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Insurers would make losses if contribution exceeds HUF 20 billion

Hungary's smaller insurance companies would suffer losses if the sector has to contribute more than HUF 20 billion to the HUF 200 billion in revenue that will be generated by the planned extraordinary tax on financial companies, chairman of the Hungarian Insurers Association (MABISZ) Peter Kisbenedek said at a press conference on Wednesday.

Prime Minister Viktor Orbán said earlier the government planned to introduce an extraordinary tax on banks, leasing companies and insurers that would generate HUF 200 billion in budget revenue in 2010.

No details of the tax have been revealed, but MTI learnt banks are to pay more than half or up to 60% of the HUF 200 billion.

Six insurers accounted for about 90pc of the sector's HUF 66 billion in after-tax profit in 2009, Kisbenedek said. The extraordinary tax could cause losses at the 25 smaller insurance companies, requiring capital raises or prompting decisions to pull out of the market, he added.

Kisbenedek said industry interest groups were incapable of deciding on how the burden of the extraordinary tax should be divided and this was rather the responsibility of the state.

Kisbenedek noted that Hungarian insurance companies were paying out HUF 30 billion on claims for flood damages filed thus far. (MTI-ECONEWS)