Life insurance market in Romania could hike 5% in 2009, ING says

The life insurance market in Romania will go up 5 percent the most this year, five-fold below the past year’s level, owing to hike of unemployment rate and reducing of people’s incomes, managing director of ING Asigurari de Viata, Cornelia Coman (photo) told NewsIn.

Last year, the life insurance market grew 24.11 percent to 1.8 billion lei, accounting for 20.5 percent of the whole insurance market.

Despite the small increase forecast of only 5 percent the most this year, sales in March topped those in the other previous months, Coman said. Still, the market could recover in the next months, but it is unlikely to see the climbs of the past year, she added, pointing to the negative effects of the rising unemployment rate on the market.

Moreover, incomes of families in Romania shrank significantly in the first months this year and uncertainty will continue to hover over the economic evolution. What’s more, Romanians are worried about their financial future, Coman added.

Still, the sky is not that dark, considering the recent estimates of analysts regarding the unclogging of lending which could help the life insurance market find a way out to the light. Coman stressed that only 15 percent of the life insurance policies are tied to mortgage loans.

The market was hit not only by the lending halt, but also by the difficulty in paying back credits.

Provisions set up by lenders in Romania surged 2.4 times (138 percent) year-on-year to 9.64 billion lei in February, while back payments for loans granted to the population doubled to 1.32 billion lei in the similar period, data of the country's central lender BNR showed on April 22.

What’s more, sales of unit-linked products slipped to 20 percent in the first quarter this year from 35 percent in the similar period last year, Coman also told NewsIn.

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