Description of the Insurance Market of the Republic of Moldova in 2007

    Development tendency of the Moldovan insurance market is determined by a number of indicators characterizing the quality of services rendered by the local insurance companies and, primarily, by their financial capacity to fulfill the undertaken obligations. Net assets (equity capital) whose amount is strictly regulated by the state are deemed to be the most important activity indicator. Net assets are used for calculation of the solvency index and economically reflect insurers’ capacity, as well as net retention upon reinsurance. At present, ASITO holds the biggest amount of net assets – 113 million lei, followed by Sigur-Asigur with 25 million lei, Moldcargo SRL with 23 million lei, Moldova-Astrovaz SRL with 19 million lei, Moldasig SRL with 19 million lei and Grawe Asigurare with 14 million lei. Under provisions of the new Law on Insurance, till 6 April 2008 the amount of paid-up capital held by insurance companies must make up at least 4 million lei. As of 31.12.2007, 18 insurance companies or 55% of the total number of companies operating in the national insurance market did not have the established minimum authorized capital.

In 2007 the insurance market registered premiums underwritten in the amount of 724.2 million lei, which is a 130% increase of the 558.6 million lei in 2006. At the same time net premiums reflecting insurance market quality have only increased by 122% as compared to the same period of 2006. This result is explained by the fact that in 2007 operators of the local insurance market have ceded premiums in the amount of 171 million lei, or 66 million lei more than in 2006. Insurance companies were urged to cede a considerable part of their portfolio due to lack of their own funds ensuring them sufficient financial stability. The biggest amounts of insurance premiums were ceded by the following companies: Moldasig SRL – 66 million lei, Donaris-Group SA – 22.5 million lei, Moldcargo SRL – 20.8 million lei, Acord-Grup SRL – 13 million lei, ASITO SA – 9.5 million lei, Carat SA – 7.4 million lei and Garantie SA – 6.6 million lei.

 Another indicator denoting negligence during insurance contract conclusion and lack of efficient “credit control” are accounts receivable, i.e. amounts registered as profit which have not been received. If as of 31.12.2006 the amount of accounts receivable made up 176 million lei or 32% of premiums underwritten in 2006, then as of 31.12.2007 the amount was even bigger – 220 million lei. The biggest part of the total accounts receivable – 37.5 % or 82.6 million lei – belongs to Moldasig SRL, followed by ASITO SA with 22.3 million lei, Afes-Moldova SRL with 17.6 million lei, Moldcargo SRL with 16.3 million lei, CARAT SA with 10.5 million lei and ARTAS SRL with 10.0 million lei. Accounts receivable present a high risk for both companies that register such accounts receivable and for the market on the whole and must undoubtedly be secured with considerable reserve funds against the risk of non-payment the clients. However, the country’s business environment still has much to recover in this regard.  Damages paid for risks occurred in 2007 made up 235 million lei or 32% of premiums underwritten. Among the top 10 companies with the biggest turnover the largest amount of paid damages was registered by ASITO SA – 54 million lei, followed by Moldasig SRL with 48 million lei, Afes-Moldova SRL with 26 million lei, Moldcargo SRL with 19 million lei, Donaris-Group SA with 17 million lei and Carat SA with 15 million lei.  And finally about profit. On the whole, the market has registered total profit in the amount of 78 million lei, as compared to 54.8 million lei in 2006, thus increasing by 142%. The highest profit was obtained by ASITO SA – 13.8 million lei, Moldcargo SRL – 11.3 million, Moldasig SRL – 8.9 million lei. Six insurance companies have registered losses: Delta SRL – 2.6 million lei, Garant SRL – 1.1 million lei, Mobias SA – 0.35 million lei, Accept Insurance SRL – 0.35 million lei, Adara-S SRL – 0.34 million lei and Koruntu-Asig SRL – 0.05 million lei.

    Nevertheless, in spite of certain negative factors, year after year the insurance market of the Republic of Moldova grows more dynamic, constantly develops and becomes consolidated, tending to meeting market standards of developed countries.

 

Source: Economic magazine “Eco”

 

 

 

 

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