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XPRIMM News - THE ROMANIAN INSURANCE MARKET NEWSLETTER
No. 141, October 1st, 2009
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  EDITORIAL



Household insurance: tax or protection?

For the Romanians, "household insurance" is not only a relatively new term, but also a not entirely understood concept, in relationship with the perception of the risks to which a house is exposed to. And this state of affairs had to do, initially, with the fact that before '89, "insurance premium" had the shape of a "tax" to the former ADAS.

Subsequently, the real estate boom and the massive development of mortgage loans gave a strong impulse, but still insufficient, to household insurance for individuals, by imposing the buying of such a policy for the purchased property.
So, we can say that, between these two moments, separated by about 20 years, the Romanians' level of education, necessary to generate the individual initiative to protect the house, has not evolved very much.

Instead, the risks to which Romania is exposed, especially the capital city, are more than real... If we consider that Bucharest concentrates around 9% of the country's population and is responsible for 20% of the GDP in Romania, the scenarios of an earthquake similar in magnitude to that of 1977 or of destruction of dams in Bucharest, highlighted in the Plan of analysis and coverage of risks created by the Bucharest City Hall, would have a devastating impact, both on the the population and on the economy.

With only 10% of the total number of houses in Romania covered through voluntary insurance, and with the mandatory household insurance law still being expected, the problem of uncovered damage that could result from a natural disaster cannot be left for solving only to the State, the more so as each of us has at hand the solution: household insurance.
This is the context in which ICAR - the International Catastrophic Risks Forum - Europe's main event on catastrophic risks, takes place. Organized in partnership by the Ministry of Administration and Interior and Media XPRIMM, the sixth Edition of ICAR takes place on October 12, 2009, at the Parliament Palace in Bucharest.

by andreea.ionete@mxp.ro

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BCR Asigurari de Viata
MILLENIUM INSURANCE BROKER

WILLIS
POLISH Re
Credit Europe Asigurari
EDITORIAL | INTERVIEW | TOP PRESS | CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS
 INTERVIEW

 

Interview with Viorel VASILE,
Managing Partner
SAFETY Broker

XPRIMM: How were the Romanian brokerage market and, thus, your company's results, affected by the financial crisis? Which are the insurance classes that have suffered the greatest decreases?
Viorel VASILE:
In a global economic environment strongly affected by the collapse of capital markets and by the temporary lack of cash, the Romanian insurance brokerage market recorded, in our opinion, a decrease in mediated volumes, as an effect of cutdown of activity of the corporate clients.
Regarding SAFETY Broker de Asigurare, we tried to benefit from this troubled period and to attract new clients across the country through direct sales, especially in the retail area. In order to implement this strategy, we have started an action of nationwide expansion, by opening more sales points in major cities, and also by developing our own franchise network.
The insurance classes that have suffered the biggest depreciation are the life insurance ones, and mainly those with capital accumulation, unit-linked type.

XPRIMM: How do you consider the brokerage market will evolve by the end of the year? But in 2010?
V. V.:
In our opinion, the insurance brokerage market will not decrease compared with 2008, but it will not register an increase of more than 5% in 2009. Starting 2010, provided that the national economy will start to show signs of life again, particularly through fundraising in the economic circuit, automatically the insurance market, namely that of insurance brokers, will also resume its upward course.

XPRIMM: What were the consequences of limiting the commission fee to 15% for MTPL policies and how did this affect the profitability of the brokerage activity?
V. V.:
Limiting the commission for the MTPL policies to the maximum threshold of 15% of the value of insurance premiums has had an impact on the cash-flow of insurance brokers. A major negative impact of this limitation was suffered especially by the brokers who focused mainly on this type of insurance, some of them coming even to the point of abandoning the business.

XPRIMM: What do you think is the most acute problem of the market for the next period? Which are the solutions for the development of the brokerage market in times of crisis?
V. V.:
The most acute problem of insurance brokers in this time of crisis, when large corporate clients have difficulties, is the attempt to keep them active and to offer optimal solutions.
At the same time, developing the retail market is and will be, in our opinion, the medium and long term solution.
The role of the insurance broker in this economic period is very important because he, besides the ability to sell insurance products, must also have good professional training, in order to correcty present all the elements of the insurance product to the customer and thus to persuade him of the importance and the necessity of buying an insurance policy, by offering complete services: risk analysis, selling the policy and, in addition, advice in case of claim. Thus, as the customer becomes more and more aware of the importance of the insurance broker, he saves time, gets the best offers on the market and benefits from technical support that he would not have had if he had bought the policy directly from an insurance company.

XPRIMM: How will the share of brokers' mediations in the total of the underwritings evolve? (In 2008, it was 27%, and in Q1/2009, 23%, in decrease). What share do you estimate for the current year?
V. V.:
In general, the analysis made at half a year is not very conclusive, because the insurance brokerage market is focused on motor insurance. Car fleet renewals are made at the end of each year and the decrease registered in the first half of 2009 compared with the previous period of last year is not relevant.
In our opinion, the brokerage market will grow compared to last year, although the growth will not be more than 5%, and thus the share in the total insurance market will remain the same as last year.

XPRIMM: How did the crisis influence people's perception regarding insurance? Which insurance classes have development potential in the next period?
V. V.:
Insurance has always been an alternative to reduce the risk and, except for the situations in which it has a mandatory character imposed by the law, the insurance contract is random. Thus, we believe that the general perception of customers was not affected by this economic downturn, but only their availability to buy insurance policies, due to the lack of cash on the market.
Regarding the possibility of development, we would go for property insurance, and also liability insurance, in general, as having "an appetite" for development.

XPRIMM: Two months ago, the amicable report of road accidents was introduced. What is the role of the broker, as a representative of the client in this regard, and what has been achieved so far?
V. V.:
The role of the broker is to advise and actively assist clients in using the amicable report and throughout the elaboration of the claims file. It is natural for the insurance broker to be immediately by the client's side in difficult moments, which is why SAFETY Broker developed a specialized department to support its clients throughout the process of elaboration of claims files.

XPRIMM: What are the expected results of the company you represent at the end of this year, compared to the previous year?
V. V.:
For 2009, SAFETY Broker estimates an increase of 10% (approximately EUR 11 million - gross written premiums) compared to the previous year, due to the retail lines and due to the territorial development, with its own sales points and franchises.

XPRIMM: Thank you!

by mihai.cracea@mxp.ro

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Viorel VASILE
Viorel VASILE,
Managing Partner
SAFETY Broker

MEDICOVER
FADATA
EDITORIAL | INTERVIEW | TOP PRESS | CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS
 TOP PRESS

FIAR 2010 - Only one week for the SPECIAL OFFER
October 7th is the last day untill you can reserve a place at FIAR - International Insurance - Reinsurance Forum for only EUR 1,400/person.
Click here to read more!
by oana.radu@mxp.ro, 1.10.2009


PAID was founded
PAID - the Pool of Insurance against Disasters was constituted on September 23. As announced in premiere by 1asig.ro, PAID will be composed of 13 companies, compared to the 16 initially speculated, this having been later confirmed by the press release issued by the law firm VOICU&FILIPESCU.
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by andreea.ionete@mxp.ro, 24.09.2009


Major European groups own over 80% of the motor insurance market
The cumulated value of gross written premiums on motor insurance in H1/2009 of the companies part of the major European insurance groups present in Romania (ALLIANZ, GENERALI PPF, GROUPAMA, VIENNA Insurance and UNIQA) was EUR 543 million. The figure represents 80.2% of all businesses registered on the motor insurance market (Motor Hull, MTPL and Green Card, added-up), up 10 percentage points compared to the first six months of 2008.
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by andreea.ionete@mxp.ro, 30.09.2009


Let the battle begin!
GROUPAMA Asigurari, the newest player on the Romanian insurance market, officially launched its activity on September 28. Thus, two years after entering in Romania, through the acquisition of BT Asigurari, and a year and a half after taking over ASIBAN, following the largest merger process on the local market, GROUPAMA Asigurari enters the fight with great objectives.
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by mihaela.circu@mxp.ro, 29.09.2009


CIG Romania Asigurari de Viata is being launched
At the beginning of next month, the Romanian life insurance market is making place for a new player. Thus today, October 1st, CIG Asigurari de Viata is being launch, a company which will operate as a branch of CIG - Kozep-Europai Biztosito, also known as PANNONIA Insurance, according to company officials.
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by andreea.ionete@mxp.ro, 23.09.2009


AIG Romania will become a branch of CHARTIS Europe
AIG Romania will become, by the end of 2009, the branch of the French company CHARTIS Europe, the brand under which AIG Europe is activating since July. "Along with the transformation from subsidiary to branch, AIG Romania enters into a process of rebranding which will be completed by the end of this year, or in early 2010 the latest", said Mihnea TOBESCU, General Manager of AIG Romania.
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by andreea.ionete@mxp.ro, 22.09.2009


CERTASIG, a new player on the health insurance market
The insurance company CERTASIG will enter, until the end of this year, on the health insurance market. Thus, the company plans to launch a new product, already having signed a series of partnerships with health care providers.
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by mihaela.circu@mxp.ro, 21.09.2009


The Ministry of Administration and Interior supports ICAR 2009
This year's edition of ICAR - International Catastrophic Risks Forum is organized in partnership by the Ministry of Administration and Interior (MAI) and Media XPRIMM.
Thus, Mihai Viorel FIFOR, Secretary of State in MAI, has accepted the invitation to open the Forum, which will take place on October 12, at the Parliament Palace.
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by oana.radu@mxp.ro, 22.09.2009


An extra EUR 12.6 million to EUREKO Asigurari's share capital
The Dutch group EUREKO increased the share capital of EUREKO Asigurari with EUR 12.6 million (RON 53.07 million), up to EUR 36.3 million (RON 153.2 million), an investment announced in July.
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by andreea.ionete@mxp.ro, 28.09.2009


New from EUROTAXGlass's
The obligation of on-line issuing of MTPL policies starting 2010 will be a turning point for insurance and mediation companies, as the sales force of companies and of intermediaries will have to report in real time, as quickly and as accurately as possible, the data of the new policies.
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by mihai.cracea@mxp.ro, 25.09.2009


B.A.A.R. intends to become part of the protocol of cooperation regarding the amicable report
Discussions about changing the protocol of cooperation regarding the amicable report and the correspondent legislation remaine a current issue. The specialists consider that, to the extent it will be needed and depending on the feedback received about the way the amicable report had functioned so far, the necessary improvements will be made.
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by marian.mardare@mxp.ro, 1.10.2009


19% decrease for health policies
The value of gross written premiums on the health insurance class was, in the first six months of 2009, about EUR 3 million, according to Specialty Review INSURANCE Profile. The figure represents, compared to the results recorded in the period January-June 2008, a decreasing nominal evolution, in European currency, of 19.4%.
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by vlad.boldijar@mxp.ro, 25.09.2009


Travel insurance reached the level of 2006
The amount of gross written premiums in the first half of the year for travel insurance was EUR 4.04 million, being practically at the same level as the one in the first half of 2006, a nominal decrease in European currency of more than 17% compared to the results in the first half of 2008.
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by vlad.boldijar@mxp.ro, 25.09.2009

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Casco Ieftin

Safety Broker


EDITORIAL | INTERVIEW | TOP PRESS | CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS
 CEE, RUSSIA&CIS


"Health 2009" takes place next week in Berlin
Today, all countries have some form of private medical health insurance that is supplemental to a public health system. With the outlook for other insurance products still uncertain in today's climate, now is the time to react and enter this growth market. So, next week, between 8th and 9th October, UNIGLOBAL Research presents "Health 2009", in Berlin, Europe's largest health event.
Click here for details!
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by andreea.ionete@mxp.ro, 30.09.2009


The 5th International Conference "World Views for LIFE INSURANCE in Eastern Europe, CIS and Asia"
17th - 18th November 2009, Hotel Baltschug Kempinski, Moscow, Russia
In November, Moscow will once again host one of the key conferences on life, bancassurance and asset management in emerging markets.
Click here for more details!
Click here to read more!
by oleg.doronceanu@mxp.ro, 17.09.2009


November Business Meetings in Moscow
On 24-25 November 2009, for the 8th time, the Russian capital, Moscow, will be the venue of the November Business Meetings of Reinsurers, organized by All-Russian Insurance Association and "Business Character" Group, with the support of PRIMM - Insurance & Pensions Magazine as Media Partner. The event will be held at Holiday Inn SOKOLNIKI.
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by eugen.spivacenco@mxp.ro, 17.09.2009


KAZAKHSTAN: The number of mandatory insurance will be reduced
National Financial Markets Supervision Agency of Kazakhstan will take all needed measures to restructure the mandatory insurance system, and it is not excluded that some of compulsory insurance be removed, according to INTERFAX - Kazakhstan.
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by eugen.spivacenco@mxp.ro, 22.09.2009


First year-on-year drop for Serbian insurance market
In the second quarter of 2009, on Serbian insurance market, total premiums came to RSD 28.5 billion (EUR 305 million or USD 430 million), recording its first year-on-year drop (0.7%) as the global financial crisis fallout and the sector's exposure to market risk dampened demand for insurance products.
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by eugen.spivacenco@mxp.ro, 21.09.2009

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EDITORIAL | INTERVIEW | TOP PRESS | CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS
 FINANCIAL NEWS


IMF: The accord has stabilized the financial system
The Romanian financial system has stabilized. But, the banking market is still fragile. Pressure on the exchange rate has dropped significantly. But, the economy is too weak to sustain the strengthening of the currency. The Romanian lending market is showing signs of rebounding. But, banks will not be able to do very much to relax real economy lending conditions. This is how foreign analysts characterize Romania's economy, as the International Monetary Fund (IMF) approved the second tranche of its loan, which will inject EUR 1.85 billion into the state's accounts.
"The RON has stabilized due to the policies of BNR [National Bank of Romania]. The reduction of the minimum compulsory reserves has brought more liquidity onto the market. This was a good decision, whose results we have seen. Of course, the money from the IMF has also been very important. We believe that the RON will remain stable in the period immediately ahead, but Romania's economy is too weak to sustain the currency", said Gaelle BLANCHARD, Emerging Markets Economist of the London branch of SOCIETE GENERALE.
Neil SHEARING, Emerging Markets Economist of CAPITAL ECONOMICS in London, said that as soon as international market demand returns, the flexible exchange rate will offer the Romanian economy a competitive edge. "The RON has lost almost 15 percent since it reached a peak last year. We are expecting that once inflationary pressures abate, the central bank will relax the interest rate policy. We estimate that the key rate will drop to 6 percent. The banking sector, which we qualify as being rather fragile, will not be able to do very much to relax real economy lending conditions. A lot of good things have happened in Romania, but we must continue to be realistic", added SHEARING.
Marion MUHLBERGER, Economic Analyst for Eastern Europe of DEUTSCHE Bank, believes that the main problem for Romania continues to be public sector salaries. The EUR 1.85 billion will be divided in equal shares between BNR's reserves and the State Treasury.
"Against the backdrop of a significant deterioration in economic activity since the approval of the Stand-by Arrangement in May, policy implementation has been strong. The deeper than expected economic downturn, however, requires a recalibration of policies so as to strike an appropriate balance between the short-term response to the crisis and the medium-term policy objectives", said John LIPSKY, First Deputy Managing Director and Acting Chair of IMF's Executive Board.
by standard.ro, 25.09.2009


PwC: Holding law could attract investors
The introduction of legislation for holdings could attract groups of companies to Romania, as these would benefit from a favorable fiscal environment. "Countries in the region, such as Poland, the Czech Republic, and Bulgaria do not have fiscal legislation adapted to holdings. Romania could benefit from this opportunity. Central and Eastern European groups of companies could be interested in locating holdings here", Mihaela MITROI, Partner of PwC Romania, said for Business Standard.
by standard.ro, 28.09.2009


FDI in Romania to remain at EUR 5 billion in 2010
The value of foreign direct investments (FDI) in Romania will remain at some EUR 4-5 billion in 2010, similar to this year, in line with estimates by analysts, due to reticence on the part of foreign investors to allocate major financing during an economic recession, say representatives of the Foreign Investors Council (FIC). "Specialists indicate that the rhythm of decline in the volume of foreign direct investments will remain similar to that registered in the first six months of this year, due to the fact that potential investors have put expansion projects on hold, due to the economic crisis. There are no positive signs concerning foreign direct investments in Romania for next year. Specialists are speaking about a comeback only as of 2011", Doina CIOMAG, FIC's Executive Director, said. In the first six months of this year, foreign investments reached EUR 3.1 billion, down 47.9 percent from the EUR 5.9 billion in the same period in 2008, according to National Bank of Romania data.
The Romanian Agency for Foreign Investment (ARIS) is currently monitoring only 22 investment projects on paper, worth over EUR 1.5 billion, that could generate some 6,200 jobs. The most important investments are for wind energy, with the four projects on paper in this sector worth EUR 400 million. CIS and ARIS representatives believe that only three areas will attract foreign investments in the coming years, namely construction, especially infrastructure, agriculture.
by standard.ro, 27.09.2009


The IMF tranche will leave more money for the private economy
Half of the second tranche of Romania's stand-by agreement with the International Monetary Fund (IMF), namely some EUR 950 million that is to enter the Treasury in coming days, will ease the need for financing on the local market, leaving more lending resources for the private environment, Dorin MANTESCU, Head of the Macroeconomic Analysis Department of the Ministry of Public Finance (MFP), told Business Standard.
IMF was to approve yesterday the second letter of intent signed with the Romanian state after assessing the country's economy in August, and releases the second tranche of the some EUR 13 billion two-year loan. The EUR 1.9 billion will be split equally between the reserves of the National Bank of Romania and the state's Treasury for financing the budget deficit. The Fund will publish the report of the second assessment of Romania's economy in the coming days.
At the latest issue on the local market, which took place last week, the Ministry of Public Finance placed benchmark government bonds, with three-year maturity, worth RON 983.17 million (EUR 231 million), at an average annual return of 9.99 percent, less than that initially accepted, according to the central bank.
Regarding the new macroeconomic indicators (7.3 percent budget deficit and 8.5 percent economic decline) agreed upon with IMF for this year, MANTESCU said that these levels are viable, and are adjusted to the current context. "The lowest point of the economic decline will be in the third quarter, and in the last three months of this year there will be a slight increase compared to the previous quarter", the MFP representative said.
by standard.ro, 25.09.2009

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EDITORIAL | INTERVIEW | TOP PRESS | CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS
 EVENTS

Health 2009
October 8th & 9th, 2009
Berlin, Germany
Organizer: UNIGLOBAL Research
Media Partner: PRIMM Magazine - Insurance & Pensions
Details: www.uniglobalresearch.eu


31st Baden-Baden Meeting 2009
October 25th-29th, 2009
Baden-Baden, Germany
Details: www.badendirectory.com


5th International Conference "World Views for LIFE INSURANCE in Eastern Europe, CIS and Asia"
November 17th-18th, 2009
Hotel Baltschug Kempinski, Moscow
Organizer: Russian Polis Information Group
Media Partner: PRIMM Magazine - Insurance & Pensions
Details: www.in-sure.ru


November Reinsurance Meetings
November 24th-25th, 2009
Holiday Inn Moscow Sokolniki Hotel
Organizer: All-Russian Insurance Association (ARIA)
Coorganizer: Business Character Group
Media Partner: PRIMM Magazine - Insurance & Pensions
Details: www.nbm-moscow.ru

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XPRIMM Newsletters

THE EDITORIAL STAFF:

President: Sergiu COSTACHE CEO: Adriana PANCIU
Business Development Director: Alexandru D. CIUNCAN

Editor in Chief: Mihaela CIRCU
Scientific Advisor: Daniela GHETU
International Column Coordinator: Andreea IONETE
Senior Editors: Vlad PANCIU, Oleg DORONCEANU
Editors: Vlad BOLDIJAR, Oana RADU-NECULA, Mihai CRACEA, Andreea STATE, Eugeniu SPIVACENCO
General Secretary: Lidia POP

Accounts Manager: Georgiana OPREA
IT Department: Octavian GRIGOR, Dorin PALADE, Cosmin ARMASESCU

e-mail:  xprimm@primm.ro

PUBLISHED BY: Media XPRIMM


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