CSA: 2008 might be the last year of double-digit growth

The year 2008 could be the last year of double-digit growth on the insurance market, said Angela Toncescu, chairperson of the Insurance Supervision Commission, while financial analysts believe the market will surely go down, and investment performance will be significantly lower.

“There are enough arguments to support a positive answer to the question if 2008 could be the last year of double-digit growth for the insurance market. Under the circumstances, it is difficult to forecast the market level at the end of 2009. Given the negative trend of the automotive sales, the decline of lending and people’s confidence, the effects of the crisis also had an influence on the underwriting business,” Toncescu said during the International Insurance-Reinsurance Forum organised by Media XPRIMM in Sinaia. Dragos Cabat, the chairman of the Association of Chartered Financial Analysts (CFA) Romania, says the insurance market will go down for sure, after in 2008 the growth stood at 24%, because the economic crisis is real, and the insurance sector will be affected both in terms of gross premiums underwritten and in terms of investment performance. The market fell 3% on the segment of general insurance in the first quarter, and went down 6% on the life insurance segment. “Premiums will be lower because of the decline in the individuals’ purchasing power, but also in the companies’ turnovers. As for the investment part, which is very important, yields are expected to be much lower, and volatility much higher. Yield expectations will be 5-8% lower than previously thought for many years from now on,” Cabat says. He believes the economy will continue to contract for at least two or three more quarters. “This is not a V-shaped recession, but rather an L-shaped or a U-shaped one at best, and we will spend two or three more quarters at the bottom at least. We have to wait for a rebound of the major states in the EU, our commercial partners, which in turn are waiting for a signal from across the Ocean,” CFA Romania chairman explains.