Insurance in sweden

Insurance in Sweden 2012

Security for the individual – growth for the economy We are all exposed to risk. It might be the risk of being in a traffic accident or of a fire in your home. It could be theft or long-term illness. Without insurance these events could entail financial disaster. But with insurance you can be financially protected.

The idea of insurance is simple: you share the risks.

Through insurance a household or a company pays a premium in exchange for compensation by the insurance company if disaster should strike. A private individual can also take out a pension insurance that pays a given future income in exchange for premium payments made in the present.

Insurance makes it possible for private individuals and companies to live and work in economically stable conditions.

Through this brochure we want to provide an overall view of the insurance industry and describe its importance for the national economy.

The insurance industry The insurance industry is an important part of the national economy. Through insurance individuals and companies can obtain financial protection at a low cost against different types of risk. Swedish insurance companies generated premium income of slightly less than SEK 250 billion in 2012, they employed over 20,000 people and invested SEK 3,165 billion in the global economy.

There are about 410 registered insurance companies in Sweden.

Most of them are small local nonlife insurance companies. The market is concentrated into a few large companies and company groups.

In non-life insurance the five largest insurance companies/groups have 83 per cent of the market. In life insurance the five largest insurance companies/groups have 53 per cent of the market.

The international presence has increased in the past ten years. At present there are 38 foreign insurance companies represented via branches or agencies.

Number of insurance companies, 2012

The insurance industry employs about 20,000 people. This is equivalent to a half percent of all gainfully employed people in Sweden. Slightly more women than men work in the insurance industry.

There are many different jobs in the insurance industry. Common occupations are actuary, claims adjuster, economist and lawyer. The level of education has increased steadily in the past ten years.

Number employed, 2012

National insurance companies, of which

138

Unit-linked insurance companies

10

Other life insurance companies

32

Non-life insurance companies

96

Local insurance companies, of which

161

Large local companies

42

Small local companies

119

Friendly societies

79

Foreign companies, branches and agencies

38

Total

416

Source: Swedish Financial Supervisory Authoriity

Number of employees

Women

Men

Total

11 098

9 453

20 551

Source: Statistics Sweden (SNI code 66). Own calculations of gender distribution based on statistics from FAO (Swedish Insurance Employers’ Association) and KFO (employers’ organisation for cooperative business).

Insurance in Sweden In Sweden 95 per cent of all households have home insurance. Most employees have occupational pension insurance and a large proportion of the population also have private insurance policies. In recent years the number of private health care insurance policies also increased substantially. In 2012 non-life insurance companies paid out over SEK 49 billion in compensation for various claims. Life insurance companies paid out over SEK 77 billion in pensions and death benefit.

In Sweden about 95 per cent of all individuals aged 16-84 are covered by home insurance. In the group “cohabiting adults with children” the figure is over 99 per cent. The percentages have been relatively constant since the start of the 1990s.

Home insurance consists of a package of various non-life insurance policies that protect the policyholder’s belongings in the event of theft or fire, for example.

The policies also provides travel insurance, insurance against assault or liability to pay damages.

Percentage of households with home insurance, 16-84 years, 2006/2007

The most common insurance policies in the group householder and homeowner insurance, holiday home insurance and boat insurance are householder and homeowner insurance. More than 4.7 million householder and homeowner insurance policies were written in 2012.

Since 2000 the number of insurance policies in this group has increased steadily. This is mainly because the number of home insurance policies has increased. The number of boat and holiday home insurance policies has remained relatively constant at 285,000 boats and about 580,000 holiday homes per year.

Number of non-life insurance policies written (home, holiday home, boat), 2001–2012

4 s INSURANCE IN SWEDEN 2012

16-84 years with home insurance Source: Statistics Sweden Living Conditions Survey 2006/2007

Million 5.70 5.60 5.50 5.40 5.30 5.20 5.10 5.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Note: From 2011 Vesta is included in the reporting

The number of claims for householder and homeowner, holiday home and boat insurance policies reported to the non-life companies in 2011 amounted to over 747,000. Insurance companies paid claims of almost SEK 8,7 billion. The most common type of claim was on all-risk policies, while the largest type of claim in terms of value was fire damage.

The numbers of claims reported and claims paid have increased since 2004. The increase was mainly within householder and homeowner insurance.

Number of claims reported and claims paid in non-life insurance (home, holiday home, boat), 2000–2011 Number of damages, thousand

Claims, SEK billion

900

9

800

8

700

7

600

6

500

5

400

4

300

3

200

2

100

1 0

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Antal anmälda skador

Number of claims reported

Utbetalad ersättning

Claims paid

Motor third-party liability insurance is a compulsory policy that among other things covers personal injury.

In 2011 it covered just under 5.9 million vehicles. Motor vehicle insurance covers damage to the vehicle itself, among other things.

The number of vehicle and third party liability insurance policies has increased during the 2000s, with the exception of the period 2007–2008, when a premium tax was introduced for motor third party liability insurance. This led to a reduction in the number of Antal motorförsäkringar policies written inAntal bothtrafikförsäkringar motor third party liability and motor vehicle insurance.

Number of motor vehicle and motor third party liability insurance policies written, 2004–2011 Million 6.5

900 800 6.0 700 600 500 5.5 400 300 200 5.0 100 0

2004

2005

2006

2007

2008

2009

Number of motor vehicle insurance policies 2000Number 2001 of2002 2003 2004 2005policies 2006 third party liability insurance

2010

2007

2011

2008

2009

Källa: INSURANCE IN SWEDEN 2012 s 5

Between 2004 and 2010 both the The number of claims reported and claims paid in motor vehicle and motor third party liability insurance, 2004–2010 number of claims reported and claims paid from motor vehicle insu- Number of damages, thousand Claims, SEK billion rance increased. However, for motor 1000 10 third party liability insurance we see 9 900 a decrease in the number of claims 8 800 reported.

7 700 In 2010 the number of claims reported was just over 1,100,000.

6 600 Insurance companies paid out 5 500 compensation of more than 4 400 SEK 11 billion.

Claims reported motor third party liability insurance Claims reported motor vehicle insurance Claims paid, motor third party liability insurance

300

3

200

2

100

1

0 2004

Claims paid, motor vehicle insurance

2005

2006

2007

2008

2009

2010

Anmälda skador trafikförsäkring

Utbetalad ersättning trafikförsäkring

Anmälda skador motorförsäkring

Utbetalad ersättning motorförsäkring

Sickness and accident insurance Number of sickness and accident policies written, 2006–2011 consists of several different types of Million policy. It includes child insurance, 25 rehabilitation insurance, health care insurance, accident insurance and 1000 various forms of sickness insurance.

20 900 Group insurance is normally written 800 via a trade union.

15 700 600 10 500 400 5 300 200 0 100 0

6 s INSURANCE IN SWEDEN 2012

2006

2007

2008

2009

2010

2011

Employer-paid Group insurance Individual Individuell2008 Arbetsgivarbetald 2004 2005 Gruppförsäkring 2006 2007

2009

0

The number of private health care insurance policies has increased in recent years. In 2011 about 440,000 people had private health care insurance. Most of these people have their policy paid by their employer.

Private health care insurance complements public welfare and social protection systems. Health care insurance gives faster care and can also help towards covering some costs that arise in connection with health care.

Number of private health care insurance policies, 2006–2011 Thousand 450 400 350 300 250 200 150 100 50 0 2006

2007

2008

2009

2010

2011

Employer-paid insurance Individual Individuell Gruppförsäkring Arbetsgivarbetald Group Note: Includes Insurance Sweden’s member companies

INSURANCE IN SWEDEN 2012 s 7

The Swedish pension system has three parts: national pension, occupational pension and private pension.

About 2 million people had private pension savings in 2011. In the age group 35-59 about 45 per cent had a private pension policy.

Average savings for these were SEK 5,700 per person.

Percentage of people who save in a private pension scheme by age category, 2011 Per cent 50 45 40 35 30 25 20 15 10 5 0

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64 65-69

Note: Only includes pension insurance, not endowment insurance Source: Statistics Sweden

Private pension insurance is classified for taxation purposes either as pension insurance or endowment insurance. Premium income for private pension and endowment insurance was more than SEK 53 billion in 2012. The policies classified as endowment insurance constitute over 77 per cent of all private pension insurance.

Private pension insurance can be divided into unit-linked insurance and other life insurance. Of these, other life insurance is greatest by volume. Other life insurance includes traditional life insurance and deposit insurance.

During the latest year, savings in endowment insurance has decreased, probably due to people choosing investments savings accounts to a greater extend.

8 s INSURANCE IN SWEDEN 2012

Premium income for private pension and endowment insurance, broken down into unit-linked insurance and other insurance, 2012 SEK billion 40

30

20

10

0

Private pension insurance, unit-linked Private pension insurance, other life insurance Endowment insurance, unit-linked Endowment insurance, other life insurance

The most common form of saving for Swedish households is insurance.

The share of insurance was almost 52 per cent of total household saving 2012. Other types of savings are bank accounts, shares or mutual funds.

The financial crisis in 2008 meant that almost all forms of savings fell in value. The decline for insurance savings was, however, less than for shares and funds, for example.

Household financial saving by type of saving, 2000–2012 SEK billion 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Insurance savings, collective, individ Försäkringssparande, kollektivt, excluding ej PPM PensionFörsäkringssparande, Shares Insurance savings, individual Fondandelar Mutual fund units Obligationer

Aktier Bonds

Bank deposits Bankinlåning

INSURANCE IN SWEDEN 2012 s 9

Insurance companies The insurance industry can be divided into non-life and life insurance. In non-life insurance there are a number of different products that cover a lot of different risks, such as property insurance, third-party insurance, legal expenses insurance, assault insurance, and travel insurance.

In life insurance the risk is associated with the life and health of the person insured. Many life insurance products are also a form of saving.

Non-life insurance compensates for loss suffered to property and pays damages to third parties. Life insurance companies’ sickness and accident insurance is also classified as non-life insurance.

2012 premium income for nonlife insurance companies was SEK 64 billion. The most common nonlife insurance is motor vehicle insurance closely followed by business and real property insurance, and householder and homeowner insurance.

Premium income for non-life insurance by class of business, 2012 4%

10 s I N S U R A N C E I N S W E D E N 2 0 1 2

24%

11%

Motor vehicle Business and real property 13%

Householder and homeowner

Third-party liability Sickness and accident Pet 21%

Life insurance pays compensation when the person insured is injured or dies, and when the insured person reaches pensionable age.

Insurance products that contain both insurance and savings components are called pension insurance.

In 2012 premium income for pension insurance policies amounted to SEK 185 billion.

Pension insurance can be divided into occupational pension and private pension insurance. There are two basic taxation categories for the latter: pension insurance or endowment insurance.

4%

22%

Other

Gross Written Premium for life insurance broken down into occupational pension, private pension and endowment insurance, 2012 30% 17%

9%

Occupational pension, unit-linked Occupational pension, other

4%

Private insurance, unit-linked

3%

Private insurance, other Endowment insurance, unit-linked 37%

Endowment insurance, other

Premium income for non-life insurance companies amounted to SEK 64 billion in 2012. The five largest insurance companies are Länsförsäkringar, If Skadeförsäkring, Trygg Hansa, Folksam and Moderna Försäkringar.

Premium income for non-life insurance by company, 2012 16%

30%

4%

15%

Länsförsäkringar If Skadeförsäkring Trygg Hansa Folksam Moderna Försäkringar 16%

Gross Written Premium for life insurance was SEK 185 billion in 2012. The five largest life insurance companies are Skandia, Folksam, Alecta, AMF Pension and SEB Trygg Liv.

Other

19%

Premium income for life insurance by company, 2012 11%

15%

4%

Skandia 15%

4%

Folksam Alecta

5%

AMF Pension SEB Trygg Liv

7%

Swedbank Försäkring Länsförsäkringar 14%

7%

Nordea Liv SPP Handelsbanken

8%

11%

Other

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Insurance companies’ investments Insurance companies are major investors in the global economy. They manage a lot of money for the benefit of their customers. At the end of 2012 insurance companies investment assets amounted to more than SEK 3,165 billion. That corresponds to about 89 per cent of Sweden’s GDP. The capital is mainly invested in shares, mutual funds and debt securities, as well as real property and infrastructure.

At the end of 2012 the value of the insurance industry’s investment assets was SEK 3,165 billion. Of this, life insurance companies accounted for 84 per cent.

Insurance companies’ investment assets, 2001-2012 SEK billion 3,500 3,000 2,500 2,000 1,500 1,000 500

Non-life insurance

0

Life insurance

Life insurance companies manage pension capital on behalf of their customers. They therefore have a long investment horizon that corresponds to these commitments.

The value of life insurance companies’ investment assets was SEK 2,665 billion at the close of 2012.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Life insurance companies’ investment assets, 2012 1%

6%

3%

26%

2%

Bonds issued by Swedish borrowers Bonds issued by foreign borrowers Swedish shares Foreign shares Investment funds 10%

Derivatives

28%

Other financial investments 11%

12%

12 s I N S U R A N C E I N S W E D E N 2 0 1 2

Land & building

Short term investments

Non-life insurance companies manage premiums paid in to enable them to meet future claims payments. They therefore have a shorter investment horizon. Non-life insurance companies mainly invest in bonds issued by Swedish borrowers.

The value of nonlife insurance companies investment assets was SEK 500 billion at the end of 2012.

Non-life insurance companies’ investment assets, 2012 6% 9%

36%

1% 4%

Bonds issued by Swedish borrowers Bonds issued by foreign borrowers Swedish shares

6%

Foreign shares Investment funds Land & building 8%

Derivatives Other financial investments

17%

Short term investments 13%

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Print: TMG STHLM April 2013 Photos: Johnér Bildbyrå Layout: Jonas Ahlgren Design

Insurance Sweden PO Box 24043, SE-104 50 Stockholm Tel +46 8 522 785 00 www.svenskforsakring.se