9 out of 10 Czechs have at least one insurance policy. However, we are insufficiently insured and have outdated contracts. This is according to a survey of Česká spořitelna, the Institute of Sociology of the Academy of Sciences of the Czech Republic and the company Evropa in data, which was carried out by the Ipsos agency at the beginning of September on a sample of more than 2,000 respondents.
Home insurance is the most widespread, 61 percent of Czechs have it. In second place is life insurance, which is taken out by 47 percent of people. Conversely, car insurance against theft or insurance of the ability to repay a loan or mortgage are among the least popular. Both of these products are used by less than a fifth of the Czech population.
Insurance is mainly taken out by older generations. “People over 50 use it more often than younger people. This applies to almost all types of products, but this difference is most noticeable with liability insurance, which is held by 12 percent of people in the 18 to 29 age category, while in the 50 to 65 age category the share is 37 percent,” says Milan Mařík, Europe analyst in the data.
Although the majority of the population has some insurance, they do not take care of it very conscientiously. This is especially true for non-life insurance. “Our internal survey shows that 41 percent of Czechs do not know the value of their property insurance. And only 42 percent of people have updated their policy in the past five years. In the Czech Republic, about 55 percent of real estate is insured, while in Western Europe it is over 90 percent, and in some places natural property insurance is even mandatory,” says the example Milan Káňa, spokesman for the insurance company Kooperativa.
Similar data is available from the Czech Association of Insurance Companies (ČAP). “Of the people who have property insurance, only a third have it properly insured and a further 15 per cent have their policy value set at less than half the correct amount. The reason for underinsurance is the obsolescence of the insurance contracts, for example half of them were concluded before 2012 and every tenth one was never updated,” adds Tomáš Pavlík, ČAP press spokesman.
We wrote more about home underinsurance here: What is the value of your house according to insurance companies. Try a new calculator
No money and no insurance
How people insure themselves depends primarily on their income. “Low-income households and households without long-term financial reserves are insured significantly less often, which is related to the fact that they simply cannot afford it financially and that insurance is unavailable to them. It is precisely for this target group that insurance can have great benefits. It makes it possible to transfer risks from individuals to institutions that manage them better, thereby improving the financial resilience and overall financial stability of households,” says Kamila Fialová, economist from the Institute of Sociology of the Academy of Sciences of the Czech Republic.
The low financial literacy of Czechs also leads to underinsurance – for example, they quite often confuse insurance with investing. “People often expect that insurance will bring them a financial return, i.e. that the money invested in insurance premiums will be returned to them. The result can be dissatisfaction with insurance coverage and a deepening of general mistrust in insurance,” says Jan Bojko, head of insurance development and sales at Česká spořitelna.
According to the survey, the belief that they have nothing of value also deters people from getting insurance. And then also distrust in insurance companies. Up to a fifth of those who do not have life insurance claim that they are not convinced that the insurance company would really pay them the promised amount in the event of an insurance event. At the same time, the probability that some harmful event will happen to us in our lifetime is 97 percent.
In the Czech Republic, the amount of insurance premiums spent represents 2.9 percent of GDP, which is the 10th lowest result in Europe. The European average is 6.8 percent.
“However, a number of factors are reflected in the indicator of the total amount of insurance in individual countries. Legislatively different tax regimes, the structure and maturity of the economy, the value of personal property or different pension systems. The level of insurance must therefore be taken with a grain of salt and each country assessed individually,” explains Tereza Hrtúsová, an analyst at Česká spořitelna.
According to her, the more prominent role of non-life insurance is typical for the Czechs, meaning that they think more about their property than the fact that an accident with permanent consequences may happen to them. Of the total amount that people spend on insurance, life insurance is represented by less than 30 percent. For comparison, the average of OECD countries is roughly 50 percent.
Travel insurance is popular in Prague, life insurance in Vysočina
A fifth of Czechs have regretted not taking out insurance at some point in the past. This happened most often (38% of cases) after an accident. Other such “triggers” tend to be a long-term illness of a loved one, property damage for which the person in question did not receive compensation, or a car accident.
There are interesting regional differences in insurance. The largest number of insured persons are among the residents of Vysočina (97%) and the Karlovy Vary region (96%). On the contrary, 15 percent of the inhabitants of the Moravian-Silesian Region do not have any of the insurance policies.
Even greater differences then appear in what kind of insurance policies the residents of individual regions take out. For example, in the Czech context, the people of Prague very often take out travel insurance, but on the contrary life and accident insurance are below average. The situation is completely opposite in Vysočina, but also in the Hradec Králové Region. In these regions, significantly fewer people use travel insurance, but more than half of the population here have taken out life insurance.
“Regional differences in types of insurance can be caused by the different needs of residents, their age, housing structure (houses vs. apartments), financial literacy, but also the structure of employment and the type of work performed. The degree of development of the market with companies and individuals offering insurance policies will also have an impact,” adds Hrtúsová.
At Peníze.cz, he focuses mainly on personal finance and the labor market. He has been working in the media since the 1990s. She started at the Czech Press Agency, later went through the editorial offices of MF Dnes, iDnes, worked in Hospodářské noviny and on the website Aktuálně.cz…. Other articles by the author.
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