News - THE ROMANIAN INSURANCE MARKET NEWSLETTER
No. 125, January 29th, 2009
Click here to subscribe!
Click here to unsubscribe!
|Powered by Media XPRIMM|
|MENU: EDITORIAL | POINT OF VIEW | INTERVIEW | TOP PRESS | CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS|
The beginning of the year, usually a period when everyone sets great
objectives, catches us, at the start of 2009, more pessimistic than ever.
The media is full with stories about the adverse effects of the economic
crisis we are crossing, while Nobel laureates underline that we haven't
seen anything yet...
And yet ... there is life after the crisis ... and it belongs to those who will know how to best adapt to current realities.
To overcome this times as well as one can, the insurers, whether they activate on the non-life segment, or they sell life insurance, have mainly one solution ... the orientation to individual customers, to retail...
In the conditions in which, for reasons of cost reductions, adjustments are being made in the budgets of companies, mainly in marketing and protection expenses, the insurers must address to individuals.
Moreover, an opportunity in this regard is the introduction of mandatory households insurance, which will help to the development of the voluntary insurance class.
Also, in the context of further clarification of the legal framework, health insurance could meet an explosion of sales. And companies in the life segment could take advantage of the fact that in times of crisis, people are more aware of their need for protection.
Customers will not make, not even this year, a queue at the door of the insurance companies, so the insurers must be aware, more than ever, that "insurance is sold, not bought." Thus, significant investments are needed, in marketing and promotion, in training the sales force, especially in what the client service activity is concerned.
Because there is life after the crisis only for those players that will provide a superior quality of services...
Thus, the companies that will put retail customers on the first place will win.
Click here to order!
Bogdan ANDRIESCU: In this moment, Bucharest has a lot to win because of corporate clients operating in the country but placing their risks in the capital city.
On the other hand, the brokers who have international links are in Bucharest and are working on behalf of clients with branches, as local representative in the territory, often have limited competent in terms of insured amounts and terms of insurance.
Also, I do not feel that the corporate contracts administration will be transferred to local branches because of the simple reason that there is no qualified staff as well specialized in the territory to operate such complex policies.
Therefore, the corporate market will not develop at the same pace, becoming somehow full, instead the retail underwritings will rise, on individual lines. Due to retail, the report will change in favor of the territory again.
XPRIMM: What is, in your opinion, the most urgent problem of the insurance market in Romania?
B.A.: In the market is very easy to notify the customers' lack of information. What happened a decade ago applies now and now when companies place their own advertising campaigns, with slogans such as "Insure here!".
There was no constant share of awareness for the population about insurance, which can be easily proved by statistical data and especially by poor insurance coverage in households insurance.
XPRIMM: The Mandatory households insurance Law will contribute to promoting this type of insurance or is there a danger that it creates reluctance among the population?
B.A.: The best way to promote house insurance is through fiscal measures, so to have the greatest effect upon population and not by a law that makes them mandatory. Reference was made to the insurance as the "households third party liability", but they are similar only in their binding character.
We have to make a clear differentiation between the MTPL and the voluntary households insurance. The liability to third parties should, in my view, be required for as many areas as possible, protecting the individual through a trading mechanism. At the same time, the voluntary insurance expresses the individual's desire to provide.
I fear most that at the first major damage, there will be difficulties in granting claims, inducing a confidence decrease in private insurance in general. Also by this law, the state has declined any involvement in compensation.
XPRIMM: What will be the involvement of insurance brokers in this project?
B.A.: In terms of insurance brokers, in this moment we are not involved and do not consider it an advantage if we participate in this project because it is a low value insurance policy which will difficulty cover the distribution costs.
It may also be an insurance that creates opposition from the client, because of the mandatory character and we want to develop a market based on healthy, commercial principles, which will respect the individual's wish.
XPRIMM: How did the relationship between insurance companies and brokers evolve in the recent years? Was it reflected at the intermediated policies level?
B.A.: There was progress and it has not been achieved "overnight". The brokers' position gradually becomes one of a specialized consultant and a client representative.
Regarding the percentage evolution of the mediated premiums in total underwritings, there is a difference between countries, depending on each tradition, so we can not estimate the exact level intermediation will reach.
However, it will still exceed that level of growth recorded in overall insurance market.
XPRIMM: How do you appreciate limiting brokers' commission to 15% for MTPL?
B.A.: The figure itself is not the problem, but limiting. Each insurance company has some criteria that need to be followed, as placing risk in reinsurance, claims reserves, and in relation to the insurance broker to establish their report according to the contract costs that they have to distribute these products.
On the other hand, a broker must cover their fixed costs. Therefore, an intervention in the commercial relationship between the two entities is totally not welcomed. Insurance companies can negotiate on their own the contracts with insurance brokers, as well as before.
Also, two years ago UNSICAR sent a material to CSA (Insurance Supervisory Commission), regarding the brokers that mainly have MTPL portfolio, in which we proposed that these brokers should operate with the status of agents and have maximum percentage of MTPL portfolio, on which to agree. At that time, the proposal was that the percentage should be 60%.
At present, each broker's network is organized so that from the negotiated commission it pays its own agents services. Under the contract conditions, the agent can receive more than 15% from the insurance premium. Here is the danger that some brokers even get in bankruptcy.
XPRIMM: How do you appreciate that the market evolution will be in the current economic context?
B.A.: In this context, without a major event or a natural catastrophe to take place, I think we will have a slack insurance market. On one hand, we can see the decline in motor vehicles sales, the restructuring taking place in large enterprises and disposal that is to come.
On the other hand, I tend to think that the insurance coverage will increase because, in crisis conditions people become more aware of the risk their heritage is exposed to and want to have it protected, thus offsetting the injuries.
I consider that the budget for insurance, both for individuals and companies will have to win as priority because of the loss would be very difficult to recover through their own forces. Regarding motor insurance, the car park was significantly renewed compared to previous years and a sales decline was normal, while the financial crisis only accelerated this process.
Apparently, there seems to be a paradox in what information is concerned:
the lack of it is just as harmful as the excess data, or as the abundance
of poor quality information. Once the Internet was created, any imaginable
topic can be detected in a few seconds and an avalanche of data more
or less connected to your target fill out your computer screen. Moreover,
fierce competition in the media or simply the people's need to communicate,
generates comments on any possible subject, in an attempt to transform
raw data into information. The quality of the comments, however, whether
they come from the "professional" or the "amateur" environment, is often
Click here to read more!
CFA Romania and Managing Partner FINANCIAL VIEW
Insurance in 2009: a 10-15% growth and profitable activities
Life insurance: 10% reduced growth and focus on retail in 2009
PAID: ten shareholders...and counting
Ion BAZAC wants complementary health insurance, based on the Second
Insurance will still be based on the motor segment
Crisis approach for life insurance: current customers retention
and sales of traditional life insurance on retail
A new hierarchy in Insurance
Joint initiative for obtaining fiscal deductibilities on life insurance
Sales force must learn to sell retail health insurance
Customer retention and profitability, OMNIASIG's targets in 2009
VIG grows with 68% in Romania in 2008
EUROINS Romania, active on the Hungarian market
YES for PAID and for voluntary households insurance
BRD Asigurari de Viata, closer to final approval
INTERAMERICAN will change its name to EUREKO Romania
TIRIAC Air's plane, insured by ALLIANZ-TIRIAC
Underwritings in credit and warranties insurance went down to half
The Annual International Conference on Risk Management in Almaty
All-Russia Conference on Reinsurance has come to its 13th edition
CEE markets boost VIG's premium
Ukrainian government to cut subsidies for agricultural insurance
Croatian insurance market up by 6,8% in 2008
Slovenian insurance companies acquire EUR 2 billion in premiums
Insurance Supervision Agency from Slovenia grants license to CEBRON
BNR agrees to less restrictive conditions for mortgages
ERSTE hopes Romania will be suffer the least from the crisis in
CEC Bank posted over EUR 100 million in earnings in 2008
THE EDITORIAL STAFF:
News - The Romanian Insurance Market Newsletter is best viewed with
an active Internet connection.
Click here to subscribe!
Click here to unsubscribe!