Insurance Market - HEALTH INSURANCE MARKET or GREAT EXPECTATIONS

Alexandru CIUNCAN Column Coordinating Editor Mihaela CIRCU Senior Editor > Two years after the launch of private health insurance on the Romanian market, the stage of development on this market is unsatisfactory, to say the least. According to the specialists, few policies were sold, the legislation is not finalized and potential customers are still far from understanding how the whole system works. HEALTH INSURANCE MARKET or GREAT EXPECTATIONS   The private health insurance market is still in its early days, says Sorina NICULESCU, Director General of SIGNAL Iduna, a company with German shareholders, that targets this niche precisely - a somewhat optimistic approach, based on fair arguments, if we are to consider that, in 2004, there was only one insurer playing in this field, as compared to the existing 10. The market is still in an embryonic phase, despite the increasing number of players on the market, states Mircea OPRESCU, Health Department Manager of INTERAMERICAN Romania. Nevertheless, the estimates regarding the market trends, as formulated in the previous years, remain just wishful thinking. For instance, when drafting this material, I read again the main article published in the last issue of the PRIMM magazine in 2005 and there is no shred of doubt that we could just republish the article without raising any major questions in our readers' mind. But from a different angle, the market has become more and more aware of the advantages voluntary health insurance may offer. Employees are striving to include them in the salary package, employers are increasingly responsive, while customers learn the difference between a health subscription and a policy provided by an insurer, says Sorina NICULESCU. The infrastructure also developed, the number of private clinics providing high standards medical care and accommodation has also increased, notices Mihai TECAU, President of BCR Asigurari, a company that just started on this market by launching a product for persons earning an income higher than the average. In 2006, the dynamics on the segment was relatively impressive, if compared to the previous year - health insurance has seen the fastest growth in the relevant market in 2006, with an increase by 208% of the underwriting volume on this segment. Obviously, this is an increase based on very low absolute values. And, as the cause of the problem is always the relevant issue, it seems that the State shares, once again, most of the blame, partially attenuated by the efforts to regulate this field during the past two months. Dan CONSTANTINESCU, member of the ISC Board and prominent specialist in the field, outlines: The most significant impediment for the development of private health insurance is, undoubtedly, the incomplete legislative framework. Thus, it seems that in Romania we currently have a law that requires the drafting of norms, the benefits package covered by the State remained almost unchanged, complementary insurance still remains an uncertainty, while the single set of norms regulating this activity is different from the form the Ministry of Health and the relevant working group from UNSAR agreed upon. But where should the State stand with regard to private health insurance? First and foremost, the State should play the role of regulatory entity, while the fund management task should be left with the private companies, capable of a better management of investments, says Corina CUCOLI, Bancassurance & Partnership Director. In the meantime, while building the legislative framework, the State must provide for efficient control mechanisms, given that the citizens have to be protected both in terms of understanding the service they buy, and the quality of the medical act, mentions Marina OTELEA, Director General MEDICOVER, one of the main healthcare providers. Therefore, the State must clearly define what the basic benefits package covers, since its current version provides a very wide coverage, which only encumbers greatly the insurers' task in their attempt to draft the complementary voluntary insurance packages. Regarding the supplementary voluntary insurance, the State should not impose restrictions on benefits insurers provide to their customers, thus allowing the market to find its own balance, opinionates Mircea OPRESCU. Not nearly as conciliatory, Gabriel IONESCU, President of HR Club and former Director General of MEDICOVER states: For two years now authorities show us only have seen only good intentions coming from the authorities that are active in regulating the private health insurance, but these are not truly encouraged and supported. Recently published, the methodological norms on private health insurance left a series of issues somehow unresolved, namely issues concerning the public benefits package covered by the State insurance and the area where private health insurance can develop and position themselves, as supplementary and complementary insurance. The State system claims, even today, that it provides the whole range of medical services, but limits the access to a certain number of procedures, thus encouraging informal payments when people use public services, states Gabriel IONESCU. But this is not the end of it, given that, as Ovidiu RACOVEANU, Head of Technical Department - Life Insurance GENERALI Asigurari outlines, there is the idea that a subscription to a clinic is more convenient than an insurance policy. The idea is not far from the truth, but few are those who dare support it in conferences, seminars or other public events. If not for any other reasons than the fact that they would clearly attract the "sympathy" of more healthcare centers that seem to be more interested in selling their own subscriptions (which guarantees loyal customers and lowers the costs with medical staff, since subscribers, when needed, shall go to the medical units of the providers they contracted with, regardless of the available physicians). Health insurance, an emerging market According to the specialized magazine INSURANCE PROFILE, the private health insurance market amounted, at the end of 2006, to a value of EUR 9.77 million (RON 34.44 million). A rather low volume of underwritten premiums, if we are to consider the estimates at the end of 2005, but showing a significant potential, confirmed by the increasing number of companies interested in this segment. Ten operators (ALLIANZ-TIRIAC, ASIBAN, ASIROM, AVIVA, BCR Asigurari, GENERALI, GRAWE, INTERAMERICAN, OMNIASIG Life and RAI Asigurari) are currently active on this segment. Also, AIG Life shall soon launch, in collaboration with MEDLIFE, two private health insurance policies under the ASILife (ASILife GOLD and ASILife SILVER) brand, and the SIGNAL Iduna Group from Germany shall come up with new offers for the relevant Romanian market, in collaboration with the National Trade Union Block. Companies have various healthcare benefits packages, with prices ranging between EUR 10 and 200 per month, in line with their specificity, destination and complexity, the most sophisticated packages covering even interventions abroad, dental insurance or access to a second opinion within or outside the system. The newest player on the market is BCR Asigurari, which launched a special product on the Romanian specific market, in February this year, in cooperation with TPSH Insurance Brokers and AXA Krankenversicherung from Germany, as reinsurer and know-how provider. The market development is also supported by an increasing demand on this segment. Thus, according to a survey commissioned by the ISC and conducted by INSOMAR, over 67% of the respondents, regardless of age, sex and education, consider private health insurance as useful. The result of this survey is also confirmed by Sorina NICULESCU, who states that the market has become increasingly aware of the advantages provided by voluntary health insurance: employees are striving to include them in the salary package, employers are ever more responsive, while individual customers prove to be more knowledgeable in assessing the offers presented to them. Meanwhile, although it might sound like a cliche, we cannot but also mention the effects of the European integration, of connecting our citizens' mentality to the EU mentality. Thus, in order to estimate the future of this market, we must also take a pick "over the fence". More than 10% of the EU citizens currently own a private health insurance, and the growth rate for underwriting on this segment is higher than the Gross Domestic Product's dynamics. If we take this further, we can expect, in Romania, several years from now, to count over 2 million Romanians who insured their health in the private system, according to the predictions made by Gabriel IONESCU. Dan CONSTANTINESCU shares the same optimism and thinks we can expect the premium volume to double on this segment of activity, within one year - one year and a half. In 2005 we quoted from an interesting ROLAND BERGER survey, which estimated that the health insurance market will reach a level of EUR 50 millions in the next 5 years (until 2010, editor's note). Clearly, the market has potential, but the figures presented by the consulting company might be exceeded. The context is, however, positive. The increase in the population's purchasing power, corroborated with a steady and ongoing deterioration in the quality of services provided by the public health system shall give an impetus for the growth of the private health insurance.

Dan CONSTANTINESCU Member, ISC Board > We can expect the premium volume to double on this segment, within a year, a year and a half. Mihai TECAU President, BCR Asigurari > The number of private clinics that offer high standard medical services and lodging facilities to their patients has grown. Mircea OPRESCU Health Department Manager, INTERAMERICAN Romania > The state should not restrict the benefits offered by insurers to their clients, in order for the market to balance itself. Sorina NICULESCU Director General, SIGNAL Iduna > The market is growing more conscious of the health insurance advantages: the employees demand their inclusion in the salary package, the employers are getting more receptive, individual clients now have more knowledge and can make an informed decision in what regards the offers on the market. RESOURCES Table 1 The evolution of private health insurace