The gross claims settled by insurance companies last year went beyond 1bn euros for the first time, up 35% (in euros) from 2006. Also, turnover on the insurance market in 2007 advanced by a mere 32% in euros at the level of gross underwritten premiums. Last year, settled claims reached 47% of total turnover, from just 32% in 2003.
The market has already seen a trend take shape: 2007 was the 4th consecutive year when claims advanced faster than gross underwritten premiums.
In 2006, the pace difference was even steeper: plus 53% in euros for claims, compared with a 33% increase in euros for gross underwritten premiums.
Practically, the trend of recent years translates into a continual deterioration of insurers' technical and financial results. Since 2003, when claims started rising faster than premiums, the net result on the insurance market (the sum of profits minus the sum of losses) has dropped from a net income of 20m euros to a net loss of 20m euros in 2006.
While the Insurance Supervision Commission has not published data on insurance market profitability in 2007, yet, the market is highly likely to have registered a net loss last year, as well, on the basis of information released by some companies.
The biggest insurers on the 2 segments (general and life insurance) had lower profitability in 2007 than in 2006. Most losses on the market were generated by car insurance policies, insurers say. As a matter of fact, almost three quarters of gross claims settled by the entire insurance market are related to car insurance. Last year, claims settled for auto liability (RCA) and comprehensive (Casco) policies revolved around 720m euros, against total gross claims of 1bn euros (for general and life insurance).
"Claims settled for comprehensive policies are the ones ruining insurers' profit," comments Tudor Moldovan, CEO with Generali Asigurari. He says car claims are responsible for the weak and shrinking profitability of the insurance market.
Despite this trend maintaining last year, Moldovan estimates the overall market registered a slightly positive result.
This year, he expects the trend of claims to rise faster than the premium volume to continue.
Most companies operating on the insurance market have stated in recent years that premiums are too low compared with the levels considered as normal.
Late last year, Cristian Constantinescu, CEO with Allianz-Tiriac Asigurari, estimated auto liability policy prices should be raised by 30% on the entire market for premiums to cover settled claims and ensure a minor profitability margin for insurers.
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