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Aurel GUBANDRU, President, Committee for Budget, Finance and Banks of the Chamber of Deputies


Aside from the legislative process, and I mean its main attribution of adopting laws, the Committee for Budget, Finance and Banks is obliged to support the development of the two markets, on the one hand taking into consideration any proposal, initiative of legislation's modification or completion as to adapt the legal regulations to the actual conditions of the practice and on the other hand collaborating with the regulatory and supervisory administrative authorities: Insurance Supervisory Commission and Private Pensions System Supervisory Commission.

XPRIMM: You are the President of the Committee for Budget, Finance and Banks; committee directly related to the establishment and development of two most dynamic and important financial markets in Romania: insurances and private pensions. Aside from the legislative process, how can support the Committee the development of these markets?
Aurel GUBANDRU:
Aside from the legislative process, and I mean its main attribution of adopting laws, the Committee for Budget, Finance and Banks is obliged to support the development of the two markets, on the one hand taking into consideration any proposal, initiative of legislation's modification or completion as to adapt the legal regulations to the actual conditions of the practice and on the other hand collaborating with the regulatory and supervisory administrative authorities: Insurance Supervisory Commission and Private Pensions System Supervisory Commission. These institutions are under the control of Parliament, which continually monitories the aspects related to both the surveillance of the two markets and the improvement of mechanisms for the good function of the insurance system and private pensions.

XPRIMM: It's obvious that most of the time the problem of these markets regard a pronounced technical aspect which needs professional consultancy. In this direction, how would you characterize the Committee's collaboration with the representatives of both markets, both as supervisory authorities and professional associations of the operators?
A. G.:
As I have mentioned before, one can talk about a very good collaboration with the representatives of both coordination and supervisory authorities of the markets, they being good mediators in the relation of the legislator with the market, respectively in the relation of the Committee's members, as specialists less experienced in the mentioned markets, with the professional associations of the operators.
I stress the last aspect because it consists in collaboration of the parties and communication and negotiation as to meet the parties' interests, inclusive of the citizens and as to fulfill their objectives. That's why for example in my official position I took part at the debate meeting called "Dialog and solutions for the insurances' development in South - East region", held in September at Mamaia. The event was organized by the Insurance Supervisory Commission and brought together representatives of the insurance market, of professional associations, respectively National Association of Insurance and Reinsurance Companies in Romania and the National Union of Insurance Brokerage and Consultancy Societies from Romania, of Parliament, of local public administration and of the businesses in the South - East region. Also, I attended the second Edition of the National Conference of Private Pensions, organized with the support and participation of Supervisory Commission of Private Pension Scheme, which facilitated the dialog between authorities, employers and main operators on private pensions market.

XPRIMM: Your intervention in the Chamber of Deputies highlighted the constant preoccupation for the way natural disasters have affected in the last years the citizens' lives of the county that you represent, Buzau. You have mentioned continually the inefficiency of the government help for the reconstruction of houses and the way agriculture had to suffer. In this context, which is your opinion on the project of reducing the exposure to catastrophic risks and especially on the compulsory dwelling insurances law? Do you believe these laws can contribute to solving the problems related to the post - event finance of reconstruction?
A. G.:
As it is known, Romania is one of the European countries frequently exposed to natural disasters, like earthquakes, flooding and landfall. As these natural phenomena become more severe, involving extremely high post - event costs, reconstruction. I believe that a law regarding the compulsory dwelling insurances is necessary. I strongly sustain this especially because lately these natural disasters occur more frequently, causing real difficulties to governors in helping citizens, affected zones in condition of the risks of happening new events. Obviously, Buzau makes no exception. Moreover, if one considers the compulsory dwelling insurances regulation against natural disasters, it must tackled from two contradictory perspectives: on the one hand, citizens with lower incomes, who don't have the financial means to insure their dwellings and on the other hand the operators who believe that the sums that cover the insurance are too small. I consider we shall find the optimum solutions; we shall succeed in making the post - event solution more efficient.

XPRIMM: You have repeatedly referred in the Parliament debates to the social health system, mentioning its lack of efficiency and the low quality services offered to the population. Do you consider private health insurance would represent a viable alternative, at a large scale? If so, is the Parliament a body that could allot a substantial support to this industry for it to get clear of the difficulties from the beginning of this demarche?
A. G.:
The Parliament can offer this industry the necessary support, but the Government or the professional associations will have to initiate a normative paper draft with regard to the private health insurance. In this case we also speak about a political option because unlike private pensions where money can be used by beneficiaries over 25-30 years old since the first subscription, the private health insurance customers continuously and urgently need the money, when they get sick and must be hospitalized or when they need medicine.

XPRIMM: For 2004 only, households insurance has been fiscally deductible. Although the period when this measure was applied in order to encourage insurance was much too short for causing significant effects in the industry, the signals were positive. Thus, the public interest for protecting one's property through insurance grew and we could assume that on a medium term it could have led to a considerable growth of the penetration rate for this type of insurance. Compared to the conditions envisaged for implementing mandatory insurance, the facultative system seems to be much more interesting for property owners in the urban area, to whom insurers could offer cover for many more risks at a bigger insured sum, applicable to the higher value of household in these areas. Do you think it would be both suitable and possible to reintroduce this kind of incentive for encouraging facultative property insurance?
A. G.:
As people with low budgets can hardly pay for property insurance, the fiscal deductibility for households insurance, after the 2004 model, could be a solution for facultative insurance. Indeed, households from the urban area have a bigger value, therefore insurance is more expensive but they can be insured against fire, earthquakes and floods and the fiscal deductibility could answer to this problem. I think deductibility for household insurance can be reinforced in Romania in 2008.

XPRIMM: Speaking about life insurance, in mature insurance markets the fiscal facilities offered for these products have been the primary growth engine for an activity segment which today contributes with over 60% to the European insurance industry turnover. Although most of these facilities have been drew back, life insurance culture viewed both as a protection and saving instrument, is already strengthened, while life insurance markets continue to report a growth rate above that posted for general insurance.
Taking into consideration, on the one side, the massive contribution insurance companies have to these states' budgets and, on the other one, the social benefits determined by the protection and personal savings brought by insurance, the initial budgetary effort could be considered as an efficient investment. Do you think Romania could adopt such a politic in order to sustain both the development of this industry and a responsible economic behavior among population?
A. G.:
The fiscal facilities offered for buying life insurance could be a very important factor in stimulating development for an economic segment, indeed. Unfortunately, I don't think Romania is now prepared, financially speaking, to create fiscal facilities for life insurance. I see life insurance as a saving instrument whilst the possibility and the arguments to subsidize such a product are very thin. The population isn't ready yet, it does not have a proper economic behavior. Maybe after 5-6 years…I hope so!

XPRIMM: In an intervention you had in June 2007 at the "World Environment Day" you have declared that "as students are involved into this sort of actions, we have a guarantee that after a few years, the ones who will deal with the environment quality will be many more and more responsible". Do you believe a similar approach of educating the youth in the financial field from primary school would be advisable for creating a financial-economic culture for the Romanian population, so that the companies in the field would address to an informed audience, more pretentious and able to administrate their own financial resources with more discernment?
A. G.:
Unfortunately, our youth is not trained from early school in the economic-financial field, regarding the ways one could administrate their own funds. This situation is conducted mostly by two issues: those who provide or should provide this training haven't been themselves prepared in this direction; secondly, there are still many children with very little money allocated. We have to militate for having teachers but also disciplines to train students in this matter so that tomorrow, when they will dispose of more financial resources, they will be having an economic culture as to invest more efficiently.

XPRIMM: Thank you!
Editor: Daniela GHETU | Published on 22.11.2007






















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