Preview of XPRIMM Insurance Report 1H2020 discussed at XPRIMM Time for Business in a new international edition

22 October 2020 — Alexandra GUZUN
One week before the official launch of the autumn edition of XPRIMM Insurance Report, the readers were offered a preview of the main conclusions of the report, commented by the special guests of the XPRIMM TIME for BUSINESS show: Prof. Karel Van HULLE from KU Leuven and Goethe University Frankfurt and Prof. Klime POPOSKI, Insurance department of St. Kliment Ohridski University, Macedonia.

Data shown on the XPRIMM Insurance Report reveal that the impact of Covid-19 crisis was somehow less severe than initially expected. On top 5 CEE countries where Romania occupied the 5th place, the life insurance sector was the one which driven the negative changes in their business volume. In Romania and Slovenia, the markets have recorded slightly growing business volume helped by health insurance classes in Slovenia and by motor classes and especially the MTPL, in Romania.

In this regard, Prof. Karel van Hulle declares that "It is important to stress that nothing is fundamentally wrong with the insurance industry. The main problem for the industry will continue to be the low interest rate environment, which hits insurers both on the asset and the liability side. Considering that market yields are at very low levels, this might also have an impact on insurers' profitability in the medium to long-term. The pandemic has amplified this by pushing risk free rates while increasing the uncertainty and risk premia of riskier assets. But insurance should be seen as the solution and not as the problem. It would be helpful to improve the drafting of policies so that everybody is clear about what exactly is covered by the contract."

As key person of the Solvency II system, Prof. Kare also commented on the impact that pandemic had on the insurance industry from the Solvency II perspective: "The Covid-19 crisis proved that Solvency II works well and that the overall solvency ratio of the insurance industry is still very comfortable, even after such a severe crisis. A recent analysis carried out by EIOPA shows a reduction of the solvency coverage from 242% at the end of last year to 225% at the end of Q1. But maintaining high solvency ratios is not the objective of Solvency II, it is not necessarily in the interest of policyholders as it makes insurance more expensive."

Navigating through the pandemic storm as subject of the discussion, Prof. Klime Poposki has offered his opinion: "Like in Europe and the rest of the world, the Western Balkan regions are projected to suffer recessions in 2020. According to the World Bank forecast, on the insurance sector, with exception of Serbia, the rest five countries have experienced drop in premiums with large hit in Albania by almost 8% and the lowest decrease in Montenegro by -0.2%. In the case of Serbia, the positive growth of almost 4% can be explained by the strongest resilience of the Serbian economy in H1 2020, government incentives measures against Covid-19 consequences and specific insurance industry features. In all important insurance line of business is notable increase such as: MTPL, CASCO, property, life and private health. In contrary, these were the most affected lines of business in the case of Albania, Macedonia, Montenegro, Kosovo and Bosnia and Herzegovina. In Albania and Macedonia, the deep drop in MTPL could be explain by the separate single policy form on green card and border insurance. However, COVID-19 might just prove to be the catalyst for innovation in insurance, unlocking greater levels of customer experience and personalization that has long been overdue. As a result of the situation surrounding COVID-19, there is a unique opportunity for insurers to rethink and innovate as they adjust and respond."


You can watch more guest reviews on this topic on the XPRIMM TV YouTube channel.


The full XPRIMM Insurance Report will be available online starting with 28th of October with new digital features that will allow you downloading the data in an editable format.

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