The Hungarian insurance market in 1995

The State Insurance Supervisory Authority


The table below shows that the position of the insurance profession further improved in 1995, though to a small extent. Premium income compared to GDP remained stable, but the ratio of insurance premium per HUF 100 of income improved slightly. The mathematical premium reserve also increased.

Some comparative indexes of insurance affairs
Premium income compared to GDP, %
Insurance premium per HUF 100 income, HUF3.452.
Insurance reserves (HUF billion)37.341.352.159.469.0
Gross savings of the population (HUF billion)888.0 1171.2 1378.3 12727.5 2108.9
Ratio of the growth of the mathematical premium reserves compared to the financial savings, %3.66-0.422.83.24.0

To sum up, the economic and financial processes of 1995 displayed contradictory characteristics. GDP increased again in 1995, partly as a result of the favourable foreign market situation, partly because of the demands of the domestic budget and the revival of business. The economic revival was accompanied by a further severe deterioration in the financial balance.

The number of active insurance companies in 1995 - 14 - was unchanged, though at the end of the year a 15th was founded, and three more were established in early 1996. Three of these 14 companies can be considered as having Hungarian ownership majority. The capital net worth of these companies increased by 5.9 per cent in 1995, reaching 32.2 HUF billion. Foreign participation accounts for 75.8 per cent of insurers' capital net worth.

The premium income of the original 14 insurance companies was HUF 119 billion, compared to the previous year's HUF 93 billion. For the assessment of this growth we have to take into consideration the rate of inflation, which was 28.2 per cent during this period. Twenty-one per cent of the gross premium was ceded to re-insurers (a mean 25 HUF billion), of which 95.6 per cent went to foreign re-insurers.

Within the total premium income, life assurance premiums have gradually increased, from 23.2 per cent in 1992 to 29.8 per cent in 1995.

The insurance market in Hungary is highly concentrated. The market share of the two largest companies is 58.6 per cent, and the share of the five largest more than 85 per cent. However, there is a tendency towards breaking down the duopoly of the two largest companies (their market share has fallen from over 90 per cent in 1990). The share of life assurance on the basis of gross premium income is 29.8 per cent; this has consistently grown from 17.8 per cent in 1992.

Claim payments increased to HUF 60 billion, a reverse of trends in preceding years. This growth comprised two types of claim payments: those of voluntary insurance, where a slight increase took place, and those of obligatory insurance, which saw an increase of 19.7 per cent to HUF 2,319 million.

The technical reserves of the insurers amounted to HUF 129.1 billion at the end of 1995. This was 30.3 per cent higher than in 1994 (growth slightly exceeded the 29.5 per cent increase of the preceding year).

The balance of results of the 14 insurance companies was a profit of HUF 5,122 billion in 1995 after taxation. This is a promising result compared to the loss of HUF 0.5 billion in 1994. From among the 14 insurance companies, three produced profits, eight losses and one broke even.

Generally, those insurance companies which began operating in the last five years suffered losses. Their negative results - because of the specialities of their profession - are understandable.

Insurance and mutual benefit societies' activities declined in 1995 after spectacular growth in 1993. In number they increased (in 1995, 18 insurance and mutual benefit societies operated), though their premium income decreased (to HUF 1,239.9 million).

As at 31 December 1995 260 independent agencies (brokers) were registered at the Supervisory Authority, compared to 113 in 1994. Capital net worth was even more significant (34. 7 per cent) and growth of commission income especially high (2.7 HUF billion).

The Hungarian insurance industry: an international comparison

The importance of the Hungarian insurance industry in the national economy - though it slightly increased from 1993 to 1995 - is relatively unchanged compared to other OECD countries, where it is roughly four times as central. The only countries in which the insurance business is less important to the national economy are Mexico, Greece and Turkey.

Examining the life and non-life branches separately, it is striking that our backwardness is even more significant in the field of life assurance. It is an important and favourable development, however, that life assurance is starting to take the lead: by 1994 its importance had more than doubled, allowing it to balance the decline in the importance of the non-life branch of the business.


The Supervisory Authority is a state administration organ operating as an independent central office under the supervision of the Ministry of Finance. It undertakes supervisory and regulatory tasks, operating with a staff of about 40. The activity of insurance institutions is regulated by the 1995 Act XCVI on Insurance Institutes and Insurance Activities, which came into force on 1 January 1996.

Further detailed information is available in the Annual Report of the Supervisory Authority (including the translation of the above-mentioned Act) in English

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