PZV contracts: the number falls below the important mark | Insurance | 07/08/2022

In the case of the provision of preferred premium futures (PZV), there is still a big drop. The approximately 88,000 contracts that expired or were terminated last year could only be offset to a very small extent by new contracts (7,797). After a record figure of more than 1.6 million units in 2012, the number of existing contracts has been reduced every year and in 2021 it fell below one million (967,000) for the first time since 2006. This is what emerges from the new report. PZV of the Financial Market Authority (FMA).

The sharp decline began after the significant reduction in government funding in 2012. However, it was not just backsliding by politicians that made this product, which was intended to boost voluntary old-age provision, unattractive, but also the high costs and the guarantee model, which generated little profitability in a low-interest environment.

Tickets of 739 million euros
At the same time, the PZV market itself remains large: as it is a product with very long maturities, premium inflows amounted to €739 million in the previous year (down 3.7 percent compared to 2020). Total assets under management in this insurance product amounted to a new record of almost €9.38 billion in the year under review.

In view of the good development of the capital market in 2021, PZV products also increased: the additional yield was 8.3 percent (before costs). That’s close to the previous growth peak of about ten percent, as reported by the FMA. However, the stylized benchmark portfolio calculated by the FMA over the years (30 percent Austrian equities, 70 percent 10-year Austrian government bonds) fared even better at 10.8 percent.

Maximum premium currently 129.92 euros
In 2012, state funding was halved from 9.5 percent (on premium) to 4.25 percent. The highest possible premium privileged deposit in the previous year was EUR 3,056.94 (2020: EUR 2,957.80), resulting in a maximum state premium of EUR 129.92. Providers are required by law to at least give a guarantee on the nominal premiums paid.

In 2021, only four insurance companies were still offering a PZV product in new contracts. At peak hours there were 19 companies. The largest supplier is Wiener Städtische, which now accounts for 80 percent of new contracts. Equity investment companies have not offered new PZV contracts for more than ten years. (eml)

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