Bank deposits will migrate to life insurance

Bank customers who were lucky enough to withdraw their money from deposits are increasingly thinking about entrusting their hard-earned money to insurers.

Insurance companies assure that in the current conditions they will be able to provide a small but stable income. However, investing in insurance is fraught with serious risks.

Insurers expect to attract at least part of this money.

On the one hand, general panic works against financial institutions. On the other hand, life insurance plays into the hands of the super-liquidity accumulated on the market due to the massive outflow of funds from banks and the reliability factor of companies.

In a crisis, insurance makes it possible to invest money securely and receive, albeit small, but profit.

Therefore, insurers do not see anything surprising in the fact that in the midst of the crisis, the volume of income from individuals continues to grow. See how Life Insurance Save Money.

Meanwhile, the relationship between companies and old insurers is not easy. Insurers complain about the decrease in the solvency of customers, many of whom are already thinking about how to part with the company with the least loss for themselves.

This means that policyholders stop making insurance premiums. At the same time, the contract continues to be valid, but with less coverage (the sum insured is recalculated in accordance with the amount of capital that the client managed to accumulate at the time of suspension of the contract). Policyholders decide to break contracts much less frequently due to the harsh penalties provided for in life policies.

In order to stop the outflow of policyholders, companies offer them to reduce the amount of premiums under the contract (of course, with a parallel reduction in the sum insured) or take advantage of a delay, which in different companies can range from 30 to 60 days.

More and more citizens are switching to paying for policies in installments, making monthly or quarterly installments, although they have to overpay from 5 to 10% of the annual payment.

Another trend in the market is the change in the currency preferences of policyholders. Due to the sharp growth of the dollar and euro rates, contracts in hryvnia began to prevail in the portfolios of companies. In our portfolio, contracts in the national currency today account for about 75%.

Despite the impressive amount of funds from the population, which could potentially migrate from banks to life, insurers do not expect records from this year.

The slowdown in the growth dynamics of the life market was caused by a sharp decline in lending volumes. Until recently, bancassurance products (including life insurance for borrowers) accounted for almost half, and for a number of insurance companies, up to 90% of the total insurance portfolios.

In fact, there is no demand for life insurance on the part of enterprises that are actively reducing their insurance budgets.

The corporate sales market, which had just begun to revive in 2008, is again frozen for at least two years. Therefore, at the end of the year, the life market may show a negative result.

Another factor hindering the inflow of funds into life insurance is the absence of a deposit guarantee fund similar to a bank one, from which compensation could be paid in the event of bankruptcy of the insurance company.

At the same time, the situation with the solvency of companies today is far from favorable. Insurers concentrated the lion’s share of reserves on bank deposits. However, many bankers stopped returning even those deposits that had expired.

If the insurer has problems with the return of deposits, in the absence of the support of shareholders or a wealthy investor, the company may go bankrupt.

It will be difficult for many companies to cover such losses, since their shareholders now have no money.