Global Briefs

Global Briefs – December 2019

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Albania­ – Economic losses of more than USD 100 million after strongest earthquake in decades

More than 21 people have been killed and over 600 more injured after Albania was rocked by its strongest earthquake in decades, informed Euronews Albania, though many expect the number to increase. “Significant damage is likely and the disaster is potentially widespread," the United States Geological Survey says in its damage estimate, quoted by npr.org. It adds that economic damages will likely be more than USD 100 million, noting that previous earthquakes of this severity "have required a regional or national level response.” The epicenter was 10 kilometers northwest of Shijak, between Durres (population 122,034) and the capital, Tirana (population 375,000), at a shallow depth of 10 kilometers, according to the US Geological Survey.

Azerbaijan  financial markets supervision transferred to the Central Bank

On November 28, by Order of the President of the Republic of Azerbaijan, the Chamber of Financial Supervision of the Republic of Azerbaijan (FIMSA) was abolished, its task being transferred to the Central Bank. The presidential order's text shows that the measure aims to improve the regulation and supervision of the financial services market, according to the provisions of clause 32 of Article 109 of the Constitution of the Republic of Azerbaijan. The Central Bank of the Republic of Azerbaijan was, thus, assigned the powers and rights of the former Financial Market Supervision Authority, including licensing, regulation and supervision in the financial services market and protection of the rights of investors and consumers of financial services. Within one month, the Central Bank has to prepare and submit to the President of the Republic of Azerbaijan proposals on necessary changes to the laws "On the Central Bank of the Republic of Azerbaijan", "On Banks", "On Non-Banking Credit Institutions", "On Insurance Activities", "On Securities Market", "Currency Regulation" and other legislative acts. Also, it has to take all the necessary measures to carry out the relevant handover operations. Any other issues that may arise from the transfer process will be solved by the Cabinet of Ministers of the Republic of Azerbaijan.

China  State Council issues policy document on lifting restrictions on foreign investment

China will lift all restrictions on the business scope of foreign banks, securities companies, fund managers and other financial institutions operating in the country under new guidelines on foreign capital issued by the State Council at the beginning of November. The new guidelines, calling for accelerating the pace of opening up of the financial sector, also remove capital requirements for foreign insurance broking firms and foreign banks setting up branches in China, reported Caixin. The State Council also reduces quantitative criteria for foreign investors establishing insurance or banking institutions in the country. (Asia Insurance Review)

Greece – insurance market expanded to EUR 3 billion at the end of September

The Greek insurers reported aggregate GWP of €3 billion at the end of September 2019, up by 7.8 percent y-o-y, according to the nine-months market report published by the Hellenic Association of Insurance Companies (HAIC). The 3Q2019 market results published by HAIC include the figures for 52 insurance companies of which 19 were active in life insurance (and accounted for 99.9 percent of the segment market’s full data for 2018) and 44 were active in non-life insurance (94.8% market share). In terms of GWP, the life insurance segment was up by 15.4% y-o-y to €1.45 billion due the double digit increases reported by the two main subclasses: +26.2% y-o-y reported by UL policies to €189 million, while the traditional life policies reported a positive growth rate of 10.6% y-o-y to €1.08 billion. The published figures show that the non-life insurance GWP accounted for 51.8% of the total - €1.55 billion, or 1.4% more y-o-y. Motor TPL segment was the largest non-life insurance class - €560 million in total GWP, followed by property policies (€318.8 million) and MoD (€162 million).

Russia – S&P: industry and country risk in the property/casualty insurance sector is high

S&P Global Ratings assessed industry and country risk in the Russian property/casualty (P/C) insurance sector as high (foreign currency BBB-/ Stable/ A-3; local currency BBB/ Stable/ A-2), as the agency stated in its report. S&P noted sound profitability of the sector, an improving regulatory framework, but at the same time, the agency expects low premium growth in 2019-2020 due to the weak economic growth prospects and tough operating environment. According to the agency, one of the key segments, motor insurance, has prospects limited by MTPL gradual liberalization, competition, low level of disposable income and high use of deductions in Motor Hull. S&P expects the combined ratio for nonlife companies to be likely below 98 percent and return on equity (ROE) above 13 percent in 2019-2020. According to the agency, the high country risks create a difficult operating environment for insurance businesses. VAT increase, slow real wage growth, tight credit conditions, adverse investment, poor demography, export performance, which is under pressure, are among the negative factors for the Russian P/C insurance growth. S&P expects annualized spending on insurance to remain about USD 115 per capita in 2019, the insurance penetration ratio in P/C sector to be about 1 percent of GDP, close to Turkey and India. Industry risk for the P/C sector is assessed by the agency as moderately high, the same as for the U.S., U.K., Turkey, the Netherlands, Ireland, and Japan. Despite macroeconomic challenges, S&P considers the profitability of the sector as strong. Overall insurance market profitability, according to the report, is supported by corporate lines and personal accident insurance. The P/C insurance market is becoming more concentrated, with the TOP-20 players occupying 88 percent of the market for 1H2019 (based on GWP), and local players dominating the landscape.

Russia – almost 9 in 10 insurance frauds fell on MTPL in the first nine months

According to the Bank of Russia, from January to September 2019, the total number of criminal cases in the insurance industry amounted to 1900, said Ekaterina Abashieva, deputy director, Bank of Russia, insurance market department. It’s worth noting that out of the total number of cases, 1700 of them were targeting MTPL business line, which is equal to about 89%. “According to the statistics of the Central Bank, in 2018, if compared to 2017, total number of criminal cases related to insurance fraud, increased by 55 percent. Of 2600 criminal cases, initiated in 2018, 2400 were related to unlawful practices in MTPL", said Abashieva.

United States – Goldman Sachs buys shares of insurance group AXA

French insurance group AXA announced it sells 144 million shares in its US subsidiary AXA Equitable Holdings (EQH) to the investment company Goldman Sachs which acted as the sole underwriter of a registered public offering of the AXA Group. Under the deal, EQN will buy from Goldman Sachs 24 million shares from the proposed 144 million shares. The purchase price of one share will be equal to the value per share which the underwriter paid AXA. 

United States – California bans insurers from dropping homes in wildfire areas

On December 5 California regulators announced that they have imposed a one-year ban barring insurers from refusing to renew insurance homeowners policies in some parts of the state that are at high risk of wildfires. State authorities say that the moratorium now applies to approximately 800,000 homes and expect to extend it to other areas. In 2018 state lawmakers approved a measure that allows the California Department of Insurance to require insurers to renew residential policies for one year in ZIP Codes affected by wildfires officially declared as disasters. Under previous law insurers were required to renew policies for property owners whose homes were total losses, but the new law applies to all policyholders in affected areas of the 16 wildfires that burned in 2019. To-date the regulator has mapped the perimeters of seven of those fires and banned non-renewals in dozens of ZIP Codes. Regulators are working with other state agencies to identify perimeters for the remaining nine fires and plans to announce more affected ZIP Codes soon. State authorities said that wildfires cost California insurers more than $24 billion in 2017 and 2018. (Source: I.I.I. from The Wall Street Journal 12/05/2019)

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