BMI's Executive Summary for the Czech Republic Insurance Report

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This report differs from its predecessors in that it includes BMI's Insurance Business Environment Rating (IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI's Country Risk Rating (CRR). It is now much easier to consider the business environment for the insurance sector in any one country relative to the business environment for other industries in that country that are surveyed by BMI, and the business environment for the insurance sector in other countries.

The Czech Republic's IBER is 61.5. Relative to other countries in Central and Eastern Europe, it is a moderately-sized market for foreign insurers, although still relatively small by world standards. Within the region, the Czech Republic stands out for the measure of openness of the non-life and life segments, while the overall economic outlook is very positive. The IBER is held back by the relative underdevelopment of the sector and the low levels of expected growth and penetration of both the life and non-life sectors. It is also lowered by taxation, bureaucracy and external risks.

Over the forecast period, we anticipate that non-life premiums will grow by 11% annually in local currency terms and by 13% in US$ terms. Life premiums are expected to increase by 4% annually in local currency terms and by 5% in US$ terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around US$158.30bn to US$237.7bn and an expected increase in non-life penetration from 2.35% of GDP to 2.80%. The key driver of growth in the life segment is the envisaged rise in life density from US$208.42 per capita in 2007 to US$280.00 per capita in 2012. The Czech Republic's total population is declining very moderately.

The bottom line is that the Czech Republic's insurance market is similar to that of Slovakia: amazingly crowded. According to the Insurance Information Institute (III), by far the largest player in the Czech both the life and non-life segment in terms of premiums written is Ceska Poistovna, which had almost a third of all premiums written in 2004. However, despite being the largest player, it is not over-dominant and certainly no longer has the monopoly it once enjoyed. We anticipate that with a small market and numerous players, there is a likelihood of rationalisation into the future. Over the medium term, economic slowdown volatility in regional financial markets may provide the catalyst for a substantial rationalisation of the sector.

The strengths of the sector lie in the strong economy, expected to grow at 6% in 2007, and the Czech Republic's excellent Regulatory Framework, Development and Competitive Landscape. Though the sector is crowded, the low penetration rates and relative diversity of the market in relation to other countries in the region may provide opportunities for growth into the future.

The main weakness of the Czech Republic's insurance sector is the relatively low total size of the sector and the low expected growth and penetration rates. The sector is also still dealing with issues related to taxation, bureaucracy and possible GDP volatility. There are also possible risks from a reduction in capital inflows following the US sub-prime crisis and possible inflationary pressures.

Contents of the Czech Republic Insurance Report

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Chapter 1 - The Sector At A Glance

Table: Czech Republic Overview

Key Features Of This Report And Likely Future Changes

Chapter 2 - Latest News

Recent Developments

Chapter 3 - Evolution Since The Mid-1990s

Table: Czech Republic Evolution of the Insurance Sector (in millions of currency specified)

Evolution

Chapter 4 - Projections And Forecasts

Table: Czech Republic BMI Projections (in millions of currency specified)

Projections And Drivers Of Growth

Chapter 5 - Macroeconomic Outlook

Table: Czech Republic - Economic Activity

Chapter 6 - Country Update

Political Risk More Wrangling Ahead

Economic Risk Losing Faith In The Euro

Business Environment On The Bandwagon

Table: Non-Life Segment Rankings of Markets

Table: Presence of Non-Life Cross-Border Insurers

Table: Selected Local Non-Life Insurers

Country Overview Czech Republic Life Segment

Table: Life Segment Rankings of Markets

Table: Presence of Life Cross-Border Insurers

Table: Selected Local Life Insurers

Whos who in the Central and Eastern European region?

Chapter 7 - Regional Context

Table: Regional Context - Premiums

Table: Regional Context Total Premiums

Chapter 8 - Methodology And Objectives

Introduction

Background

Forecasts

Chapter 9 - Appendix

Table: Latest Estimates / Actual Figures For 2005

Table: Latest Estimates For 2010

Table: Latest Estimates For 2005-2010 (Growth In US Dollar Terms)

Competitive Landscape for Europe Insurance Reports: Sample of
    Companies Ranked

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A cross-border overview of key players and their insurance market share across Europe. Tables and graphs show country presence of multinationals across the region. Comparative company analyses and rankings by premium income (life and non-life). Company SWOTS for leading life and non-life insurers, covering network of offices, presence of foreign stakeholders, strategic relationships, joint ventures; portfolio of clients; diversity of product range; profit growth, investment strategy and risk exposure.

Network of Insurance Sources

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BMI's European Insurance Reports are based on an extensive network of multilateral organisations, government departments, insurance industry associations, chambers of commerce and company reports. Information sources include:

Read about our other Insurance Reports