The effects of inflation and tightening financing conditions on household disposable income continue to paint a “complex picture” for the insurance sector in Spain, according to Mapfre Economics in its latest ‘Economic and sector outlook: outlook for the fourth quarter ‘.
Although the sector is recording a significant growth in the volume of premiums (5.7% and 5.6% respectively in the Non-Life and Life classes), “this growth – according to the experts of the Study Center – they are not enough to compensate for the average inflation which, so far this year and up to October, is around 8.8% ”. Likewise, they warn, “this inflationary process continues to erode the profitability of insurance companies and keep the pressure on insurance prices high.”
They note, on the other hand, that the context of the Life business linked to traditional savings and annuities “continues its path of improvement”, when the tightening of the ECB’s monetary policy materializes, which is raising the market interest rate curve of sovereign debt and, in particular, of the Spanish sovereign bond on all maturities and offers an increasing positive term premium at shorter maturities high (still at levels below inflation, so the context of negative real interest rates continues, albeit lower than in the previous quarter).
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