2008-10-06 20:04:03 -

www.ambest.com - Non-life insurance premiums are flat or declining while claims costs are escalating in Western Europe's major markets. Meanwhile, life insurers' growth is threatened by turmoil in the credit and equity markets. In Central and Eastern Europe, where many insurers from the West are seeking growth, some of the same pressures are coming to bear on the life and

non-life markets.

-- Lackluster premium trends, rising claims costs and increasing damage awards have led to deteriorating non-life underwriting results in Western Europe.

-- An upward trend in repair costs spans both the motor and property sectors, as do the effects of catastrophes such as windstorms Kyrill in 2007 and Emma in 2008.

-- Competition in motor markets has dampened premiums in Central and Eastern Europe, but steady car sales have had a mitigating effect.

-- Growth has driven up expenses for insurers expanding in the CEE region, and some have adopted acquisition strategies as a means to control costs and gain scale.

-- The appetite for unit-linked life products is waning in Western Europe as credit and equity markets struggle, leaving life insurers vulnerable to competition from other savings products.

-- Pension reforms in France, Germany and Italy offer possible avenues of growth, though in practice, results have been mixed and depend on factors such as government tax policies.

-- The CEE region has provided steady growth for Western European insurers, though volatility in the investment markets may reduce the appetite for unit-linked products that have driven growth in life business.

-- Tax changes and pension reforms in CEE countries have boosted the attractiveness of life products, but penetration remains low compared with other European countries.

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