Forecast Crisis affects the insurance market

The local insurance market will be subject to a tempering in growth rate and a widening of losses, unless significant changes related to insurance tariffs are made, the General Manager of insurer Allianz-Tiriac, Cristian Constantinescu, told Business Standard. In a pessimistic scenario, the industry will increase 15 percent in 2009, compared to a 20-25 percent growth rate in previous years, according to the President of the Insurance Supervision Commission (CSA), Angela Toncescu. However, she added, that the local market will not suffer severe shocks due to the international financial crisis. On the other hand, the General Manager of MARSH insurance broker, Cristian Fugaciu, said an impact will be felt on the insurance market, because it is closely connected to other industries. “Companies in various economic sectors are considering savings, and they could lower budgets allocated for insurance products,” Fugaciu added. One of the fields that has already been hit is the consumer loan policy segment, given the significant losses it generated in previous years, according to Constantinescu. At the end of Q1, the volume of gross premiums subscribed for loan and collateral insurance amounted to €30.56 mln., 60 percent lower than in Q1 2007. Constantinescu said that insurers are to renew their reinsurance treaties at the end of the year. “A rise in reinsurance costs is expected, as there are clear signs from international reinsurers. These hikes will be felt in the case of non-proportional reinsurance contracts, excess loss type,” he said. Local insurance will be obliged to compensate for higher reinsurance costs “and this will be mainly through a rise in insurance tariffs,” explained Constantinescu. The most likely segments where fees are set to increase are third party liability and no-fault auto insurances.