Biggest risks on insurance market: claim settlement rate and Stock Exchange decline

The increase in the claim settlement rate and Stock Exchange decline are the main risks that could put a strain on the general insurance and life insurance market, according to a report on financial stability, recently published by the National Bank. According to the report, the international financial crisis has not had a major impact on local insurance firms, and will not affect the system’s stability. “The exposure of insurance companies on the local securities and real estate markets (the most affected markets internationally) – is relatively low, and the higher yields derived by these investments in previous years can absorb the potential depreciations. Additionally, life insurance companies are involved in long-term investments, having anticipated corrections that can occur on the financial markets during the running of contracts, and have transferred the market risk to the clients in the case of unit-linked products (life insurance products linked to investment funds),” the report specifies.