Moldova insurance profits plunge despite 3% premium growth
Moldova’s insurance sector continues to expand, yet experts warn that growth remains superficial. The market is currently dominated by mandatory motor insurance, while long-term protection and voluntary products remain under-utilised.
Analysis from the National Institute for Economic Research indicates a structural imbalance. Angela Secrieru, PhD in Economics, noted that the sector is defined by volume-driven growth rather than deep structural development. She emphasised the need to align with international standards and shift toward sustainable, long-term products.
The burden of mandatory policies
The market relies heavily on stable demand for mandatory products. According to researcher Cristina Ungur, motor insurance accounts for over 50% of the sector. She attributed the slow adoption of diverse portfolios to low financial literacy among the population.
"We can diversify our offerings, but these policies will not be purchased if there is no consumer demand," Ungur stated during a Radio Moldova broadcast.
Profitability challenges
Official data shows the insurance market grew by 3% last year, with total premiums reaching approximately €170.6 million (3.3 billion MDL). Fire and property insurance saw the most significant gains, while motor third-party liability (MTPL) fell by 4.6%.
Despite the rise in premiums, pre-tax profits plummeted. The sector reported a profit of just over €4.29 million (83 million MDL), a figure roughly 4.2 times lower than the previous year.
A shift toward green finance
Experts believe the sector must evolve from simple administration to strategic risk management. Associate Professor Victoria Iordachi suggested that the transition to green finance and sustainable instruments will eventually become mandatory.
This shift will require closer cooperation between the banking and insurance sectors, supported by active government intervention to reduce economic uncertainty.
Translation by Iurie Tataru
