A new PWC/ARC survey puts the size of the European run-off market at a massive €204bn

Discontinued insurance business in Europe exceeds €204bn according to a new survey released today by PricewaterhouseCoopers in conjunction with the Association of Run-off Companies (ARC). The research, the first of its kind to estimate the size of the European run-off market, also highlights the significant costs associated with discontinued insurance business to European insurers – around €5bn every year.

The survey examines the challenges of managing run-off business across Europe. It shows that German and Swiss insurers have the largest exposure, with an estimated 41% of the market worth more than €84bn. The size of the market in other countries is as follows:

  • UK and Ireland – 28% (€57bn)
  • France and Benelux – 15% (€31bn)
  • Nordic region – 5% (€10bn)
  • Eastern European countries – 1% (€2bn)
  • Other Western European countries – 10% (€20bn)

Dan Schwarzmann, partner in the Solutions for Discontinued Insurance Business practice at PricewaterhouseCoopers LLP, said: “To date the London market has been the most proactive in recognising the issues associated with run-off business and creating solutions which release value for the insurers as well as policyholders and cedants alike.
“However, this is now beginning to change as insurers in the rest of Europe recognise that they can no longer ignore their discontinued business. This is as a result of issues like Solvency II and the capital that will be required to support run-off liabilities as well as the management distraction and costs associated with dealing with these portfolios on a day-to-day basis.”