Life Insurance in Spain, Key Trends and Opportunities to 2016 by benturner06

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									Life Insurance in Spain Trends and Opportunities to 2016

The Spanish life insurance segment is considered to be one of the largest life insurance
segments in Europe and witnessed a healthy CAGR of 6.4% during the review period. Despite
registering a decrease of 5.9% in 2010 as a result of the debt crisis which created financial
difficulties for the life insurers, the segment bounced back in 2011 with a growth rate of 6.3%.
Furthermore, the growing aging population in Spain is expected to increase the market of post
retirement savings, such as pension and general annuity. The presence of an aging population,
deficits in pensions and a shrinking workforce are expected to drive long term demand for life
insurance and private pension. Overall, the segment is expected to grow at a CAGR of 4.7%
over the forecast period.
Life insurance in Spain is predominantly distributed through bancassurance, which accounted
for 80.3% of the segment’s total new premiums business in 2011. Despite the global financial
crisis, the Spanish life insurance segment registered growth rates of 17.9% and 8.4% in 2008
and 2009. However, the debt crisis decreased consumer confidence in life insurance products
in 2010 and the segment registered an annual growth rate of -5.9%. The growing aging
population, recovery in Spanish economy and consumer interest in investing guaranteed
products all recovered the life insurance segment in 2011 which registered a growth rate of
6.3%. Furthermore, the segment is expected to grow further over the forecast period to reach
a projected value of EUR37.47 billion (US$41.42 billion) in 2016.
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Report Details:
Published: October 2012
No. of Pages: 251
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Implementation of Solvency II
Solvency II is the new European regulatory framework for insurers which will change the capital
requirements of the insurance industry and introduce new risk management standards for
insurers. The implementation of Solvency II aims to ensure a more accurate allocation of capital
to risk. This new set of regulations is expected to come into effect in 2013. With the
implementation of the EU’s Solvency II directive, small life insurers operating in Spain will be
forced to merge with large multinational companies.
Expanding aging population
The Spanish aging population is expected to contribute to the growth of the country’s life
insurance segment over the forecast period. The older population tend to purchase more life
insurance than the younger population in order to secure their post-retirement life. The life
expectancy for women in Spain in 2010 was 85 years, whereas for men it was 79 years. In 2011,
17.1% of the Spanish population was above 65 years of age. Overall, the Spanish life insurance
segment is expected to grow in written premium value from EUR29.75 billion (US$41.42 billion)
in 2011 to EUR37.47 billion (US$52.18 billion) in 2016, at a CAGR of 4.7% over the forecast
period.
Dominance of bancassurance
The Spanish life insurance segment is majorly dependent on the bancassurance distribution
channel for the sale of life insurance policies. The channel accounted for 80.3% of the written
premium new business market and is expected to increase its market share to 87.1% in 2016.
The increasing demand for bancassurance influenced life insurers to make bancassurance
agreements with banks in order to enhance their market share. This increase in market share
indicates that the dependency of life insurers on banking industry will also increase over the
forecast period.

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