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Interview of the week


Cristian FUGACIU, General Manager, MARSH Romania

At the corporate level, most of the companies already have a culture, certain practices in the field and many of the multinational organizations are already working with an insurance broker, which means this market is better represented by the mediation companies.

XPRIMM: I suggest to start the discussion with the role the insurance brokerage and consultancy market has nowadays. How do you estimate this market will evolve next year and further on?
Cristian FUGACIU:
I see things in an optimistic way, as I did before, so I estimate a growth of the mediated premiums weight in total premiums, especially on the retail market. At the corporate level, most of the companies already have a culture, certain practices in the field and many of the multinational organizations are already working with an insurance broker, which means this market is better represented by the mediation companies.
From our own experience, many of the local companies that haven't worked with a broker yet are more and more opened towards the cooperation with an intermediary which will bring them added value.
They are interested in the consultancy services because they started feeling the need to have their risks identified by a specialist, who could also assess the impact of these risks on their business. After all these steps are made, the local companies wish to buy the necessary insurance with the best conditions they would get.

XPRIMM: At a corporate level, which line of business do you consider it will have a stronger evolution in 2008?
Regarding the weight in the total market, pensions will have the biggest development, especially the 3rd Pillar. In what concerns insurance, I estimate a growth of the specialty lines - producers' liability, pollution liabilities, Directors' and Officers' and professional liabilities.
Also, the positive dynamics for classes where a growth of the commercialized goods can be observed such motor insurance will continue in 2008.

XPRIMM: In 2007 D&O liability insurance became compulsory in Romania. Have you noticed any change in the weight this line has in MARSH portfolio?
We certainly felt much more interest raised by this line of business among companies, but from the weight and the volume of premiums point of view, I can not say that the legislation had too much influence, because, as it is known, the legal compulsoriness is not quite clear. There are companies that buy D&O insurance only for coming in line to the legal requirement as they are not convinced this insurance is useful in any way, so it is normal for these companies to try limiting the relevant costs not acknowledging its utility. Concluding, this year we mediated more D&O insurance than the years before but in what the value is concerned there hasn't been a spectacular, nor an impressive change. However, in my opinion the law provisions stimulated the market to provide the product, to reach the clients starting from the compulsoriness. And the target of both insurers and brokers is to promote the product on the market, to explain it. Probably, in the next years when the market will have a certain culture on this subject the clients will ask for D&O insurance.

XPRIMM: Do you think the same thing would happen for compulsory household insurance?
The difference between D&O and compulsory household insurance is the targeted market; the first is conceived for the corporate level, for companies and their managers while the second is addressed to the population. Consequently, reactions could be different because you depend on the financial matters, the peoples' financial resources and on the way they will perceive the compulsoriness, the real benefit coming from buying compulsory household insurance.

XPRIMM: What are the development options and scenarios for MARSH for the next years?
The future is standing on a consultative approach of the brokerage business so the brokerage must not equal to mediation but to financial consultancy provided to the client. A very important thing is that before we do brokerage business, we first offer our clients risk consultancy, because risks covered through insurance are just a small part of the global risks a company must face. Everything must be approached as a whole and centralized at the management level, there has to be a risk management politic to include insurance and implicitly the brokerage market. In the future we will focus more and more on this consultative approach. We are not the only company in this field to express this intention but I believe only a small number of brokers have the needed technical and professional capacity to provide the consultancy I am referring to.

XPRIMM: How do you think will evolve the insurance brokerage market, as presently 20% of the total premiums are mediated by brokers?
It is difficult to estimate but, as I was saying, probably the strongest growth will be posted in the retail segment. However, I estimate that the volume of mediated premiums will reach 25% of the total premiums in 2008, especially taking into consideration the wave of brokers interested in the Romanian market and the insurers coming in Romania which already have a culture regarding the cooperation with a brokerage company.

XPRIMM: Thank you!
Editor: Alexandru CIUNCAN | Published on 06.12.2007

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