Poor debt repayment on borrowing worries insurers

Hopes of the population paying all their banking loans in due time are quickly fading away. According to six-month data, the volume of late payments went up 50% in euros, twice the growth rate posted by lending during the same period.

In other words, the growth rate in the late payment of loans is twice the growth rate of lending. Most delays are being posted in the case of medium-term (one to five years) credits in ROL, namely loans for household devices. The increase in late payers is being felt by the insurance companies that are significantly involved in consumer lending, by selling policies for guarantees and financial risk. Delays in repaying medium-term credits in ROL doubled between January and June, surging to 328 billion ROL (8 million euros). In the case of an average loan of 500 euros, more than 15,000 banking customers having bought refrigerators and washing machines with money borrowed from the bank are now registered in the banking documents as late payers.

Last year’s main performers on the insurance market in terms of market share increase are now making calculations and worrying over profitability. For instance, Asiban, which last year tripled the amounts cashed especially due to guarantee and financial risk insurance, has settled claims worth almost 400 billion ROL in the first six months of the year, three times higher than last year. Under the lending and guarantee insurance category, the damages recorded by the company are four times higher compared to the corresponding period of last year.

“We have noticed an increase in claims, we are watching this phenomenon and thinking about the measures that might be taken, but it must be said that it is only natural to have a high volume of claims, following last year’s sales boom,” explained Mugurel Ceraceanu, general manager of Asiban. At any rate, Ceraceanu says that the reinsurance of up to 60% of the contracts means that the financial burden can be transferred to the reinsurers. In fact, this level of reinsurance has been imposed by the Insurance Surveillance Commission this spring, as the insurance market watchdog was concerned about the massive involvement of some insurance companies in this sector.

Damages are meanwhile four times higher in the case of BCR Asigurari (BCR Insurance). For this company, gross premiums underwritten through the insurance of credits and guarantees account for almost 40% of the entire portfolio. The company’s general manager Romeo Jantea says, “This increase is normal, it does not mean that spectacular negative effects have occurred. We did not sharply feel this increase. We rather felt the constraint norms imposed by the Insurance Surveillance Commission, which directed us towards reinsurance. In fact, because of this, we had to redesign our premiums policy (increasing some and modifying others), as reinsurance is rather expensive in this sector.” According to Jantea, the existing risks will be better controlled from now on, after the creation of the Credit Bureau, which monitors late payers and warns the banks about them.
sorin.pislaru@zf.ro