social Affairs (UNDESA), the average life expectancy of the Portuguese population increased from 75.2 years in 1995 to 78.5 years in 2007 and to 79.5 in 2011.
Those aged 65 accounted for 18.1% of the total population in 2011 and recorded a CAGR of 1.2% during the review period this is expected to positively affect the country's life insurance segment.
Policies such as pension general annuity and unit-linked are expected to grow at higher growth rates than other life insurance products due to the increasing consumer demand for saving products.
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