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| EDITORIAL |
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The growth potential of the Romanian insurance market is no longer a secret for anyone. However, besides double digit growth rates, we must not forget one of the main problems of this industry: the lack of profit... Reporting only gross written premiums and growths, the insurance market in Romania seems very much like an El Dorado for investors, but however... If we take a look at the companies' profitability, things are not really that rose-coloured... Thus, only 20 insurance companies gained profit in 2006, according to the Insurance Supervisory Commission Annual Report. The total income of the Romanian insurance market was RON 175.44 million (EUR 51.88 million). At the same time, 21 insurers posted losses, overall losses for 2006 in insurance reaching RON 243.97 million (EUR 72.14 million), so the financial result for the whole year was negative, of EUR 20 million. Figures reported by insurers last year enables us to estimate the situation wouldn't change very much for 2007. So, big companies obtained lower profits, while some insurers posted significant losses. Why there is still no profit? One of the possible reasons is that insurers still act on the ground of some 2000-2001 strategies, when market conditions called for market share... Also, some investors set up insurance companies whom they tried to place on top of the market in order to sell them afterwards. We must not neglect the eternal problem of the claims rate in motor insurance, that negatively impact non-life companies' profitability. Asking ourselves how long can an industry survive without profit, we have to point out that the domestic insurance market, of almost 18 years old, prepares itself to reach its much desired maturity. "Now is the moment for insurers to make a change in the way they do business, from the market share focus to chasing profitability", Mihail TECAU, General Director of BCR Asigurari has recently stated. Therefore, let's hope in 2008 the Romanian insurance market will reorient from the market share view to gaining profit... by mihaela.circu@mxp.ro |
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| INTERVIEW |
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Interview
with Mr. Constantin TOMA, Constantin TOMA: Although I do not have the right to speak about the overall market and I would refer here to the non-life segment only, I anticipate the market will continue its growth. This particular statement is based on the big difference between the insurance penetration rate in Romania and the figures reported by developed countries. If Romania oscillates at about 2% - insurance penetration in GDP, western European countries swing somewhere between 8% and 10%, while the former communist states that acceded to EU before us, as Hungary, Czech Republic, Slovakia, Poland, already reached 4-5%. I earnestly believe Romania cannot be an exception. In my opinion, this lag we have today between Romania and the other developed countries as regards the insurance industry could be eliminated even faster, even in spectacular growing rates, if we could get over certain psychological deficiencies... However the market presents some perturbations in several sectors, especially in what concerns pricing policies which do not conform neither to the calculations to underlie these prices, nor to costs' level every company has and bases its products and insurance policies on. From this point of view it is regrettable hundreds of millions of euros are wasted in an industry that came to be very interesting. Many people crave to work as employees in insurance, mistaken insurance with banks or stock markets and see only white collars and millions of euros... Everybody is impressed when you say you are working in an insurance company because they already have in mind the image of West European insurance companies. They even look at you "through green glasses" or respect you, without knowing that, in fact, you are just an employee, engaged in a coal face. In many economic sectors we are pretty close to those countries and we must stay in line with this continuous growth in insurance services so that in the next 10-20 years frame to get even closer. In this context we trust that an annual growth rate of 25%-30% would be reasonable. The markets' development vehicle will still be motor insurance, as in Romania the car has a central role in every persons' life. Plus, these cars are bought either through a credit or in leasing - so they will be compulsory insured. The industry would be happy to provide them protection. However, I hope other classes of insurance would gradually balance the result. For the moment though, motor insurance are and will remain the first violin. XPRIMM: How do you see OMNIASIG in 2008, in this coal face you referred to? C. T.: I would rely on the team I am leading, to continue the same miraculous activity, grounded on some very healthy principles, based on an adequately strategy and objectives and, once again, I would rely on the quality of this team and their commitment to carry this task forward. I trust we will someday decide to stop wasting money and to strengthen this industry and the company we represent, to make our shareholders content, and why not, our customers; they will certainly be more satisfied and trust us more if our companies will come out with results that won't dishonour us anymore. The customers we serve must have the chance to see the financial results as they are, to see how many these people do, how we managed to obtain this profit. Nobody gives it to us. I have strived to make it and on the strength of my team we succeeded. I said it before, the apparent success is bitter indeed. To answer the initial question, our objective for 2008 is to maintain our top position. We have an over EUR 300 million target to reach and a EUR 12 million profit. I hope I will have the chance to fulfil these targets. And I also trust my colleagues, the other companies, will approach more cautiously the pricing issues and that we will first of all interact more. Then things will get better. I especially wish that OMNIASIG will maintain as a top three company; of course I would be very happy if we could keep our current position but this is a permanent and hard battle; I don't want to make any predictions, but I feel myself obliged to fight for making my point. XPRIMM: From which business line would you expect to gain a significant profit? C. T.: I, like well as the other insurers in the market, am taking an interest in first priority classes in what concerns profit: big industrial risks, general liability, accident insurance and even the CARGO line where we make some pretty good business. For 2008 I sincerely hope we will start obtaining profit from motor hull insurance also. Regarding this matter, we have already introduced franchise for motor hull insurance. I know this acerb competition has made this instrument, so normal, so necessary in a well balanced industry, to either disappear or be provided from the zero level. OMNIASIG brought this franchise at a reasonable level for Romania. Even more, I hope this example will be followed also by the other players. The franchise makes the customer more careful with his goods. Besides this franchise we are now working at a system that will allow differentiate pricing for drivers based on the risk profile which would be implemented in the beginning of this years' second half at the earliest. This project started some time ago but was somehow timed out by this business environment. XPRIMM: How do you expect OMNIASIG partnerships with leasing companies and banks to evolve, and especially with ERSTE? C. T.: We are already winding off partnerships with many leasing companies, to whom I would like to thank for the trust they have in OMNIASIG. I trust even more leasing companies will make partnerships with us, taking into consideration both our services' quality and the fact that there's nothing more to do than for we to make them an offer and for they to include us on their co-operation insurers' list. Regarding, our cooperation with ERSTE Bank, I would rather avoid making any comments. We will see if the two financial institutions will decide whether and how this partnership would be favourable for Romania. XPRIMM: Thank you! by mihaela.circu@mxp.ro and |
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| TOP PRESS |
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Non-life insurance market - changing the tide The Romanian life insurance market will continue to grow in 2008 with growth rates of over 25%. In these conditions, the non-life insurance ratio will remain constant at about 80% of the total market. This is the major conclusion drawn from the "PRIMM Insurance & Pensions - Forecast 2008" event, organized on the 5th of February by Media XPRIMM. Click here to read more! by mihaela.circu@mxp.ro, 6.02.2008 The life insurance market - a huge leap forward! The life insurance market will grow this year by 25%, mostly because of the rising on the population education degree regarding this topic, following the implementation of the reform of the private pensions. This development will continue in the following years, so that, in 2015, the life insurances will represent 50% of the entire market. This is the major conclusion of the "PRIMM Insurance & Pensions - Forecast for 2008" event, organized on the 5th of February 2008, by Media XPRIMM. Click here to read more! by vlad.panciu@mxp.ro, 6.02.2008 Pensions 2008 - between politics and economics The private pensions market, the compulsory one as well as the optional one, are at the beginning of the road, a delayed start, highly awaited and why not very promoted. The leaders of these markets have debated the current and future problems which have to be solved, all within an event organized by PRIMM - Insurance and Pensions. Click here to read more! by vlad.panciu@mxp.ro, 14.02.2008 Motor insurance, on forefront! The pressure generated by rising competition between the insurers regarding the motor segment and the growing claims ratio on this class are creating serious problems on the entire market. Click here to read more! by mihaela.circu@mxp.ro, 11.02.2008 GROUPAMA buys Hungarian OTP's insurance arm Consolidation strategy for BCR Insurance Good perspectives for the Romanian insurance brokerage industry Another insurance broker without authorisation ASITRANS Euroins is opting for franchise PRIMM - Insurance & Pensions Magazine at the start line in 2008! The PRIMM's magazine editorial team is preparing to mail the first issue for 2008 of the most popular insurance and private pension publication in Romania to all its readers. Click here to read more! Click here to order! by oana.neula@mxp.ro, 14.02.2008 ASIROM is preparing for a double force administration The private pension's lottery is still available Collaboration between the Balkans insurers BCR Life bets on bancassurance The Romanian company BCR Life will apply, during this year, a business model based on life insurance distribution through bancassurance system. Click here to read more! by mihaela.circu@mxp.ro, 8.02.2008 Some more insurance intermediaries Starting this week, the Romanian insurance market has two more insurance brokerage companies. Click here to read more! by mihaela.circu@mxp.ro, 8.02.2008 |
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| CEE, RUSSIA & CIS |
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| FINANCIAL NEWS |
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Private clinic business increased 30-300% Official launch: NOKIA Romania will produce phones for Middle
East and Africa EFG Eurobank's profit tops Romanian banks total MORGAN STANLEY strengthens its position as Bucharest bourse shareholder MORGAN STANLEY, one of the top investors in Bucharest Stock Exchange (BVB) shares, acquired a further 9,796 BVB shares last week, worth some EUR 0.4 million. Following this acquisition, the investment bank controls some 1.5 percent of BVB's share capital directly, and 4.26 of shares with HTI Valori Mobiliare, making it BVB's top investor. At the end of last year, MORGAN STANLEY acquired 1.28 of BVB's share capital, worth some EUR 2.5 million, and the investment bank announced at the end of January that it had acquired 51 percent of HTI Valori Mobiliare, which in turn owns 2.76 percent of BVB shares. by Business Standard, 13.02.2008 |
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