Losses of the insurance market could continue to rise unlessinsurers charge the right prices, says the CEO of GeneraliAsigurari.
Next year will be as difficult as 2009 for insurers, with a lessthan two-digit market growth rate, says Marie Kovarova, CEO ofGenerali Asigurari, one of the top ten players on the insurancemarket, controlled by the Generali PPF Holding.
In the first half of the year, the insurance market grew by only6%, whilst in previous years it had recorded two-digit rises,putting pressure on insurers to cut costs and change businessstrategies.
"The year 2010 will also be a difficult one because nobody knowswhat the political situation will be and what measures will betaken to restart the economy. What is primarily needed is a reformof the healthcare system and to encourage the population to savemoney. I don't think the insurance market will see more than aone-digit growth next year," Kovarova told Ziarul Financiar in aninterview.
Kovarova, 35, is Czech-born and was appointed to the helm ofGenerali Asigurari a year ago, after being a part of the executivemanagement team of Ceska Pojistovna, the largest insurance companyheld by the Generali PPF Holding.
"When I took over the management of Generali, it didn't evencross my mind that insurers would face their toughest year yet, butI wouldn't change my decision. It is a challenge, it forces you tothink more and alter your strategy."
Generali's chief executive compares the Romanian insurancemarket with the Czech one, which has not been so affected by theeconomic crisis, primarily because it is not so dependent on carsales, but also because it is a much more mature market, withclients being used to buying insurance and making long-termsavings.
2009 will see losses of the insurance market continue to rise,after they doubled last year, just as they had in 2007. In 2008 theinsurance market's net losses amounted to around 160 millioneuros.
"I think losses will continue to rise on the insurance market,because the prices charged on the market are not right (they arelower compared with those charged in Western European countriesi.e.). During the years when the market was booming, prices weremuch lower than normal, and now this has got to change.Shareholders are putting increasingly more pressure on companies tomake a profit." Generali posted an around 900,000-RON(245,000-euro) net profit last year, down from the 3.5 million-RON(1 million-euro) profit recorded in 2007.
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