FIAR 2019: "Insurance Market Trends" Conference - part II

20 May 2019 —
What are the tendencies from Romanian and local insurance markets? Which insurance products have growth potential this year? What are consumers expecting from insurers? All these were discussed in part II of FIAR 2019 "Insurance Market Trends" Conference.

The participants from this conference received 2 professional training credits from ISF - The Institute of Financial Studies, according to the new IDD requirements.

In the second part of the conference, the following speakers sustained presentations:
  • Adrian MARIN, President, UNSAR
  • Alexandra SMEDOIU, CFA Romania
  • Alexandru FILIP, Partner, McKinsey
  • Oskar SOKOLINSKI, Associate Partner, McKinsey
  • Cristian ROSU, Insurance Reinsurance Vicepresident, ASF
  • Dorel DUTA, President, UNSICAR
  • Antonio SOUVANNASOUCK, President, PRBAR
  • Michael THEILMEIER, Re/Insurance Expert
  • Virgil SONCUTEAN, General Manager, ALLIANZ-TIRIAC
  • Mihai TECAU, President, OMNIASIG
  • Nicoleta RADU, General Manager, PAID Romania
  • Cristian IONESCU, President, ASIROM VIG
  • Viorel VASILE, CEO, SAFETY Broker
  • Cristian FUGACIU, General Manager, MARSH Romania

(Part I of the conference can be found here)


Alexandra SMEDOIU,
Vice-President, CFA Romania

  • In the global economic environment, things are pretty good - I don't think there is any imminent concern - global economies are growing at a natural, satisfactory growth rate. There are, however, things we can't foresee (eg trade war between the US and China), that can cause problems. There is a generalized tendency to raise interest rates. There is a trend of rising inflation
  • Stabilization of Gross Domestic Product at EU level
  • If we fail to explain to consumers the importance of insurance and the basic concepts of financial education, we will never succeed in increasing the insurance penetration rate
  • Inflation, our biggest enemy
  • Romania - budget deficit - we've finished 2018 with 2.99%. Tax revenues in Romania are rather small compared to other states
  • Romania's population will decrease by 21% until 2060. And, by 2060, 30% of the population will be over 65 years old
  • Higher internal risks: fiscal policy and budget deficit. Higher external risks: rising interest rates, low volatility in financial markets, rising raw material prices
  • Long-term strategies: to maintain a healthy economic environment, to create a flexible regulatory framework, to have a predictable fiscal policy, to increase the level of both financial education and savings
  • Generation I - a financial education campaign launched by CFA Romania

Adrian MARIN,
President, UNSAR

  • The Romanian insurance market includes 29 societies, which managed to bring a volume of gross written premiums of EUR 2.18 billion, marking a 4.5% increase, in 2018. The insurance penetration degree remains at a low level, the indicator decreasing from 1.23% in 2017 to 1.13% in 2018, due to a much slower growth of insurance sector compared to the blooming economy.
  • The insurance industry is growing, but the pressure on profitability is growing bigger. Motor business lines, Motor hull (CASCO) and MTPL (RCA) represented about 72% of total non-life sector in 2018. Non-life combined ratio rose from 97.6% in 2017 to 102.8% in 2018. Motor hull combined ratio was 112.3% in 2018, while MTPL combined ratio 112.2%. The increasing number of motor vehicle registration from last years shows that there is space for motor insurance to further expand.
  • The health insurance segment will continue to increase in future. According to a GfK study requested by UNSAR, 97% of private health insurance consumers from Romania are pleased with the offered services and the overall experience. UNSAR estimates a number of about 365,000 private health insurance contracts, both individual and group insurance.
  • On property insurance side, there is a high potential for growth in the future. According to a research made by IRES on UNSAR request, 4 out of 5 Romanians know that property insurance is mandatory in Romania, but only 1 out of 5 said they have insured their homes with a mandatory policy.
  • Since April 1st the state offers subsidies for farmers. It is expected that agricultural insurance will become more accessible and used by Romanian farmers.

INTERACTIVE PANEL - Shaping the insurance business to meet future consumers' expectations:

Re/Insurance Expert

  • In Germany, the age group of 45-65 years old controls over 90% of the premiums
  • In Romania, in my opinion, except for MTPL, which is a mandatory policy, nothing else would have been sold if it were not for brokers

Mihai TECAU,
President, OMNIASIG

  • We always think about the clients and we strive to satisfy their needs
  • The market offers a lot of room for improvement in this direction: of satisfying the clients' needs
  • I and my company are always sensitive to our clients' expectations
  • We are not yet prepared to answer the needs of the next generation of clients
  • In Romania, there are still a lot of clients who do not trust the insurance industry yet
  • We need to increase the clients' awareness regarding the role of insurance, as well as their trust in the industry
  • Before the revolution in '89, we did not talk about insurance in Romania

Viorel VASILE,

  • We should divide customers on more classes, on more categories
  • The European insurance industry is a bit behind compared to the new generations - we are not ready for the new technologies. From this point of view, we have a problem at the industry level
  • I think that, in the next 5 years, the insurance industry will be completely different from what it looks like today. If we want to reach the young consumer, we need to adapt
  • I don't know if niche products are useful to corporate brokers. No broker can make a product unless he has an insurer behind. The role of the broker is to find the insurer who best suits the clients' needs
  • IDD will help the consumer: I think that our focus is to go to the consumer
  • The average age of our brokerage distribution network is somewhere under 40 years. Over the next 10 years, the sales force from Romania will barely reach the top of potential. I am sure that in Germany there will be big problems, because there you're going to address young customers with an aging sales force

Cristian IONESCU,
President, ASIROM VIG

  • The digital transformation is affecting the insurance industry as well, because it affects all industries
  • In our portfolio, we have a lot of clients - baby boomers- they are bringing the biggest revenues for our retail portfolios. But the new generation is coming. For them, accessibility of the insurance product will be a must
  • We have developed a digital product together with SAFETY Broker - it is a type of CASCO which can be activated online, for a limited amount of time.

Nicoleta RADU,
General Manager, PAID Romania

  • Customers are no longer interested in just insurance products;
  • My opinion is that customers' expectations will increasingly focus on customer experience - they want more than products
  • Insurers must create full-packages of services for clients
  • The winners will be the companies which will offer the best services for clients
  • We need to have simple products to educate the population and then maybe we can think to import or to bring new ideas from the outside markets. We need to increase awareness regarding products which are basic and add new value
  • Right now, we are in the middle of discussion with ASF to introduce in our law the possibility of selling PAD policy through brokers. I hope brokers will contribute to the increase of the penetration rate of the mandatory household insurance policy.

Cristian FUGACIU,
General Manager, MARSH Romania

  • Clients want to feel protected, they want to know that someone protects them
  • We should first segment the market by geography first - in our portfolio we do not see the majority of premiums being controlled by 45-65 year olds, but 30-50 years olds. The generation here is different
  • We have to differentiate between retail and corporate. What a company expects differs from what an individual expects
  • We have to adapt the products, as well as the services we offer
  • The risk landscape is continuously evolving: for example, cyber risk is very important now - ten years ago, nobody was talking about this risk
  • There are insurers which are saying that they will continue to work with brokers and vice - versa. The whole model of collaboration between insurers and brokers might change: the insurers might take the risks and the brokers might develop products - this might be a potential model from the future. But it is clear that clients will always need guidance - they will always need someone to explain insurance products to them
  • Risks are evolving: they need consultancy - they need advice on what to buy
  • Clients want both tailor-made products AND simplicity - so we should strive for both, if possible. This, I believe, is the receipt to increase the insurance market.

General Manager, ALLIANZ-TIRIAC Asigurari

  • We are living in two "countries" at the same time: the first country is represented by insurance clients, the second country is represented by people who have never bought an insurance a policy before
  • It is our responsibility to create awareness regarding insurance policies
  • Life insurance, health insurance and liability insurance - we expect these three lines of business to have the potential to reach up to at least half of the market share
  • Liability insurance is still in its infancy on the retail segment
  • ALLIANZ-TIRIAC in Romania has one of the most balanced distribution landscapes. From what we see, the technology is not replacing the intermediation, it is enabling the intermediation. In the Romanian environment, what you need to create in front of the client is a capital of trust - that cannot be created by technology, but by people
  • All distribution channels need to be more modern
  • We strongly believe that people will prevail in front of technology, but we need to take advantage of technology to improve the distribution channels
  • Customization is very seductive, but simplicity is what the clients pay for - customization means a lot of complexity. Adding complexity and functionalities which might confuse things is not helping. We are betting on simplification