FIAR 2022 - The Insurance Brokerage Conference

The current landscape of insurance distribution in Romania and the CEE, the challenges and perspectives of the market, as well as the best solutions for answering the customers' needs are just a few of the topics analyzed during the Insurance Brokerage Conference, taking place at FIAR 2022 - The International Insurance-Reinsurance Forum.

The conference was supported by OMNIASIG VIG and EUROINS Romania as Main Partners, as well as COFACE, SAFETY Broker, ERGO, CHIRIC&CHIRIC, and DESTINE Broker as Partners.

MAIN STATEMENTS

PART I


Adriana GRECU - President, PRBAR

- The figures show that, in recent years, the degree of intermediation has steadily increased, which demonstrates that brokers are the main vector of the market. However, with growth comes a lot of pressure on the brokerage segment.
- The pressure is of at least two kinds. One challenge is for each of us to be responsible, to maintain and increase the quality of the act of intermediation. Another challenge we feel is that of trying some adjustments of the market mechanisms through a big pressure that is put on the adjustment or limitation of brokers' revenues. This makes the brokerage profession a difficult activity to keep at a certain level of quality and difficult to have an optimistic view.
- It is said that adaptability is a characteristic of the intelligent. After all, it's about survival: either you adapt or you close.
- I do not believe that the brokerage business has been affected by these recent changes (pandemics, digitalization, legislative changes), but that it has been transformed. If I were to give a number - on a scale of 1 to 10 - for transformation, that would be 7-8.
- I don't expect the number of brokers to fall this year.

Viorel VASILE, CEO, SAFETY Broker:

- The CITY bankruptcy has happened and is over from my point of view. We are now in a very good situation; we have a functioning market. Bankruptcy is not a bad thing.
- I hope everybody has understood that the capping of the MTPL rates is not opportune. We have a self-regulating market, a safe and stable market. We have 3 MTPL players with over 20% market share. I don't think we have a problem.
- Brokers' revenues are increasing, but let's not forget that MTPL rates have increased a lot.
- Our role is to provide quality service to customers, to move more towards life and health insurance.
- Our role is also to bring in more players from the European area. This is our role as a consultant, to regulate the market. If we have more players, the market regulates itself.
- In Poland, there are agents who can work with insurance companies and brokers. It is chaos. We are privileged from the legislative point of view in Romania. That's why brokerage has such a big share in Romania.
- In the MTPL sector, it can be a problem because we intermediate more than 90% of the underwritings and I hope that insurers will increase a bit the share of their RCA sales, maybe online or other channels.
- I think the crisis has helped us a lot. We managed to be closer to the customer, to adapt to what he wants.
- I think this year there will be consolidation through mergers in the brokerage market.

Dorel DUTA, President, UNSICAR:

- In Romania, brokers can be companies, while in other countries there are individual brokers. Each market reports these individual brokers differently. For example, in the Czech Republic there are a lot of individual brokers, the same in England, France and Belgium. In our market, the market was built this way from the beginning, that brokers are entrepreneurial companies, and that everyone working in this market is part of a company.
- The fact that brokers have such a large share of the market in Romania now is because they started as small, entrepreneurial companies, that adapted much faster. But, already, brokers have become big companies.
- The brokerage market in Romania has undergone a profound and rapid transformation following the impact of the COVID-19 pandemic.
- I don't expect the number of brokers to decrease this year.

Laurent POCHAT-COTTILLOUX, CEO, AXA Life & Health Reinsurance Solutions

- The pandemic changed the way we consume entertainment, the way we work, the way we interact with doctors and medical professionals. Before the pandemic, everybody was talking about telemedicine, but the progress was very slow. After the pandemic, in these 2 years, we made an incredible progress (10 years of progress in 2 years) regarding telemedicine;
- The COVID-19 was a global health crisis as we haven't seen in 100 years;
- The pandemic exposed the fragility of public health systems and it underlined the need for insurance;
- There are 3 mega-trends affecting health insurers everywhere, accentuated by the pandemic: 1) Global interconnection and customer centricity, 2) Healthcare is ever more complex, expensive and personalised, 3) On average, we are getting richer (and older) year after year
- We seem to have gone a little bit in reverse: we are getting less healthy. This should be the healthiest time in human history: lowest child mortality, longest longevity, we have eradicated diseases as smallpox, measles, polio, plague, people are taller people, no more dying from appendicitis, dysentery, broken limb, anemia, we've moved beyond "peak tobacco;
- However, we are not healthy: obesity, cancer, type 2 diabetes, osteoporosis, heart disease, strokes, kidney disease, lower back pain, some allergies, dementia, not to mention all the mental health issues;
- We consume too many calories and we burn too little (insufficient physical activity, bad diets);
- Diabetes, cancer, cardiovascular disease, respiratory disease - represent 60% of all deaths worldwide, 80% of the disease burden;
- Heath insurance companies are aiming to: improve the overall health of the portfolio and select the healthiest lives in the first place;
- Healthcare technology is getting more complex and more expensive: the emergence of hyperspecialised medical centres of excellence and personalized medicine, amid struggling public health funding systems;
- Two of the most significant factors driving medical costs per persons include the overuse of care due to medical practitioners recommending too many services, as well as the overuse of care by insured members;
- Health insurance companies try to balance between the perspectives of the provider (do what's best for the patient, over-testing, worldwide talent shortage), those of the client (ex: wants to get better, trusts the doctor, has unrealistic expectations of modern medicine) and their own perspective (ex: keeping the product affordable, standardized practice, meet customers' needs). There's a constant tug of war between Insurer, Customer and Provider;
- We are now using telemedicine as "gates" to make our products more affordable and medical services more accessible;

Daniela GHETU, Editorial Director, XPRIMM Insurance Publications

- the Distribution Report 2020 produced by XPRIMM and IAIS analyzed 17 markets from the CEE;
- Data for FY2019 - the last "normal" year before the Covid-19 pandemic, collected from the national supervisory authorities;
- A new approach: instead of considering the insurance distribution systems from a structural standpoint, by inventorying the number of players in each category of insurance distributors, we have chosen to define the importance of each category of distributors through assessing their contribution to the market GWP formation;
- Poland - the only market where insurance agents are holding an absolutely dominant position, with an over 65% share of the intermediated GWP;
- Romania, Bulgaria and Albania - brokers are dominant - at least 50% of GWP;
- Lithuania, Hungary and the Czech Republic show a rather balanced contribution of all the major
distribution channels;
- Slovakia, the ex-Yugoslavian countries and Estonia insurance distribution stays mostly in the insurers' own sales networks hands;
- Poland, Hungary and Croatia are the only few markets where bancassurance has a documented, significant contribution to the insurance products distribution;

Interactive panel - Challenges and perspectives of the insurance distribution in Romania - Part I

Costi STRATNIC, Vice-President of the Management Board, OMNIASIG VIG:

- After the bankruptcy of CITY Insurance there was a lot of pressure from brokers to take over the CITY portfolio. On guarantees, the market failed to come up with satisfactory solutions. 
- However, I think the transition was natural. 
- The bankruptcy created a trust issue: we have to convince consumers that such moments will not happen again. It will be a big job to convince consumers to buy insurance. It will take a while for this wound to heal.
- As far as voluntary policies are concerned, I think there are and will be more and more products, and digitalisation will make it easier to sell. Our problem is to encourage consumption and increase customer interaction with the market. It's a problem of our culture. We need to increase the number of claims paid quickly - it's the only area that can lead to real growth.

Viorel VASILE, CEO, SAFETY Broker:

- CITY Insurance's business volume has been huge. Insurers have hardly coped with our [n.red. brokers'] requests. As far as the guarantees policies are concerned, there is still a need for capacity on the local market. The MTPL market tends to be stable. Another problem is on Motor Hull, where CITY had some very low prices, and here we lost some customers who had been expecting the same low prices.
- We have encountered countless problems. Nobody anticipated how big CITY was. Ee should look to the future and not go through this again.
- We need to try to train the sales force to sell other voluntary policies, to develop the network that we have each built over the last 15-20 years. It is our role to give the consumer what they need.

Antonio BABETI, CEO, GLOBASIG Broker:

- I very much want there to be consultations every time these decisions are taken, when legislative proposals are made, because they have effects in the business area as well. We need predictability in order to build a good business and a stable market.
- There will always be challenges as far as regulation is concerned.
- I would like to see more openness on the part of insurers, not just at the declarative level.
- We want a balanced portfolio, with a focus on facultative insurances, and here we all need to get out of our comfort zone. 
- We need to direct resources towards attracting young people into the industry.

Calin GRIGOROVICI, Director Sales & Marketing, EUROINS:

- It was essential, in our partnership with brokers, to listen to each other;
- We have to give credit to the brokers - because they were there, in the front line, in front of the clients, after the bankruptcy of CITY Insurance; 
- We need to start rebuilding trust in the industry again. In many conversations with our broker partners, we ask them how to bring in colleagues from younger generations - Generation Z. We need this new energy, we need to burst this bubble we're in and get closer to our clients;
- EUROINS Romania has made great efforts to diversify its portfolio outside the auto insurance segment - we started a cooperation with partners in the brokerage area;
- Our sales on facultative non-auto insurance have increased this year by more than 2 times already compared to last year;
- We need to make things as easy as possible for our partners;
- It is quite difficult to take the sales force out of the comfort zone of MTPL - we need to create a new distribution to contribute to this diversification of portfolios and orientation towards the non-auto area;
- The customer needs advice from his agent to provide the insurance he needs. This is the role of the agent's work, it is the added value that the agent brings;

Stefan PRIGOREANU, CEO, MILLENIUM Insurance Broker:

- From 2018 until now we have been talking about the same two big legislative issues that have not been solved: 1) the harmonization of the PAID legislation (we need the distribution of compulsory household insurance through brokers), 2) the modification and the update of the MTPL law;
- Despite ASF's good intentions, unfortunately it is not possible to solve only through secondary legislation everything that is problematic in primary legislation;
- Capping is not a solution - the market must regulate itself through its own mechanisms;
- The MTPL industry is not about those who buy, but about the injured, because they must be compensated correctly and in due time;
- For brokers there is a discrepancy between the legal restrictions and documentation of the whole process in interacting with the customer, on the one side, and the customer's need for things to be simple and easy to understand, on the other;
- The broker will always have the difficult task of explaining to the client what the differences between products are and which the best product is for the client;
- The professional training of the distributor and the financial education of the customer mirror each other, they support each other - but it is a long process;

Radu MANOLIU - Deputy General Director, ERGO Asigurari 

- What I appreciated, on CITY Insurance bankruptcy, is the change of approach, because the first reaction, perhaps natural, was to try to place the facultative insurance portfolios. Fortunately, slowly, slowly, the focus shifted to finding the best solutions as the facultative policies expired. It was the first event of its kind, after we had all practiced this new legislative framework, which represents a normalization.
- What would I change in my relationship with brokers? I would give the overwhelming part of the commission for proven advice, because, being directly involved in the claims side as well, I almost invariably encounter quite unpleasant cases from this perspective. There is an improvement compared to the past, now policyholders receive the insurance conditions, the information notes. I think that is the main change so far. 
- Perhaps we should see a documentation of the advice given, because, in my view, this is the main role of intermediaries. Many of them do their job well, obviously, there is no doubt. In the case of those with very large networks, there is a kind of fast-forward activity.

Erik BARNA - Founder & Member of the Board, Life is Hard

- Technology can help, but it's not a universal panacea. Technology needs to be helped by the legislative framework, which, now, at least in the insurance area, is lagging behind, not up to date. 
- To be able to sell other products, we must not increase the loss ratio or the damage rate, but we must educate and make the consumer aware that they have solutions to cover their risks. Let's be less technical when talking to the consumer and provide a framework on their language, with less information, because sometimes information can be confusing.
- We don't have to stop at online. Omni-channel is more appropriate right now because we have different consumer segments with different digital skills. In CEE, unfortunately, the financial literacy of the end consumer is quite low.
- In Romania, lately, the effort has been consistent - both from brokers and insurers. We are a long way off, but it is good that we are taking steps in this direction, and we are all learning what would be better online.

Interactive panel - Challenges and perspectives of the insurance distribution in Romania - Part II

Octavian TATOMIRESCU, General Director, CAMPION Broker:

- I always wanted a balanced portfolio and to increase life sales was one of the objectives in our strategy. Balance can only be achieved if each of us pays attention to the level of education and training of the team, and this is done with a lot of effort - time, financial, etc. This effort must be a joint effort with insurers, ISF and ASF.
- Moreover, brokers need to make their work inside each company known, known to the authority and the Institute, because I believe that we are not expressing very well the efforts that each of us is doing in the development of the market.
- In collaboration with insurers we have development programmes in the professional and personal area. Last year alone we had more than 30 sessions online and this year we have already reached 14 sessions.

Cosmin TUDOR, Development Director, PAID Romania:

- Would legislative changes be necessary for a better distribution of the PAD policy (mandatory household insurance policy)? If we were to prioritize these changes, the first thing would be the transition from an annual policy to a multi-year issuing possibility, for 20, 30 years. This will be the biggest plus in terms of the changes already contained in the legislative proposal. I say this because in 2021, 300,000 new homes entered the PAID portfolio, in the same year 250,000 homes that were insured were no longer insured. 
- It would have been much easier to pay an installment than to issue a new policy. A big advantage would also be for distributors, because those costs related to issuing, consulting, and others, would only happen once.
- There are other things that are included in the proposal - storm risk, distribution through brokers and so on, but the biggest impact I think will be the change related to the multi-year policy.
- We have an online sales portal, which is slow going. We have 1,600 policies issued in a year - that's very few.
- People don't perceive the PAD policy as mandatory, there are no sanctions put in place, like with uninsured cars on the street. There's a lot of work to be done here.

Marius LASLO - Executive Director, DESTINE Broker

- Diversification of portfolios is only done together, brokers and insurers. 
- We invest in the life area, including by training and challenging our people. The successes are visible, but it's still not what we want. We want to diversify this portfolio. We are pioneering product development with insurers in the market.
- Perhaps the first change to the IDD Law would be related to those documents that come attached to the policy and are a prerequisite to the issuance of a policy. The size of those documents can be reduced, we feel this also from customers, who always complain about this.
- As far as the electronic mutual agreement is concerned, I know companies or people who have already prepared it, they are just waiting for the legislation to be changed. It would make the process much easier and could close a circle for those involved. Everything is automatic, with geographical localization. It would greatly reduce the stress for those involved in an accident.
- Also, in the area of IDD, we could discuss life and health insurance, in the sense that those documents could be signed electronically by the clients. This is the 21st century, we should be able to do that.

Cerasela CHIRIAC - Owner, INTER Broker

- For us, it works that we started, since September 20199, with Zoom meetings with the sales force on various topics. It took us three years to find the winning formula. We started in 2019 and tried different variations: different times, different lecturers, different products, different formulas. After three years, every Monday, we meet with our people and discuss a product. Within an hour, we manage to at least arouse our people's curiosity for that insurer's product. On Tuesday, we repeat the same thing.
- We started meeting in the room again. Not coincidentally, on life and health insurance. We started a new team in this area.
- We are big believers in proper communication that also involves fun, that attracts our people. 
- We place a high value on experiences.

Ioana DUMITRU, Director - Brokers Department, GRAWE Romania:

- Collaboration between insurance companies and brokers exists, it is essential, and we constantly challenge each other to improve this collaboration;
- We have noticed an increasing interest of brokers for life insurance, and this diversification of the portfolio is part of the maturing of the market;
- Every person, every entity in this market has the role of educator and every single person in the market should be aware of this role in order to educate the consumer. It is, however, a long-term process that we need to accelerate.

Alina BARBULESCU, Property & Casualty Insurance Specialist, UNSAR:

- The pandemic has led to a lot of changes, but through change we can evolve. A good example: as a result of the pandemic, we have become more interested in financial market solutions (for example, as a result of the pandemic, the interest for certain types of insurance has increased);
- Romanians are more interested in health insurance, the UNSAR study shows, followed by interest in home insurance, then cyber risks and life insurance;
- This interest is a starting point for the processes of diversification of insurance portfolios that we all want;
- Cyber risks - very present in our lives. In 2021 were reported 400 cyber attacks per minute, and in 2022 the number increased to 550 cyber attacks per minute;
- Romanians are, therefore, becoming more aware of cyber risks and their impact (data loss, reputational loss) - 3 out of 10 Romanians would be interested in buying cyber risk insurance, the UNSAR study shows;
- Interest in home insurance - this is growing because Romanians are becoming more aware that they are exposing themselves to risks. Romanians fear, first and foremost, the risk of fire - 1 in 2 Romanians believe that, at some point, their home could be affected by a fire; 
- Of the top 50 largest claims paid out by UNSAR member insurers, 40 were caused by fire;
- The second most feared risk: storm risk (2020 - 13 million claims paid for storm damage);
- During the pandemic, we also identified new insurance solutions and new, more efficient, digitized processes;
- Digital innovation and customer orientation, customer proximity and the ability to respond to the customer's digital needs - among the elements we need to keep in mind;

PART II

Eugen ANICESCU, Country Manager, COFACE Romania:

- Coface entered the Romanian guarantee market a year ago. We are open to any dialogue that will help to create a more efficient guarantee insurance market in the future and bring clarity.
- We have tried to see how relevant guarantee insurance is to the Romanian market. These policies represent 4% of general insurance and 10% of non-auto classes. It is the fourth class after motor insurance and fire insurance. Guarantee insurance is the largest sector of corporate insurance that the market has and is extremely important in the relationship with companies. There are more than 30,000 companies working with the state. I believe that these insurances are extremely significant.
- In the last 5 years there has been a doubling of the market share to 4%. Guarantee insurance has become the main instrument through which companies working with the state guarantee their contracts. This is because insurers have been faster, more flexible.
- The insurance market has gained a lot of volume in the area of guarantees, but in order to maintain this volume of premiums, the relationship between the insured/beneficiary and the insurer will have to be readjusted to the new standards. I believe that we still have some way to go before we are sure that we can maintain our dominant position as insurers in guaranteeing public projects.
- Another element has to do with the repeated crises in the market - the bankruptcies that have occurred have not only affected the companies concerned, but the market as a whole. A stronger dialogue with all market participants will be needed.
- The last few months have been extremely complicated. We have gone through portfolio takeovers and changes that this situation (CITY bankruptcy) has brought about. These changes have also brought some positive changes. A first positive - I think there are more players in the market, there is real competition and there is a more balanced risk appetite than in the past. 
- I think there are much healthier underwriting standards in the market. We need to look to the future.
- I don't think it's realistic to think that in 6 months you will take over the entire portfolio (CITY) underwritten in years. Instead I think we should look beyond that. There are alternative solutions, e.g. successive retentions.

Gheorghe GRAD, Country Manager, RENOMIA - SRBA:

- A rough calculation indicates that about 25 - 30% of the remaining CITY guarantee contracts have found solutions in the insurance market, the remaining 70% are left without a solution in the market;
- This is problematic for these clients, they are clients we have been working with for more than 10 years; but underwriting on guarantees is more complicated;
- Insurers should open their appetite for this line of insurance (guarantees) and accept some broader underwriting solutions. Insurers refuse, however, a dialogue and an analysis on individual cases, taking a conservative approach;
- By not identifying solutions to take over these remaining CITY Insurance contracts, we will somehow push the construction market into financial problems for at least 2 years from now;
- We have tried to find solutions through reinsurance, but so far we have not succeeded;

Antonio SOUVANNASOUCK, CEO, ASIGEST Broker:

- The situation is difficult and will continue to be difficult. If at the time of CITY's bankruptcy everyone in the market initially considered only the MTPL, at the guarantees many of CITY's customers will remain without insurance, they will not find alternative means. With MTPL there are solutions, more expensive, but they exist. Many policyholders will not find solutions to this guarantee problem. CITY has been flexible in taking on these risks, but on a good basis - I have not heard of any unpaid claims by CITY here or in Italy. I know that the claim rate on this insurance is at about 15%.
- I don't know why there is this reluctance on the part of insurers to underwrite this risk because it is a line of business that has proven profitable.
- Probably every player in the market will understand something from this experience. The guarantee market will continue to exist in a new form. And insurers will have to change their mindset.

Vlad STOICHITESCU - Head of Sales Client Management, OTTO Broker:

- Legislation is still improving if I may say so.
- We, as brokers, found many good things in CITY Insurance: they had an application that worked very well, they delegated competence, which insurers don't want to do, etc.
- The damage rate at auctions is almost non-existent.
- It is clear, we will no longer have insurers insuring infrastructures worth billions.
- We have legislation still discussing whether we can co-insure on guarantees - something that could be interesting.
- It's a "perfect storm" from all points of view. We don't have the resources. 
- Insurers should have a man in the relationship with AEGRM.
- We have customers who are crying. There are still some who don't understand why, after years of being credited, they can't find the solution. I can't find understanding with other insurers. 
- Many customers have policies with many insurers. Some were polarized on CITY.
- Responsible brokers have seen since 2015 that it's not good to stick to one insurer.
- We are talking about a systemic risk; chances are high that even a contract that is running very well will be affected.

Dan DIMA, Director, WMP Ramboll SEE:

- In the consultancy sphere, we interact with the end clients - the regional operators who are in charge of infrastructure projects;
- Will the construction market and the insurance market have the capacity to absorb the financial resources available in infrastructure projects?
- The current challenge: to regain lost image capital following the CITY Insurance bankruptcy;
- Lack of predictability has also manifested itself in the construction market. The 2016 - 2020 period was very lean in construction projects; 
- Now, the authorities are looking for solutions to grow the construction sector. Of course insurers will have to look carefully to see who they are insuring;
- A clearer regulation would help us to stop wasting resources on simple cases;
- All large infrastructure contracts have employed a third party - the supervising engineer - who would come up with an analysis of the contract. The supervising engineers produce monthly reports, as they answer to the legislator; 
- I don't think there will be very many solutions found in the future, if they have not been identified so far; It will create problems over time on what cash-flow means in the coming years;

Viorel VASILE, CEO, SAFETY Broker:

- Last September, everyone was scared of MTPL and then I said that the MTPL part can regulate itself, that the market is mature and it has proved that. However, the systemic risk generated by CITY's bankruptcy on guarantees still exists and in my opinion the market will not be able to self-regulate. It is a young market and I think that state intervention is absolutely necessary. Without a state insurer or intervention we will not be able to move forward.
- Only for 25-30% of the customers who had policies in force we were able to renew them. The 70-75% gap is huge. The market can collapse at any time. 
- Our role is to assist customers. We have to find solutions for customers.
- The major risk is that Romanian builders - many of them unbankable - will cease their activity. They have to solve their problems in the short term. We have to explain to them that they have to become bankable companies in the first place.

Mihut MARCULESCU, Head of Bonding Department, COFACE Romania

- It is important to understand and transform a period of crisis into one of progress
- Personally, I think that everything that has happened in the last 9 months has been perceived with a lot of emotion
- A contract that is in progress is much more visible to an insurer - so it could be taken over in insurance
- We understand that there are companies that are not insurable - but every company has underwriting rules and procedures and has indicators by which they analyze the capacity of some companies
- Insurers have much more visibility, they know how to underwrite. We will have to wait for this wave of negative emotion generated by the bankruptcy of CITY Insurance to pass. I am convinced that in 1 year there will be a change;
- The supervising engineer - employed in every European project - can be used by insurance companies to check a contract, the quality of the works in that contract;
- What are we doing differently today than 6 months ago? We communicate a lot with the beneficiaries and I'm happy when we can explain the product and when they understand what they have to pay attention to and what processes they have to follow;

George ZAHARESCU - CEO, PRESTIGE Insurance Broker

- There has been a lot of pressure and tension since October 2021. Insurers were open in 2021 and slightly more restrictive from 2022.
- We have Rule 32/2021, which tells us that we can share, now, an underwriting tool. It's a very good rule, which brings predictability and clarity.
- It's a difficult situation for builders and it can lock up domestic capital at any second.
- As far as the authorities are concerned, we could go back to the best practice guide.
- I believe that the ASF can help us and, at the same time, the ASF can support and even attract new players in the market, which is obviously needed, players who must be flexible and adapt to the Romanian market. 
- only by working together we will find solutions.
- If all organizations and associations, from brokerage and insurance markets, and the authorities would work together, this would help a lot in building a unique instrument on the market.
- We have had and still have cases where, because of pressure, customers are desperately trying to find solutions and are asking insurance quotes from more than one broker, which makes it more difficult to offer. Resources are lost.
- It is important to educate the client, to understand that a broker goes to all companies and tries to find solutions.
- Now, we are investing even more in the professional development of our staff.
- We discuss a lot with clients. We try to educate the client to forecast their own costs and see if there are insurance solutions before signing contracts.
- We are working and trying to convince insurers to be more flexible an accept more collateral guarantees.



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