Portugal general insurance industry to surpass $9 billion by 2028, says GlobalData

27 Dec, 2023 Portugal general insurance industry to surpass $9 billion by 2028, says GlobalData

Posted in Insurance

The Portuguese general insurance industry is set to grow at a compound annual growth rate (CAGR) of 6.9% from EUR6.6 billion ($6.7 billion) in 2023 to EUR9.2 billion ($9.7 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

GlobalData's Insurance Database reveals that the Portuguese general insurance industry is expected to register a consistent year-on-year growth of 6.4% in 2023 and 2024. The growth will be supported by the growing demand for health insurance due to increased awareness, rising motor vehicle sales, and increasing incidents of cyber-attacks.

Sutirtha Dutta, Insurance Analyst at GlobalData, comments: "The Portuguese general insurance industry declined by 0.5 percentage points (pp) in 2022 and another 1.9pp in 2023 due to weak business sentiment as a result of high inflation and a subsequent increase in interest rates. The trend is expected to continue in 2024, and the general insurance industry is expected to grow from 2025, owing to a recovery in the economy and a rise in healthcare awareness."

Personal Accident & Health insurance is the leading line of business, accounting for a 36.6% share of the general insurance GWP in 2023. High inflation along with an increased demand for health insurance after the pandemic has led to a rise in healthcare expenses. This has led to an increase in the demand for health insurance, which has led to a rise in premium prices.

As per the Portuguese Insurers Association, the average premium per person has increased by 4.3% to EUR360 in the first half of 2023 as compared to the same period in the previous year. Also, the number of private health insurance policies grew by 5.9% in 2023 as compared to the previous year.

Limited access to the public health system is also driving the demand for private health insurance. The coverage of outpatient care expenses provided by the SNS public healthcare system of Portugal stands at 63%, which is lower as compared to the OECD average of 76%. PA&H insurance is expected to grow at a CAGR of 8.0% during 2023-28.

Motor insurance is the second largest line of business, accounting for a 26.5% share of the general insurance GWP in 2023. The rise in vehicle sales has supported motor insurance to register a year-on-year growth of 4.7% in 2023. According to the Automobile Association of Portugal (ACAP), vehicle sales increased by 29.9% during January-October 2023 as compared to the same period in 2022.

Dutta adds: "Also, the incentives provided by the government to promote the sale of electric vehicles (EVs) will support motor insurance growth. Motor insurance is expected to grow at a CAGR of 4.7% during 2023-28."

Liability insurance accounted for 17.7% share of general insurance GWP in 2023. The growth of liability insurance is driven by workmen's compensation insurance, which is mandatory in Portugal and accounted for 85.6% of the liability insurance premiums in 2022. According to the Insurance and Pension Fund Supervisory Authority of Portugal, the number of mandatory workmen's compensation policies grew by 1.7% in 2022, marking the third consecutive year of growth.

An increased frequency of cyber-attacks, especially after the pandemic, will also support liability insurance growth. Liability insurance is expected to grow at a CAGR of 7.8% during 2023-2028.

Property, Financial Lines, Marine, Aviation and Transit (MAT), and Miscellaneous insurance accounted for the remaining 19.2% of the general insurance GWP in 2023.

Dutta concludes: "Recovery in the economy, increasing demand for health insurance, and a rise in cyber-attacks will support Portugal's general insurance growth over the next five years. In the short term, the growth might be impacted by economic and geopolitical instabilities."