Published: 23.03.2023 Updated: 05.04.2023

In 2022, a total of 680.4 million euro in insurance premiums was written in Latvia, which is 15.9% more than a year before, of which 21.2% were written in life insurance and 78.8% – in other types of insurance. Meanwhile, a total of 435.2 million euro was paid out in insurance claims in Latvia in 2022, which is 23% more than in the previous year.

After overcoming the difficulties caused by the Covid-19 pandemic, the insurance sector in Latvia faced new challenges in 2022 caused first and foremost by the geopolitical situation in the region – the war started by Russia in Ukraine and its negative consequences in the macroeconomic context. Rapidly rising inflation put pressure on claims and hence on premiums (product prices), while the sharp increase in interest rates, driven by inflation, encouraged insurers to reassess the composition of their investment portfolios.

In non-life insurance, premiums written in Latvia in 2022 amounted to 535.9 million euro, up 22.5% year on year. Insurance claims in Latvia amounted to 319.6 million euro, which is 17% more than in 2021. The return of economic activity to the Covid-19 pre-pandemic levels following the cancelation of restrictions led to a higher demand for insurance and, at the same time, to an increase in the frequency of claims.

Similarly, the high inflation observed in 2022 led to both an increase in the rates applied for setting premiums and to an uptrend in the amount of claims paid. As a result, premiums written increased by 54.9% in assistance (travel) insurance, by 33.2% in motor vehicle liability compulsory insurance and by 24.5% in land vehicle insurance (CASCO). Meanwhile, the most significant increase in claims was in the fields of assistance (travel) insurance – by 129.3%, accident insurance – by 23.2% and land vehicle insurance (CASCO) – by 21.4%.

In life insurance, premiums written in Latvia in 2022 amounted to 144.5 million euro, with a 3.3% decrease compared to 2021. Meanwhile, 115.7 million euro have been paid out in claims, which is 43.1% more than in the previous year and can be explained by the uncertainty caused by the geopolitical situation in the region and its negative consequences in the macroeconomic context, which has generated additional interest in withdrawing accumulated funds. The decrease in life insurance premiums was due to a 13.1% drop in life insurance with savings. In contrast, annuity insurance, which is one of the options to receive the 2nd pillar pension capital when retiring (payout phase), showed a 9% increase in premiums written. Similarly, premiums written in life insurance without savings (life risk insurance) increased by 10.1%.

Insurance undertakings registered in Latvia closed the year 2022 with a profit of 28.8 million euro: non-life insurance undertakings earned 21.8 million euro, up 8.2% year on year, while life insurance undertakings earned 7.0 million euro, with their profit decreasing by 56.4% year on year.

The solvency capital requirement ratio of insurance undertakings remains stable above the minimum requirements and reached 171.9% at the end of 2022 (the lowest permissible limit of the ratio is 100%), 5.3 percentage points lower than at the end of 2021.

At the end of 2022, six insurance undertakings were registered in Latvia, and insurance services were provided by 11 branches of Member State insurers.