There has been competition in the Finnish motor insurance segment for some time but, since 2017, a new wave has started and has adversely affected premium income. This is especially evident in motor third party liability (MTPL). The main factor in this competitive environment is the 2017 Motor Liability Insurance Act. An important feature of this law has been a change to the operation of the bonus/malus system allowing greater flexibility. Maximum bonus levels offered now go up to 83% in the case of one insurer. About 60% of drivers enjoy the maximum MTPL bonus.
Motor insurance business totalled EUR 1.55bn (USD 1.79bn) in 2017, representing around 37% of total non-life premium. Due to the increased competition, this figure is down about 5% on the total for 2016. After two quarters of 2018, premium was again down, by about 4%. This continued in the third quarter of 2018, which was down by 2.78%.
The total non-life market premium income (including personal accident and healthcare) in 2017 was EUR 4.24bn (USD 4.90bn), down 1.85% on 2016, again because of competition in the market's main classes: motor, property and workers' compensation. The total insurance market in Finland has, however, seen a premium growth of 0.43% after the first six months of 2018.
There have been no recent changes to motor insurance legislation and so relative stability in the market is expected to continue through 2019. Axco will continue to monitor Finland’s ongoing market competition which will be a key feature of the market, especially for motor business. Improved economic growth will be reflected in classes such as workers' compensation and higher non-life premium volume is forecast.