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According to data released by the HFSA on Friday, at the end of 2019, the MNB registered 418 independent insurance intermediaries, a decrease of 24% compared to the peak in 2010 and a decrease of 5% in one year. There are currently as many plural agents and brokers in Hungary as in 2007.
However, it is a positive fact for market participants that their income is increasing considerably. Non-life insurance commission income amounted to HUF 64 trillion last year and life insurance to HUF 23 trillion, although in the past there were years when market participants made more from the sale of life insurance . However, the central bank’s ethical life insurance regulations and the weaker performance of the life insurance market are reflected in the figures.
A significant portion of commission income continues to be made through non-electronic channels by brokers and multiple agents. Non-life insurance has a higher degree of digitization than life insurance, where the proportion of insurance contracts with electronic mediation is marginal.
The following figure shows the number of new life insurance contracts. The number of new regular rate contracts increased last year, with 127,000 contracts sold by the market, a new record. However, in terms of single-prize products, the market was at a low point last year, especially in the second half of the year, in which the appearance of MÁP +, which offered a performance of up to 4.95 % may also have played an important role.
If we look at the premium for these contracts (i.e. the rate expected to be received in one year), we can see that 2019 was not a record year at all, which probably partly explains the life insurance commission revenue They were also not pending in 2019. years. The average premium for new contract was only HUF 155,000 for new regular premium life insurance policies. It can be said that last year we entered into several small life insurance contracts with independent insurance intermediaries.
Our figure below shows non-life insurance: here 2019 was a record year in terms of number of units and premium, this time the first half of the year was slightly stronger than the second.
Most of the annual reports of insurance intermediaries have not yet been published, so the data for 2018 is available in terms of total revenue and profit. In 2018, brokers and multiple agents generated revenue of HUF 93.5 billion with a profit of HUF 12.4 billion.
Only brokers and multiple agents, i.e. independent vendors, are included in the above data. However, at our Insurance 2020 conference in early March, the entire insurance brokerage market was on the table. During the public vote, a surprisingly large proportion of the professional audience thought that there were too many independent and dependent intermediaries in the market, although the number of people working in the profession had decreased significantly in recent years.
Insurance intermediaries increasingly provide complex financial advice, and more and more financial products are negotiated in addition to insurance. According to the audience, this standing position is nothing but the secret to long-term success for them.
Online channels are likely to continue to have the greatest growth potential ahead, and will continue to advance in the coming decade. The big question is which offline channel (more precisely: not just online) will remain the laurel alongside these. The public believed that bank branches / post offices and brokers could perform better in the field of life insurance.
In the area of non-life insurance, the domain of brokers can be much clearer, and personal advice and mediation are also very necessary in this area. One of the main messages from this year’s conference was that the increasing emphasis on digitization will not displace personal participation in insurance sales.
Cover image: Shutterstock
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