Insurers must focus on educating the customer, in terms of life insurance as a very useful savings and protection tool in times of economic crisis. Our clients understand that having life insurance is an effective way to provide shelter for themselves in case of the impact of unpleasant events.
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The Romanian market remains a market too little interested with regards to insurance. That is why, in this economic context, the consumers, reaction regarding the insurance industry is still a very weak one, as the ones that are interested are not very informed in this area and do not realize to what extent they are and can be affected by lack of insurance.
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The financial crisis and its impacts on the insurance industry still remain the biggest issues for 2009/2010. Reinsurers' perspectives for profit and growth are clearly affected by the economic situation on the primary insurance side. There are higher costs of capital, capacity reductions and lower interest rates. But both commercial and private customers are generally unwilling to pay more premium for insurance products.
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The main challenge for the CEA is to ensure that the regulatory environment for European (re)insurers is not unduly affected by either short-term or long-term regulatory changes stemming from the economic crisis. The CEA is working to ensure that any changes take into account the specific characteristics of insurance and are appropriate for the industry.
The CEA is monitoring and engaging in the debates on initiatives at EU and international level to change the existing supervisory architecture and on other legislative responses to the crisis in the supervisory and the consumer protection areas.
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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.
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I think that, for the insurance market, the third quarter of 2009 was the highest point and that starting the fourth quarter we will start seeing business growths again. It is true that in the first quarter the market had a 4% evolution, but this was due to increased premiums on the mandatory MTPL segment and on the Motor Hull segment; therefore, it was an increase in volume of premiums, and not in number of insurance policies or of customers.
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The most important lesson, that of the imperative of organizing business based on profitability criteria, and of lack of major concessions to the actuarial principles, was already learned - that is, in fact, one of the few positive effects of the crisis with which the Romanian sector of general insurance is still confronting.
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Travel insurance has actually proven to be a necessity for people who travel outside Romania and this can be seen by the volume of GWP registered by RAI in the first 6 months, which remained the same compared with the similar period of 2008 - RON 5 million (under the circumstances in which the travel market recorded a decline of 20% on the external tourism segment, according to statistics drawn by official representatives of travel agencies).
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In 2009, we can forget about double digits growth that the Romanian insurance market experienced recently.
On the other hand, on the long term, the Romanian insurance market has a very high potential. This is because Romania is one of the largest central European countries, but the least penetrated with insurance (measured either as GWP/inhabitant or GWP/GDP). Alas, people will be less and less focused on fast consuming and becoming more interested in securing their life standards long-term.
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Property insurance rates which also include "the loss of rent" (business interruption) ranged last year between 0.07% and 0.09% of the insured sum. In 2009, the insurance rates have decreased significantly, the range covered being between 0.045% and 0.065% of the insured sum.
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As the markets of Central and Eastern Europe align to the already developed ones, insurance products become more complex. Reinsurers that have global exposure are generally the ones who transfer the experience of the mature markets towards the developing ones.
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"I think this economic crisis was felt especially because of the speed with which we operate today in every field. The crisis went from bank to bank, from investment to investment, the insurance companies were also involved in this process, and the erosion over time has led to the collapse of this structure…"
"… This financial crisis has no precedent, it had a galloping evolution and I believe it will end just as quickly…"
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First of all, the crisis will cause increased pressure from the shareholders on the insurance companies, in order to grow profit, considering the fact that they will no longer be able to inject capital, as they have done so far, to cover the losses.
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During this period, a well-prepared insurance programme can make the difference between success and failure. The global financial crisis is the moment of truth for many companies, and also for those who manage their insurance programmes.
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Offering mainly products with medium and low degree of risk insurance coverage, establishing programs of restricted insurance coverage and targeting especially the retail segment of the market, the concern for keeping the existing clients and expanding the relationships with them are the main anti-crisis measures that should be adopted by insurance companies.
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The insurance market will follow the global trend of decline, although it will not be equally affected as the mature Western markets; in the absence of emphasis and perpetuation of the current global financial crisis, the one aspect that could really destabilize the Romanian profile market could only be represented by the unwanted withdrawal from Romania of the big insurers.
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The Romanian insurance market still has a high growth potential and the penetration degree of insurance products in the GDP is still small, about 2%, way below the Western European level. Insurance density per individual in Romania has a value of about 70 EUR, while in Austria, for example, over 2,000 EUR.
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In the more developed markets like the Czech Republic, Slovakia, Hungary and Poland, the German and Austrian companies have advantage of being first comers and they benefit from that. But today we are strong both financially and in know-how.
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The Austrian market has its limitations, as regards the number of population and market potential.
Therefore UNIQA decided to expand its activities in the CEE region, where the potential in insurance is very high and the insurance penetration and density is still on a very low level.
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GRAS Savoye is resizing its objectives for the 2008 turnover. The company’s representatives believe that the growth estimations made at the beginning of the year will be exceeded, as GRAS Savoye has great chances to grow by more than 20% compared to 2007.
Thus, in the first half of this year, the company has intermediated gross premiums of 37,93 mil. RON worth, which represents an almost 20% increase, compared to the same period of the previous year.
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Florina VIZINTEANU, President of the Board, BCR Asigurari de Viata VIG
Ileana HORVATH, President of the Board, UNIQA Asigurari
Manfred BRANDMAIER, Client Manager South Europe, MUNICH Re
Michaela KOLLER, General Director, CEA - European Insurance and Reinsurance Federation
Viorel VASILE, Managing Partner, SAFETY Broker
Antonio SOUVANNASOUCK, Managing Partner, ASIGEST
Mesut YETISKUL si Radu MANOLIU, , CREDIT EUROPE Asigurari
Iuliana HAMPU, General Manager, RAI Insurance
Marie KOVAROVA, CEO and Chairman of the Management Board, GENERALI Asigurari
Cristian FUGACIU, General Manager, MARSH Romania
Silviu SABIESCU, Pricing Actuary, GenRe Life Health
Radu MUSTATEA, President of the Directorate, ASTRA Asigurari
Mihai TECAU, President of the Directorate, BCR Asigurari VIG
Radu MANOLIU, Deputy General Manager, CREDIT Europe Asigurari
Constantin TOMA, President - General Manager, OMNIASIG
Peter KRISTOFOVIC, President, SALVE Group
Andreas BRANDSTETTER, Member of the Board, UNIQA Group Austria
Laurent CHARLIER, General Manager, GRAS Savoye