Silviu SABIESCU, Pricing Actuary, GenRe Life Health
As the markets of Central and Eastern Europe align to the already developed ones, insurance products become more complex. Reinsurers that have global exposure are generally the ones who transfer the experience of the mature markets towards the developing ones.
XPRIMM: What expectations do you have related to the reinsurance demand
of the companies in Central and Eastern Europe and what lines of business
do you think will register a growth of this demand?
Silviu SABIESCU: Reinsurance is an indispensable component of the
insurance industry and it will remain so in the future. According to
an incomplete perception, the only role of the reinsurers is to provide
coverage for the risks that insurance companies cannot hold in their
own portfolio. It is totally wrong. In order to be fully useful, this
coverage must be accompanied from the reinsurer's part by a package that
includes full support in: product development (conditions, price), underwriting
risks and claims management. Also, through reinsurance contracts, insurance
companies increase their ability to underwrite without the solvency indicators
being affected. Therefore, any type of insurance that requires expertise
or capital from the reinsurer's part will register increases of the reinsurance
As the markets of Central and Eastern Europe align to the already developed
ones, insurance products become more complex. Reinsurers that have global
exposure are generally the ones who transfer the experience of the mature
markets towards the developing ones.
XPRIMM: What are the main opportunities that the insurance market
in Central and Eastern Europe enjoys? But the main dangers that threaten
it, considering the economic realities?
S. S.: The financial protection deficit (the difference between the
financial resources of a family and those needed for maintaining the
standard of life in case of the death of a person) is very high in Romania,
as well as in Central and Eastern Europe, as people are not fully aware
of this need for protection. So, there is still a huge growth potential
for life insurance.
The dangers which threaten the insurance market are not new and they
are not necessarily related to the economic crisis - on one hand, there
is a psychological barrier given by the distrust of people in financial
institutions and, on the other hand, the decrease of real incomes and
of purchasing power.
The role of insurance industry in the economy does not change in times
of crisis. People still need to insure their life, health, home, car.
Also, companies continue to insure their assets or their businesses.
In one way or another, there is demand for insurance. It depends on each
insurance company in part how it manages to adapt its behavior in order
to survive and even to benefit from the effects of the economic crisis.
XPRIMM: How would you advise insurance companies to approach their
customers in this time of crisis?
S. S.: The flexibility towards customers who have a financial situation
that is temporarily more difficult can make the number of surrenders
or of resiliations of insurance policies be reasonable. A life insurance
is, generally, a long-term contract, and to fully benefit from it is
necessary that both parties find ways to compensate for the temporary
lack of liquidity.
The safety of the future from the financial point of view is the main
selling argument of insurers. In the conditions of the current crisis,
some people could more easily understand this argument, so that it is
up to the seller to create new opportunities.
XPRIMM: What do you think about the tendency of the Romanian insurers
to diminish the volume of premiums ceded in reinsurance, which decreased
to 20% of the total gross written premiums of 2008?
S. S.: I think the decrease is mainly related to general insurance,
and the main cause could be a sharp decrease in credit and guarantees
insurance. The descending trend of the reinsurance premiums can be determined
by the fact that the exposures retained by insurers have grown or because
the reinsurance prices have fallen. In the same time, the decrease of
the reinsurance cedings must also be correlated to the growth of the
capitalization of the profile companies.
Despite this descending trend, GenRe Life Health has increased year on
year, along with the life insurance market, because the relationships
with our partners are built on the long term and they are profitable
for both sides. As long as insurers and reinsurers rely on long term
relationships, that are fair and mutually beneficial, both parties will
benefit on the long term, from the upward trend of the insurance market.
XPRIMM: Thank you!
Editor: Oana RADU
| Published on 25.06.2009