At the same time, CO representatives pointed out that based on numerous publicly available macroeconomic projections, an economy slowdown is very likely during 2020, which may result in lower consumption and consequently lower demand for insurance services, since the volume of insurance premiums written is linked to GDP trends.
Thus, CO indicates the following key areas that could be affected by adverse economic conditions:
- volatility of comprehensive income from investments, as a result of developments on thefinancial markets,
- increased credit risk and increased impairment of insurance receivables,
- increased number of life insurance policy surrender.
"However, as part of its own risk and solvency assessment (ORSA) process, a series of stress tests, sensitivity analysis and scenarios were conducted, and it is estimated that these analyses covered the risks that could have a significant impact on the Company also in the case of COVID-19.
Although, based on analyses performed in the ORSA process, a certain decrease in the solvency ratio is expected,the same ratio should remain at levels significantly higher than the regulatory ones and the solvency of the Company should in no way be called into question".
CO representatives mentioned they will continue to actively monitor the development of the COVID-19 outbreak and "should it consider this outbreak to significantly affect the Company's business and financial position in 2020, it will fully comply with the Insurance Act and other relevant regulations".
1648 views
