Financial crisis does not affect insurance market. Economic analysis by Info-Prim Neo

The effects of the financial turmoil on the foreign markets are not felt on Moldova’s insurance market. The demand has not decreased. On the contrary, the insurance sector continues to rise. Last year, the insurance market grew by 24.9%. The insurance companies over the first nine months of 2008 recorded subscribed premiums of 633 million lei (47.3 million euros) and a growth rate of 23.46%. The insurers expect that this rate will increase until this yearend. The insurance premiums collected from individuals grew by 34.36%. The individuals play a greater role in the development of the market. During January-September 2007, the premiums paid by individuals made up 45.59%, as against 49.6% in the corresponding period this year. The financial crisis did not affect the investment and development strategy of the insurance companies. The huge potential for growth from insurance in Moldova, given the different development level compared with other markets (the value of insurance premiums per capita in Moldova is eight times lower than in Romania, 30 times lower than in Hungary and 160 times lower than in Belgium), acts like a safety lever against the crisis. The most relevant example is the optional property insurance sector, which accounts for 36.4% of the insurance contracts. The insurance companies have signed many contracts for the insurance of the goods of enterprises, especially agricultural companies, which, in a year hit by floods, signed insurance contracts worth three times more money compared with the first nine months of 2007. The insurance companies reported subscribed premiums for the insurance of people’s property of 65.7 million lei. This is 2.1 times more compared with the same period last year. The statistics of the National Commission on the Financial Market do not confirm the fears that the life or health insurance sectors would be affected by the crisis. The health insurance sector rose by only 2.4%, while the life insurance sector continued the trends of the previous years, growing by 43.25%. If the economic crisis extends and affects Moldova as well, the life insurance sector will be also affected. The growth rate of the sales of vehicles decreased and the vehicle owner civil liability insurance sector rose by only 10.5%, less than projected. The insurance market became more developed and can easier cope with possible problems caused by the crisis, specialists say. Major changes took place in the size of the paid registered capital, which rose by 107.4 million lei in nine months, to 313.2 million lei. But, probably not all the companies are protected from the negative effects of the crisis. Six of the 33 companies included in the report of the National Commission on the Financial Market reported losses for nine months, while ten insurance companies did not collect insurance premiums or collected less than 1 million lei. The damages calculated by the insurance companies are much larger than the paid damages, though the damage rate per market is rather high – 29.9%. The professional participants say that some of the companies continue to pursue a policy aimed at obtaining maximum profit, including from dumping, and this undermines the trust in the market. It is expected that after the registration of the professional association, which brings together 14 insurance companies that hold 90% of the market, there will be created self-regulatory mechanisms that would improve the resistance of the insurance market to possible effects of the crisis, would sanction the disloyal competition and would prevent the bankruptcy of some of the companies that now only pretend to work.