The Spanish insurance market in 2023
Author: MAPFRE Economics
Summary of conclusions from the
MAPFRE Economics report
The Spanish insurance market in 2023
Madrid, Fundación MAPFRE, September 2024
After its vitality in 2023, in the first nine months of 2024, the Spanish insurance industry saw a 1.2% drop in written premiums, influenced by lower income in the Life Savings line (-15.8%) that contrasted with the previous year’s extraordinary double-digit growth (see Chart 1). In terms of managed savings, however, Life technical provisions increased by 4.2%, to 209.2 billion euros in September 2024.
Chart 1. Trends in direct Life insurance
(annual variation, %)
Meanwhile, the Non-Life segment has maintained an upward trend throughout 2024, with a 7.8% increase in premium volume compared to September of the previous year and positive performance across all modalities. Two of the largest lines, Automobiles and Multirisk, have outpaced the growth seen for the total segment, at rates of 8.8% and 8.7%, respectively, driven in part by the price increases to adapt premiums to cost inflation (see Chart 2).
Chart 2. Trends in Non-Life insurance
(annual variation, %)
Spain’s insurance market in 2023 was marked by solid economic growth based on private consumption, an environment of interest rates reaching levels not seen in the last decade, and moderation in price growth, with average inflation for the year closing at 3.5% (8.4% in 2022). This environment greatly favored the growth of insurance activity, with aggregate premium volume of the Spanish insurance industry reaching 76.4 billion euros, a 17.8% increase (4.9% in 2022), significantly higher than inflation, thanks mainly to the momentum of Life insurance.
Life premiums reached 33.4 billion euros in 2023, representing 36.0% growth (4.2% in 2022). Life Savings insurance was the main driver of growth during the year, with a YoY increase of 46.3%. By contrast, Life Protection revenue dropped by 2.7% to 5 billion euros, a result of the negative impact of interest rate hikes on lending. Meanwhile, the Non-Life lines of business earned a premium volume of 43 billion euros, representing a 6.8% increase (5.2% in 2022). Practically all lines in this segment showed increases, notably the contribution of Automobile insurance, with 1.2 percentage points (pp), while Health and Multirisk contributed 1.1 and 0.9 pp, respectively (see Table 1).
Table 1. Contribution to Life and Non-Life insurance market growth
(percentage points, pp)
Growth of Automobile insurance gradually increased throughout 2023, ending December with a premium volume of 12.1 billion euros, up 6.6% on the previous year (3.3% in 2022). This performance was influenced by a rise in the average premium, which stood at 362.60 euros, 5.1% more than in 2022, as well as an increase in insured vehicles, which, at 33.4 million vehicles, was up 1.5%. However, the line’s technical result continued to deteriorate in 2023. The Automobile insurance combined ratio exceeded 100% in Q1 2023 and ended the year at 101.6%, due to more severe loss ratios and higher provider costs due to inflation. During the first nine months of 2024, the industry’s business volume continued to perform well, with an 8.8% increase in premiums compared to September 2023.
This line of insurance will be affected in the near future by a regulatory change that is in the final stages of its parliamentary process: the bill that modifies the consolidated text of the Motor Vehicles Third-Party Liability and Insurance Act. One of the act’s objectives is to transpose Directive 2021/2118 relating to third-party liability insurance for the circulation of motor vehicles, and to supervise the obligation to insure this liability. Transposition of the directive will also improve the authorities’ oversight of the existence of insurance. The act also seeks to incorporate improvements proposed by the Commission for Valuation System Monitoring into the valuation of indemnifications for personal injury caused by traffic accidents.
Health insurance grew again in 2023, with a 6.6% rise in written premiums (7% in 2022) to 11.2 billion euros, while the number of insured parties increased to 14.2 million, 2.9% more than in 2022. In terms of profitability, the combined ratio for the line stood at 94.1% in 2023, down slightly from 94.2% the previous year, with an improvement in the loss ratio partially offset by an increase in the expense ratio. During the first nine months of 2024, revenue generated by this line followed the upward trend seen in previous years, with a 7.7% increase in premiums compared to September 2023.
Multirisk insurance, in turn, remained the third line of business in the Non-Life segment by premium volume, maintaining a share of 21.3% in 2023. Industrial Multirisk insurance has sustained an uninterrupted growth trend over the last six years and increased by 9.3% in 2023. The Home, Condominium, and Commercial lines also saw greater growth than the year before and exceeded 2022 premiums by 6.3%, 6.4%, and 4.9%, respectively. It should be noted that Home and Condominium insurance policies have been affected by severe weather phenomena, which have had a negative effect on the loss ratio and increased the combined ratio. Premiums are expected to continue to be adjusted upwards for all modalities in 2024, until a satisfactory result is achieved. The data published for September 2024 show an 8.7% increase, with rises of around 10% across all modalities, with the exception of Industrial Multirisk, which grew by 6.3%.
Finally, the Life insurance business in 2023 achieved a total premium volume of 33.4 billion euros, up 36.0% (4.2% in 2022). Life Savings insurance was the main driver of growth in Spanish insurance in the year, with a YoY increase of 46.3%. By contrast, Life Protection revenues dropped by 2.7% to 5 billion euros, impacted by the negative impact of interest rate hikes on lending. Savings products with the highest premium volume registered significant increases: Life annuities grew by 67.5%, deferred capital by 57.6%, and Individual Systematic Savings Plans (ISSP) by 67.4%. Unit-linked insurance also had a good year, although with more modest premium growth of 6.1%.
The slight downward trend in interest rates could result in some improvement in the pace of consumption and lending, which may generate some improvement in Life Protection insurance, since this type of insurance is largely linked to loans. The data published for the third quarter of 2024 show a 12.7% drop in Life written premiums, with 3.9% growth in Life Protection and a 15.8% decrease in Life Savings, which contrasts with its 48.1% increase in September 2023.
The number of insurance companies in the Spanish market in 2023 continued to decrease, as a result, amongst other factors, of the reorganization of bancassurance agreements. Thus, at the end of June 2023, the Administrative Register of Insurance Companies (RAEA – Registro Administrativo de Entidades Aseguradoras) reported the existence of 192 insurance companies, three fewer than at the end of 2022. MAPFRE Group remains the top Spanish insurance group worldwide, with premiums of 26.9 billion euros in 2023, 9.7% more than the year before and 63.4% of which were generated outside of Spain (see Chart 3).
Chart 3. Ranking of the leading Spanish insurance groups active internationally by premium volume
(millions of euros)
In terms of the technical profitability of the entire insurance market in 2023, the combined ratio for the Non-Life insurance segment was 94.8%, up 1.0 pp on the figure recorded in 2022 (93.8%), due to increases of 0.8 pp in the loss ratio, to 71.4%, and 0.1 pp in both the administration and acquisition expense ratios (see Chart 4).
Chart 4. Trends in the Non-Life combined ratio
(total combined ratio, %; annual change in combined ratio, pp)
The return on financial investments in the insurance industry stood at 4.1% in 2023 (2.9 pp higher than a year earlier), driven by the rise in interest rates under the new monetary policy environment, which the European Central Bank has been implementing as part of the monetary tightening strategy to address inflationary pressures (see Chart 5). The total volume of insurance companies’ investments in the Spanish market in 2023 increased to 305.1 billion euros, up 9.0% YoY, partially overcoming the significant decline of 15.0% in 2022. This took place in a year in which the valuation of the main asset categories for insurance company investments saw downward corrections due to accelerated interest rate hikes by the main central banks.
Chart 5. Return on the insurance industry’s financial investments
(financial income / average investment, %; risk-free interest rate, %)
Aggregate profitability indicators show that the Spanish insurance industry achieved a profit of 5.5 billion euros in 2023, a slight drop of 1.3% compared to the previous year’s growth of 9.0%. However, in relative terms, the industry’s profitability improved, registering a return on equity (ROE) of 13.2%, a 0.6 pp increase from 2022. Meanwhile, the sector’s profitability, measured as the ratio of the year’s results to average total assets (ROA), barely changed in 2023, at 1.7%, with a slight increase of 0.05 pp compared to the previous year.
The strong performance of the Spanish insurance industry in 2023 fostered increased insurance penetration in the economy (ratio of premiums to GDP), which rose to 5.22%, compared to 4.81% in 2022. This increased penetration of insurance in the Spanish economy was due, in particular, to the penetration rate of Life insurance, up 0.5 pp to 2.28%, while the penetration rate of Non-Life insurance stood at 2.94%, nearly unchanged from the previous year. Conversely, insurance density in Spain (premiums per capita) stood at 1,571.50 euros in 2023, an increase of 223.80 euros compared to the previous year. Finally, the depth index stood at 43.69% in 2023, significantly above the 37.9% seen the previous year, but still far short of the 48.8% achieved in 2016, its historic high, and below the levels seen over the past decade (see Chart 6).
Chart 6. Trends in the Spanish insurance market
(penetration vs. depth)
A detailed analysis of the different business lines and structural trends in the last decade can be found in the report The Spanish insurance market in 2023, prepared by MAPFRE Economics and available at the following link:
