Romanian insurance companies continue to see their profits shrink, however, solvency margins remain above the minimum legal limit, according to data released by the NBR, in its recently published Report on financial stability.
"Losses generated strictly by the insurance business of certain companies operating on the segment of general insurance have called for additional capital requirements.
The respective companies will have to focus on adjusting premium rates for underwritten risks and on improving risk management systems in order to strengthen their financial position," reads the NBR report.
Last year, several insurance companies reported losses: Ardaf (35m euros), Generali (8.8m euros), BT Asigurari (2m euros), Unita (6m euros) and Interamerican (3.5m euros).
On the general insurance market, the main risks highlighted by the central bank are increasing levels of claims and reinsurance costs, which could threaten market stability. However, most claims settled by insurance companies did not affect financial stability, the NBR adds, owing to capital inflows and the increase in gross underwritten premiums. Rising international reinsurance costs were also reflected in the activities of domestic insurance companies operating, as most of them were reinsured with foreign companies. "The financial health of these reinsurance companies bolstered the stability of the domestic insurance market, but the lack of strong reinsurance firms on the domestic market leads to the transfer of significant amounts of money abroad," reads the NBR report.
Other downside risks on the insurance market are the low premium rates caused by tight competition between players and the transfer of lending risks from the banking sector. "The growth of the credit insurance market was doubled by a declining quality in the policy portfolio managed by companies," reads the
