In that period, GDP fell from -3.8% and -3% in 2009 and 2012, respectively, which led to a decline in insurance industry premiums of -8.8% and -7.4% in 2010 and 2012, particularly affecting the Life business but also automobiles, industrial multirisk, third-party liability, transport (hull and merchandise) and credit insurance. However, health, homeowners and condominium insurance lines were resistant at the worst moments of those crises and only slowed down.

Once these moments passed, the aftermath of the European Central Bank’s (ECB) stimulus measures at the time, with interest rate declines to negative levels (which remain in place today and are going to continue for a long time), led to the growth of insurance premiums in subsequent years anchored at low, even negative, levels that were below GDP growth. This was essentially because of the effect of the low interest rate environment on the traditional life annuity and Life savings insurance business. However, it should be noted that the Non-Life business lines again experienced significant growth after the crisis, and health insurance premiums even showed a countercyclical behavior. One of the drivers of growth of the sector in this period was the Non-Life business. However, it should be noted that the slowdown and subsequent recession of the late 1980s and early 1990s are not representative of the distortion in the growth of insurance premiums, which involved the process of externalizing companies’ pension commitments to their workers that took place at that time.

With regard to the effects of the current crisis on the balance sheets and solvency of insurance companies, it is worth mentioning the fact that the Spanish insurance industry has traditionally had a markedly conservative nature in its investments, in which Spanish and other eurozone sovereign bonds are the main investment, which, having been backed by the ECB’s broad asset acquisition programs, have a more limited risk. This feature, which was starting to be questioned due to reasons of profitability (as is often the case in periods of low interest rates and good stock market behavior), has proved to be an appropriate policy that is allowing the sector to deal with the current complex situation with solvency.

Mexico

From the analysis of what has happened in the Mexican insurance market in the economic crises experienced since 1980, it is observed that, during the 1995 crisis, GDP fell by -6.5%. This led to a drop in insurance premiums of -13% during that year and -5% during the following year, despite the economic recovery (see Chart 4). However, during the next four years, the insurance industry experienced strong growth, well above GDP growth, with real average growth (once the effect of inflation had been corrected) of 16% per year. During the Great Recession of 2007-2012, the Mexican insurance industry showed great resilience, slowing down but without experiencing setbacks despite the -5% GDP decline in 2009. In this year the insurance industry experienced real growth of 7%, anticipating the subsequent economic recovery. It should be noted that the low level of insurance penetration in the Mexican economy, which results in economic conditions that produce higher growth in the insurance business, also helped in these recoveries, as is often the case in other emerging markets.