Livstrygghet22.8.2024LocalTapiola Group’s half-yearly report for 1 January–30 June 2024: Difficult winter increased the number of claims, but the high volume of claim applications was overcome wellThe exceptionally harsh and unpredictable winter, the difficult financial situation of households and concerns over accessing healthcare were widely reflected in LocalTapiola’s results. The number of claims increased, but the high volume of claim applications was overcome well. We paid customers EUR 511 million in non-life insurance claims, up 13.7 per cent from the corresponding period in 2023.

Key figures, LocalTapiola Group, 1–6/2024 (1–6/2023)

• Premiums written, direct non-life insurance, EUR million: 961 (884)
• Premiums written, term life insurance, EUR million: 81 (75)
• Net sales, savings life insurance, EUR million: 83 (123)
• Assets under management, gross, EUR billion: 30.5 (28.4)
• Customer bonuses, EUR million: 79 (72)
• Number of customers, thousand: 1,803 (1,762)
• Non-life insurance combined ratio, %: 102.6 (98.7)
• Non-life insurance cost ratio, %: 30.8 (31.8)
• Operating result, EUR million: 142 (175)
• Total result, EUR million: 252 (255)

In May, LocalTapiola Group CEO Juha Koponen announced that he would be leaving his position as LocalTapiola Group CEO at the end of June. The functions of LocalTapiola Group CEO are temporarily being discharged by Group Director Jari Eklund (chairmanship of LocalTapiola General’s and LocalTapiola Life’s Boards of Directors) and by Group Business Director Pekka Antikainen (operational functions). Mr Koponen will serve in an advisory role in the group until the end of 2024.Comment by Chair of the Board of Directors Jari Eklund:“The weak pull of the economy and delayed rate cuts by central banks have put both households and businesses under financial strain. The Government’s expenditure adjustments and the increase in value added tax also weigh on economic sentiment. Fortunately, on the investment market, the year has continued well. During the first half of the year, returns from the listed equity investments of the LocalTapiola Group insurance companies totalled EUR 140 million, with the Helsinki Stock Exchange also recovering as spring wore on. Our interest income, too, has remained moderate, although uncertainty about the interest rate paths of central banks weighs on government bonds. On the real estate market, the mood is expectant: the worst is likely to be behind us, but the speed and the rate of recovery are not known yet. During the early part of the year, the LocalTapiola-managed fund capitals exceeded the EUR 12 billion mark, with many of our funds already in the half a billion size category. During January–June, customers fetched total returns worth EUR 292 million for the assets they have entrusted to us, acting as a financial buffer also in challenging times. Concerns over accessing healthcare infused the decisions of both individuals and employers. In operation for only a year and a half now, the wellbeing services counties have struggled under significant deficits, and whether they can make the requisite savings while protecting the quality and availability of services remains an acute issue. In Finland, the unsatisfied need for medical care is three times higher than the EU average, and health insurance cover, previously taken out mainly for children, is currently an issue that concerns the entire family. At the same time, an increasing number of businesses are insuring their personnel against illnesses and leisure accidents in order to guarantee quick access to treatment and to avoid long absences. In a customer survey, we polled the views of some 3,500 of our medical expenses insurance and accident insurance customers about public healthcare. Of them, 44 per cent said that they do not trust the public healthcare system in the event of an illness or accident, while 87 per cent regarded health insurance as a means to supplement public healthcare, which it indeed does.After the review period, we announced that we will be divesting our holding in Mehiläinen. This arrangement has no impact on LocalTapiola’s service offering – LocalTapiola customers will continue to have access to personal insurance-related health services delivered by major healthcare service providers.In the economic downturn, the worst labour shortage has eased, but competition for talents will increase again when the employment situation improves. Should healthcare waiting lists continue to stay in the headlines, comprehensive health and accident insurance cover may become a recruitment advantage. Instead of comparing employers solely based on the wages and salaries they pay in cash, indicators measuring total remuneration are used increasingly to do that. In this area, the products LocalTapiola provides to businesses will also be developing at a rapid pace, with LocalTapiola Remuneration Services, a company offering personnel funds and other remuneration models, launching operations during the autumn.Should the rate cuts continue and inflation recede, it is to be anticipated that the dark clouds over the economy will fade in the autumn. The same can hardly be said about the security situation and, particularly, cybersecurity. Both the public sector and Finnish businesses have been the target of continuous cyber and hybrid interference during the first half of the year. Furthermore, scams and online fraud targeting individuals have also become more common, with artificial intelligence making the attackers’ work easier. The volume of scams will grow further, with no signs of slowing down in sight. To respond to customer needs, we have renewed the cybersecurity products provided to corporate customers, and anticipate the business to grow during the remainder of the year.”Comment by Business Director Pekka Antikainen:“The difficult and varying winter, with its freezing temperatures, snow chaos and treacherously slippery conditions, increased the number of home, motor and personal injury claims across the board. Our claims expenditure remained higher than normal until May. During the first half of the year, we paid a total of EUR 511 million in non-life insurance claims. Our premiums written in direct non-life insurance stood at EUR 961 million, with operating profit at EUR 142 million.However, the high volume of claim applications brought about by the slippery and snowy winter conditions was overcome well, and customer satisfaction has continued to grow. This is thanks not only to the persistent efforts of our personnel, but also to the large-scale development projects that help us serve our customers in an increasingly streamlined fashion also online and on mobile devices. Our online sales are growing in leaps particularly in investment services, and steadily also for insurance products. Furthermore, LocalTapiola’s major information system reforms and continuous application updates have progressed without any major information security problems affecting transactions.The sales figures for our voluntary personal insurance products have risen to pre-COVID-19 levels but, with the growing number of claim applications and increasing healthcare costs, maintaining profitability is challenging. During the early part of the year, the volume of claims paid under our voluntary personal insurance products increased 7.3 per cent year on year.At the same time, the patient development of treatment chains for occupational accident and occupational disease claims is bearing fruit. In recent years, the length of work incapacity periods in our claim portfolio has decreased by a tenth and the number of pension cases nearly 40 per cent. Our mixed model, whereby we use many different producers to deliver health services to private customers, was strengthened further as a result of the introduction of the new electronic health portal.In motor liability insurance, LocalTapiola is the market leader, and insuring and financing mobility are the strong foundation on which everything we do rests. In the playing field of mobility, a great deal is currently changing – in one big bang. The high concentration of the automotive sector, together with digitalisation and the strengthened role of car manufacturers in the new-vehicle business, are transforming the structure and practices of the automobile market as well as the transactions between car dealerships and consumers. Completely new types of vehicles are entering the market, and propulsions are shifting away from fossil fuels, while various leasing, rental and car-sharing models are emerging as alternatives. Even the question of what is a means of transport and what is not is no longer straightforward. This was made evident by the act governing the insuring of electronic mobility devices, which entered into force at the start of June.The volume of claims involving electric vehicles, and their repairability, susceptibility to being damaged, how their batteries should be finally disposed of and uncertainty about related risks, are all issues we need to answer in order to not let the Finnish motor liability insurance system, one of the best in Europe, sour. For us at LocalTapiola, this transformation will necessitate renewal of our car and motor liability insurance products in 2025. We will intensify our cooperation with car dealerships and sectoral organisations, and will also be developing new products and services for motor vehicle finance.Another challenge shaking the entire insurance sector is climate change, the effects of which are visible in our customers’ daily life already today. Unexpected changing weather patterns make it difficult to anticipate and prevent risks, and last winter with its high claims expenditure will not remain an isolated incident. Unpredictable weather conditions particularly affect agriculture and forestry, which we insure as the market leader. The short-lived spring and the protracted dry conditions tormented the majority of farming areas, with severe thunderstorms causing damage elsewhere. LocalTapiola is a participating member in the Finnish Meteorological Institute-led PIISA project to examine the views Finnish farmers have about parametric, or event-based, insurance products, which pay compensation not on the basis of damage that occurs but for example based on the occurrence of a weather event, such as heavy rain. Similar types of insurance are part of the everyday life in central Europe, and their arrival in Finland might also provide protection to Finnish farmers at a time when unpredictable weather conditions are becoming more common.Adapting to climate risks and reducing emissions will require a great deal of effort from businesses, for many of which resources are stretched in the economic downturn. Thanks to a donation by LocalTapiola General, more than 200 small and medium-sized enterprises can participate in the Finland Chamber of Commerce’s Climate Programme free of charge this year. The Programme provides enterprises with training, tools and expert support for calculating their carbon footprint and for impactful emission reductions. The Climate Programme was widely applauded, which is why we have directed donor funds to continue the Programme in 2025.”Read the full financial statement presentation and business function-specific details here.

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