EXCLUSIVE COMMENTARY: Financial crisis biggest barrier to growth for insurers

The global financial crisis is the biggest barrier to growth for insurers, according to the Maltese finance minister, Tonio Fenech.

Fenech says that he believes that the crisis, which is dominated by the on-going Euro crisis, is having an adverse affect on both confidence in the insurance market and risks themselves.

Insurers were badly affected by the 2008-09 financial crises that spilled out from other financial institutions into the insurance market – and he believes that this could happen again.

“Clearly we are not out of the woods yet,” he says.

However this view contrasts with the domestic situation for Maltese insurers, who have been experiencing a certain amount of growth. While a significant amount of their premiums come from international business, their exposure was not too concerning, says Fenech.

“Obviously that exposes some risks,” he says.

“However when you consider the total Maltese insurance portfolio, you see that the risk is still manageable.”

Looking to regulation, Fenech says that the Maltese insurance industry is confident in its ability to implement Solvency II.

“We believe that we are already beyond the limits that are required,” he says.

“We are not seeing any difficulties in implementing it.”

Given Malta’s strong position now, Fenech finds it ironic that before the financial crisis many said that Malta financial institutions were too ‘conservative’ in their risk management approach.

“Now they call us prudent,” he says.

Comments made at the Finance Malta Conference 2012