Insurers hike trade insurance policies by 20-25%

Trade credit insurance policies saw a 20 – 25 percent rise in prices in the first quarter of the year on an increased demand for these products and larger risks of bankruptcy or insolvency of the debtor, declared for NewsIn a representative of broker Marsh Romania.
The trade credit insurance covers the nonpayment of bills by debtors of a company in production, distribution and service rendering.

“Insurers have become more rigid and selective when granting such insurance to cover the bankruptcy or insolvency of the debtor, given the current economic background,” said the head of the banking, credits and guarantees insurance department in Marsh Romania, Eduard Simionescu.

He explained that, in the case of such an insurance, a bill is issued maturing between 30 and 90 days and if the debtors fails to pay it totally or partially during the interval there is an insurance policy to compensate the producer for the nonpayment.

Statistics show that the recent period has been marked by a larger number of bankruptcies and the tendencies could go on. Insurers should be careful when inking such a policy, especially in the constructions sector, where the risk is currently very high, said Simionescu.

Moreover, insurers have already started to pay compensations for such trade policies as damages occurred on this segment in the past six months. A damage can be as high as a few hundred thousand lei, added Simionescu.

However, on the management liability segment for instance the policies have kept their prices from last year as no major damages occurred.

The Romanian insurance market hiked 5.6 percent in the first half of the year to 4.7 billion lei, as the advance on the general insurance segment offset the decline recorded by life insurance, according to preliminary data of the insurance market watchdog CSA. The general insurance market climbed by 7.6 percent and the life insurance segment dropped 2.7 percent.

Insurance companies in Romania paid total damages of 2.9 billion lei in the first semester, up 47.8 percent on the similar period last year, out of which 2.7 billion lei were for the general insurance segment.

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