A positive... minus?
Recent estimates of the insurance market leaders regarding its evolution, be they optimistic or pessimistic, indicate a negative dynamic for the current year. Moreover, they are stating that in 2010 they were forced to react, almost constantly, only in the sense of minimizing undesirable effects.
What did actually happen? With a substantially diminished purchasing power, customers had to choose between giving up insurance and "betting" on cheaper ones. Meanwhile, with increasing claims, the insurers had to choose between commercial underwriting and losing customers.
To these harsh conditions, another two things came up: the decrease of the motor market and... a "gift" of the Romanian state, the VAT increase to 24%, which have also amplified the negative impact.
However, the market potential remains the single and most important positive aspect of insurance. The potential of this market has brought here important international groups. The same potential makes the shareholders support with capital the activity of the companies in the market.
This contribution indicates that, at a certain moment, all these investments will be recovered. In short, shareholders are forced to be optimistic. And, if investors in the market are optimistic, why should't we be the same?
Published on 10.03.2011
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