Dutch insurance market reaches saturation point

"Insurers in the Netherlands were hit hard by the global financial crisis, with most of the largest insurers forced to take state aid or accept support from majority shareholders," said Ella Spencer, analyst in Fitch's insurance team, which produced the report.

She added: "Although the industry has survived the crisis, severe pricing pressure is threatening profitability for life and pension providers, driving companies to cut costs and, in some cases, withdraw from the market."

The report found the life market is also suffering from tax changes that have allowed banks to compete on equal terms with insurers in the savings market. The effect is exacerbated by a slump in insurers' products sold through banks, as banks are increasingly pushing their own saving products.

However, the unique healthcare insurance system in the Netherlands shields insurers from the underwriting risks normally associated with health insurance.

"The Netherlands has the largest private health insurance market in Europe, with annual premiums of around €40bn," explained Ms Spencer. "However, most of this insurance is, in effect, underwritten by the Dutch government, with insurers covering a lot of the administration associated with healthcare but taking on very little risk."

Indications from the fifth Quantitative Impact Study show that, overall, Dutch insurers look set be well capitalised under Solvency II. However, the industry continues to lobby for less-onerous risk charges for health insurance, believing that the Solvency II calibrations do not reflect the risk-mitigating features of the Dutch system.