Heise said that, even if the insurance market is linked to the economy, the insurance industry is a developing industry in many countries in the region. “The standard of living improves and people buy even more insurance. The insurance industry increases with the wealth measured in per capita GDP. The long-term outlook is very favorable for the insurance industry,” said Heise, adding that the insurance industry grew by a higher rate than that of gross domestic product.
The company official said that the current crisis will generate major changes on financial markets. One effect is that financial products will be simpler and more transparent, because that is what clients and investors are demanding from lenders. “One driver of change is of course the policy reaction to this crisis, which is going to be very profound. We will have new regulations, new supervision, much stricter oversight of banking, of course direct involvement of the government in banking. The other driver of change is the market itself. Financial markets will change, they will return to more traditional business models, they will be advisors to their clients, they will be risk takers.”
Referring to Romania’s external debt, much of which is in foreign currency, Heise considers the current situation to be difficult for the central bank because “usually a devaluation is a way of adjustment. Exports are becoming more competitive, imports are pushed back. In Romania’s case it is difficult, because the depreciation increases the value of the debt in other currencies so it causes more defaults, more insolvencies maybe. So it is a difficult situation that the country came into because of this currency mismatch that has to be worked off. But this is a temporary problem,” explained the company official.
