Premiums paid on nonlife insurance products, particularly in the vehicle and travel insurance segment, have been increasing in Slovakia since the beginning of 2017 due to a special 8% levy imposed by the state on new insurance contracts, The Slovak Spectator reported March 7.
In some cases, the premiums increased by only a few percent, but for other products they went up by 15% and more, the news report said, citing Maroš Ovcarik, executive director of the Financný Kompas website. The Slovak Insurance Association's General Director Jozefína Žáková reportedly said premiums are likely to increase in all nonlife insurance segments, potentially causing stagnation and a reduction of insurance coverage in Slovakia.
Initially applying to compulsory car insurance, the levy covers all types of nonlife insurance as of 2017, including real estate, liability, travel and accident insurance products. For the period between January and November, the levy will be paid in December, while the December levy will be paid in January 2018.
The 8% levy was introduced to compensate for the lack of VAT in the Slovak insurance sector. Before the relevant legislation was passed, the finance ministry estimated that it would bring up to €80 million to the state budget, while economic analysts cited by The Slovak Spectator argued that revenues from the new levy will be relatively small compared with the negative impact it could have on the market.