Hungarian Post Office predicts growth in insurance sales

Hungary's postal service said two insurers that it jointly co-operates with Germany's HDI Group have seen strong sales so far in their first year of operation, and anticipate further growth in 2004, as new auto and life insurance products make their way into the market.

Magyar Posta, said it expects to see 4.1 billion Hungarian forint (US$1 – 223.85 forint) in revenue the entire insurance operation. The general insurance operation–Magyar Posta Biztosito–should see 200 million forint in revenue for the year. The life unit, Magyar Posta Eletbiztosito, should generate 3.9 billion forint.

The life insurance operation wrote 10,000 policies worth 3.4 billion forint by the end of October, and the general insurers wrote 24,000 policies worth 160 million forint, the postal service said. Magyar Posta Biztosito entered the third-party vehicle insurance market on Nov. 1, and plans to sell as many as 30,000 policies related to that in 2004, the company said.

The life insurer, which is fourth in market share for "one-off" premium policies, sold 5,873 property and accident products in the first 10 months of 2003, for more than 75 million forint in revenue, the company said. Magyar Posta Eletbiztosito also sold more than 18,000 travel insurance policies, for 83 million forint in revenue.

In addition to the compulsory third-party vehicle policies marketed since Nov. 1, Magyar Posta's insurers market two kinds of life insurance products–continuous and one-off premium policies, as well as travel and homeowners policies. The insurers plan to introduce comprehensive vehicle and pension insurance in 2004.

Stephan P. Kramer, a member of the board of directors of Magyar Posta Insurance, said the company calculates that between 100,000 and 170,000 vehicle owners will move their compulsory third-party coverage to a new carrier next year. Magyar Posta aims to capture about 30,000 of those transfers, for revenue estimated at 720 million forint. In preparation, the general insurer has signed contracts with several independent damage evaluation agencies, set up an independent call center and prepared the companies 26-unit service network to handle clients.

Magyar Posta owns a 45% stake in the two insurance companies, set up in April 2000 with HDI subsidiary Talanx AG, based in Hannover, Germany. Talanx owns the other 55% stake, the postal service said. Magyar Posta Eletbiztosito has registered capital of 1.715 billion forint, and Magyar Posta Biztosito has 735 million forint of capital.

Before 2003, Magyar Posta had sold the products of several insurance companies, including Generali-Providencia Insurance. The postal service said it generated premium revenue of 9 billion forint in 2002 for the subsidiary of Italy's Assicurazioni Generali SpA. Since Jan. 1, 2003, contracts with all other insurers have been terminated, and Magyar Posta said it now markets insurance only for the two companies jointly owned with Talanx. Premium revenue generated by insurers in Hungary rose 14.17% in the first six months of 2003, despite a continuing slowdown in the expansion of the country's life insurance market, a trade group said.

Hungary has seen steady growth in its insurance markets overall, as first-half premiums rose to 279.2 billion forint in 2003, from 244.5 billion forint a year earlier, according to the Association of Hungarian Insurance Companies (BestWire, Aug. 21, 2003). In the life insurance segment, premiums rose 7% in the first half, to 107.3 billion forint, although that pace is considerably lower than the average 40% growth in the country's life segment over the past few years, the association said. Nearly 20% of the life premium–20.8 billion forint–came from one-off insurance policies, while the rest–86.4 billion forint–came from premiums with installment plans.

Nonlife insurance premiums rose 15% to 146.1 billion forint. Premiums from compulsory third-party insurance rose more than 14% to 48.6 billion forint.

One of eight eastern European countries expected to join the European Union in May 2004, Hungary, like its eastern European neighbors, is seen as a promising growth market for foreign insurers. A study last year by Munich Re Group found that most insurance markets–especially life insurance–are under-developed in those countries.