The Dutch life and non-life insurance market is a mature and saturated market with a contracting demand for individual and group life products. The Dutch insurance market is characterized by fierce competition and price pressure following from new entrants (including PPIs and APFs), aggregators and the offering of comparable products by other financial institutions (e.g. bank savings products).  

Furthermore, the Dutch insurance market is confronted with (demographic) challenges, such as increased life expectancy and low-interest environment which also negatively affect profitability.

The lack of trust caused by the ‘Woekerpolis’ affair has significantly reduced the demand for individual life (savings) products. As a result, a number of life insurance portfolios are currently in run-off (so-called “closed books”) leading to discussions on the profitability and financial stability of the life insurance sector in the Netherlands (which is a point of concern for the De Nederlandsche Bank). Apart from these aspects, there are regulatory developments that strongly affect the sector, including the ban on commissions and the introduction of Solvency II from 1 January 2016

The market consensus is that larger insurers and private equity firms will introduce consolidation in the developed insurance markets in their search for diversification and economies of scale. Solvency II is also an important driver for consolidation, as it becomes more and more difficult and expensive for smaller insurers to meet the stricter regulatory requirements. 

The above mentioned developments require structural changes to address the interest of the different stakeholders (shareholders, employees, supervisors and policyholders). In order to maintain/increase the profitability, insurance companies are investigating different ways to reduce their cost base and to increase the variability of their cost base, for example through new distribution channels (e.g. direct online sales), product innovation, changing price and product components, improving risk management (processes), cost savings measures and the divestment/acquisition of portfolios.

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Bas van de Pas

Partner, PwC Netherlands

Tel: +31 (0)62 263 83 99

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