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Interview of the week

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Angela TONCESCU, President, Insurance Supervisory Commission


Though a more precised quantification of the market and of the insurance activity's main particular indicators can be done after insurers' laying down the balance sheets, we estimate that gross written premiums exceeded EUR 2 billion in 2007.

XPRIMM: Which do you consider being the most significant results of the Romanian insurance market in 2007?
Angela TONCESCU:
Though a more precised quantification of the market and of the insurance activity's main particular indicators can be done after insurers' laying down the balance sheets, we estimate that gross written premiums exceeded EUR 2 billion in 2007. We believe this is a major result but more important than the abstract volume is the growth rhythm which maintained
Secondly, 2007 meant important changes in the shareholders structure of several insurance companies with significant share market and also it meant an infusion capital of EUR 90 million at the market level. These infusions have contributed to the strengthen position of the companies and of the market, in general. Of course, I must notice that the infusion of capital was meant to solve some problems and to improve the prudent indicators, but in the same time to allow a company's further development. Take for example ARDAF, which pursuant to the measure imposed by the Council of Insurance Supervisory Commission regarding the financial straighten through special administration has solved its major problems.
On the motor third party liability (MTPL) segment, 2007 represented the first year of total freedom for the premium tariff and sale of policies with long term validity. We consider insurers have passed well this exercise and the cars' owners have comprehended that at present we talk about a free market. Also, on this segment, it's important the success of the Insurance Supervisory Commission in stopping the sale of MTPL on the streets or at least in reducing this phenomenon's dimension, which has badly affected the insurance industry's image.

XPRIMM: Are there any aspects that should insurers worry about?
A. T.:
There are some aspects which insurers could reconsider but at the moment they shouldn't worry us. Thus, mainly I refer to the expenses purchase of MTPL taking into consideration that the volume of claims is growing.
As this type of insurance is compulsory, the large expenses purchase of MTPL don't increase their market share and so it's not economically justified.

XPRIMM: Which consider being the insurers' opportunities in 2008?
A. T.:
It's estimated that by the end of this year, the motor market will probably exceed 350,000 sold units, the volume of sales being around EUR 3.5 billion. The motor market's evolution directly influences the insurance market, leading to a growth of written premiums on MTPL and HULL insurances segment. So, the market continues to be dominated by motor insurances and most probably these will register the biggest weight. It seems that insurance companies will focus on voluntary pensions, now that the adhesion process to Pillar 2 is about to come to its end, and also on health insurances. In my opinion, insurers should increase their effort in drawing corporate customers, legal persons, and small and medium size companies in particular, infrastructure, and agriculture considering the great growth potential in the last years. In consequence, it depends on each insurer how understand to explore this opportunities because one thing is sure the insurance potential in Romania is still great.

XPRIMM: Are there factors which could negatively affect the market's development in 2008?
A. T.:
As it is known, since 2007 insurers have been using the Solvency I model, which takes into consideration the dimension of the company's capital and within this beside the share capital, the financial result - profit or loss - makes the difference. Thus, a tariff politic and purchase cost politic uncorrelated with claims and the portfolio's structure may cause problems that require capital infusion. Each insurer must identify and quantify the risks of the business and take measure to diminish them.
The Insurance Supervisory Commission will monitor the indicators' evolution of all insurance companies and in particular of those with important market share as to prevent any problem that may affect the market in whole.

XPRIMM: How would you characterize 2007 from the Insurance Supervisory Commission point of view?
A. T.:
A year of dialog for the Insurance Supervisory Commission with the representatives of insurance industry not only at central level but also in territory. In 2007, the Insurance Supervisory Commission organized a series of debate - meetings with the market in the main regions of development as to increase the supervisory activity's transparency and to find out directly from territory the main problems that the insurers confront with. If at the beginning the market's representatives seemed sceptic regarding the utility of the efforts of Insurance Supervisory Commission and its real desire to have a dialog, from one meeting to other the number of participants and involvement in discussions has increased.
I wish the market's representatives to believe that we want to listen to their problems and opinions, that we'll take into consideration their opinions in the decision making and regulation process. Of course, since the Insurance Supervisory Commission's role is to protect the insured persons' rights, it's possible the Commission's points of view not always to be the same with those of insurers and we'll be obliged to choose the solutions that satisfy best the insured persons' needs.
2007 was the year when we stopped the MTPL sale on streets, when we started the professional training of industry's representatives on Solvency II by organizing seminars. Also, last year we regulated the insurance intermediary registration and started the process of their registration as to allow us to be informed about those who are in contact with insured persons and about their professionalism.

XPRIMM: Which is the most important objective of the insurance Supervisory Commission in 2008?
A. T.:
We act on more plans as to protect the insured persons' rights and to increase and maintain the market's financial stability in conditions of increased competition. So we'll continue to prepare the market for Solvency II, which is more complex and totally different than the one used at present. On this subject, in June 2008, the Insurance Supervisory Commission will be the host of CEIOPS seminar: Solvency II. The event will gather participants and speakers from member and supervisory states of CEIOPS, the theme being of real interest in the context of Solvency II implementation.
In addition, we hope to finish our project of finding a solution for the professional preparation of those working in the field.

XPRIMM: Thank you!
Editor: Mihaela CIRCU | Published on 17.01.2008






















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