Reinsurance rates were flat or down for most loss-free programs at the January 1, 2011 renewal in Spain. Property risk and property catastrophe were both flat to down 5 percent year over year, with motor and personal accident down 5 percent to 10 percent. General third-party liability reinsurance was flat. Programs affected by losses were also flat or down slightly, with property risk flat to down 5 percent, property catastrophe rates flat and motor flat to down 5 percent.
Though there was some entry and exit activity, capacity has remained consistent with a year ago, and it continues to be sufficient.
The non-life insurance market has been affected by economic problems, but it showed signs of recovery by the second quarter of 2010. The life savings business fared better as customers preferred investing in insurance products over those offered by banks.
Personal property insurance rates were flat year over year, with commercial and industrial property flat to down 10 percent. Motor rates were flat to down 5 percent. Competition for a relatively small amount of new business and existing customer retention kept pricing stable. Loss ratios are deteriorating because of premium declines, though frequency and average costs are relatively stable.
The worst of the financial crisis appears to have passed in Spain, and a slow recovery is likely through 2011. Premium income is expected to be flat in 2011, except for some specialized lines of business (e.g., professional liability and credit).
Several catastrophe events affected Spanish insurers in 2010, including the earthquake in Chile, the El Pozo industrial loss, Windstorms Flora and Xynthia and snowstorms in Catalunya. Nonetheless, they were not sufficiently significant to affect reinsurance rates.
Base exposure and premium decreased in proportion with primary market trends, driven largely by pressure on the Spanish economy. Solvency II has yet to have an impact on the (re)insurance business in Spain. Structural changes have been limited, though it is likely that the bodily injury indemnity table for motor insurance will be updated. Also in motor, variable rates are being removed from reinsurance contracts, and profit commissions are being removed from life reinsurance contracts.