BMI View: In common with other emerging insurance markets, Latvia's premiums are dominated by
property and motoring lines. While the market is small, it is set for stronger growth going forward, with the
non-life sector rising in importance. This should boost foreign investment in the sector. Constraints such as
affordability in a market with a high level of low-income households and lack of awareness should lessen in
the years ahead as wages rise. However, the market will remain small, primarily due to the small size of the
population and slow population growth.
Key Updates And Forecasts
? The main development going forward is the introduction of mandatory health insurance by the
government with three models under consideration, two of which involve the private sector as a provider
of health insurance products either as the sole issuer or as part of a hybrid with state involvement. This
will determine the nature and rate of market activity over the next five years.
? Life insurance remains underdeveloped in Latvia, accounting for just over 10% of premiums written in
the market. After a short-term contraction, we do expect premiums to grow over the remainder of the
forecast period to reach EUR71mn in 2020, up from EUR48mn in 2016; this is better than the EUR63mn
we had forecast in the previous quarter, reflecting our confidence in Latvia's economic growth.
? The non-life market is considerably larger, with gross premiums written of EUR365mn in 2016. Pricing
competition and slow economic growth could dampen short-term prospects in the non-life sector, though
strong growth is expected from 2017 onwards, leading to total premiums of EUR570mn by 2020, an
upward revision from the EUR510mn previously forecast. Expansion in the product offering in the motor
vehicle segment will be key to higher rates of growth.