On the whole, the 25 largest insurers or insurance groups in Europe weathered the crisis well and stayed on track in the first Covid year 2020. This is a key finding of the latest Eu-ropean Insurance Study (EIS) by zeb. It is true that some insurers suffered notable drops in profits and premiums. Overall, however, the industry in Europe was in good shape when it was hit by the crisis. Therefore, most of the companies were able to operate profitably in 2020. The 25 largest European insurers were particularly resilient in terms of solvency. It decreased only marginally in the crisis year 2020 and remained at a very good level, albeit slightly below the previous year.

Dr. Jan Hendrik Sohl, Partner at zeb, says: “Europe’s top insurers came through the up-heavals of the first Covid year largely unscathed. They succeeded in operating profitably and staying on course in the face of difficult conditions. Unlike other industries, insurers have thus remained an anchor of stability during the coronavirus pandemic.”

Insurers were profitable in 2020
The latest European Insurance Study shows in detail how the Covid crisis has affected insurers’ profitability. In 2020, the top 25 companies’ net income fell by a quarter com-pared with the previous year. This was due, on the one hand, to losses on investments and, on the other, to underwriting aspects. These include higher loss ratios due to busi-ness closures or the cancellation of events. Both of these factors depressed the return on equity. For Europe’s top 25 insurers, it fell by 3.5 percentage points to 7.6 percent in 2020. Nevertheless, it continued to exceed the cost of capital. In other words, insurers operated profitably in 2020 despite the crisis and losses.

Solvency at a high level during the crisis
In terms of solvency, the authors of the zeb study hardly identified any pandemic-related effects. Although the corresponding ratios fell temporarily in the first half of 2020, this effect was largely offset over the course of the year. The European insurance industry kept its solvency ratio almost constant at an average of 236 percent (2019: 242 percent). At 215 percent, the ratio of the top 25 insurers analyzed in detail for the EIS was also at a very good level and well above the 100 percent required by Solvency II.

Shrinking premiums in the life segment
After recent years of strong growth, European insurers shrank in 2020, especially in the life insurance segment. Here, gross premiums declined by around 20 percent in some markets, such as Switzerland or Spain. In property and casualty insurance, however, there was only a moderate dip in growth, and health insurance also remained stable. While premiums for the top 25 insurers in Europe dropped by an average of 6.9 percent in 2020, the decline for life-dominated insurance groups was much more pronounced at 14 percent.

Success through focused product and sales strategy
A key part of the EIS dealt with the question of how insurers were able to consistently grow faster than the market over the years and thus expand their market shares, in some cases to an impressive degree. Some insurers were able to more than double their market share. We analyzed the four insurance markets Germany, Austria, Switzerland and Italy in detail over the decade from 2010 to 2020: it turned out that almost all outperformers had a focused product and sales strategy. In addition, the decade view revealed that specialists were more successful than generalists among insurance companies in all four markets.

Direct sales remain the industry’s growth engine
The authors of the study were not surprised to find that direct sales of insurance products continue to be a significant growth driver. In terms of new business in the property and casualty segment in Germany, direct sales increased from 9.4 percent (2010) to 13.7 percent (2020) over the past ten years. At the same time, the largest direct insurers were able to more than double their gross premiums from EUR 1.3 billion (2010) to EUR 3.0 billion (2020). In other European countries such as Finland, the United Kingdom and France, the share of direct sales in the property and casualty segment is even higher at over 30 percent.
In order to further develop direct sales into a growth engine, the authors of the study have identified specific approaches and success factors. In addition to the derivation of a strategic objective, this includes the bundling of responsibilities, transparent performance measurement and the creation of a common data basis.

Guido Enck, Manager at zeb, summarizes the situation as follows: “The trend towards direct, digital sales of financial products has been given a further boost by the coronavirus pandemic. The products have become even simpler and more modular. During the lock-down, many people realized how easy it is to buy insurance online. In future, organic growth will no longer be possible without a well-organized direct sales force. 

About the study:
In last year’s European Insurance Study 2020, zeb took a first look at the consequences of the coronavirus pandemic for European insurers. zeb’s forecast at the time was: insurers will clearly feel the effects of the crisis, but it will not threaten their existence. By and large, the study authors were correct, as the new November 2021 edition of the EIS con-firms. One year on, they were able to assess the consequences of the pandemic even bet-ter, using new data.
The study authors once again took a close look at the 25 largest European insurers and insurance groups in terms of gross premiums. They analyzed these “Top 25” according to their profitability, solvency and growth in order to obtain a comprehensive picture of the industry. In addition, the experts evaluated data on the overall market of selected Europe-an countries to carry out a growth analysis. When analyzing solvency, they also included insurers in the 31 countries of the European Economic Area.

Further information on the European Insurance Study 2021 with detailed figures and information on the top performers as well as best practice examples in the European in-surance market can be found at: European Insurance Study 2021

As a leading strategy and management consultancy, zeb has been offering transfor-mation expertise along the entire value chain in the financial services sector in Europe since 1992. In Germany, we operate offices in Frankfurt, Berlin, Hamburg, Munich and Münster (HQ). Our international offices are located in Amsterdam, Copenhagen, Kiev, London, Luxembourg, Milan, Moscow, Oslo, Stockholm, Vienna, Warsaw and Zurich. Our clients include European large-cap and private banks, regional banks, insurers as well as all kinds of financial intermediaries. Several times already, our company has been classed and acknowledged as “best consultancy” for the financial sector in industry rankings.