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XPRIMM News No. 136, July 9th, 2009

No. 136, July 9th, 2009
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Towards the next level...

MILLENNIUM Business Center - a fire of large proportions in one of the highest buildings in Bucharest, a topic widely debated by all the media...
MILLENNIUM Business Center, one of the greatest claims in the last years in our country, also represents the premise for taking the insurance discussions to the next level.

After a long period in which the news about this area related mostly to MTPL or to mandatory household insurance, this week the "stars" were terms such as business interruption, civil and other liabilities etc.

Such products, without which no serious company would even think to function even for one day, are among the last on the lists of the local managers. Even if the need for risk management or protection was never the strong point of the Romanians, the current economic context has strengthened even more the idea that "it works the way it is"...

Incidents like the one two weeks ago should therefore represent an alarm signal regarding the various risks to which companies are exposed.

Because nobody is immune to bad luck, in a normal economy, talking about business interruption should become companies as common as talking about MTPL.

And that moment would mark the passage of the insurance market towards the next level...


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BCR Asigurari de Viata

Credit Europe Asigurari

Interview with Cristian FUGACIU,
General Manager
MARSH Romania

XPRIMM: How do you evaluate the evolution, in the first half of this year, of the demand for property insurance for office buildings?
Cristian FUGACIU:
In general, developers and builders of these buildings are international companies that have a good culture of insurance. In the first months of the year in progress, in terms of MARSH mediations on the insurance market for office buildings, we recorded an increase.

XPRIMM: How is the premium for a class A office building rated?
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.
The mentioned quotes are for new office buildings, built to current standards.
Another policy that owners of office buildings are buying is the one of civil liability (related to third parties and to tenants). Prices for this policy vary depending on the limit of compensation, therefore, for a limit of EUR 1 million, the premium may vary between EUR 2,000 and EUR 3,000, and for a limit of EUR 3 million, the premium may even reach EUR 5,000 - EUR 6,000.
Some major office buildings in Romania are also insured against the risk of terrorism and loss of rent due to terrorism. Premiums for such policies have fallen a lot as compared to last year. Thus, in 2008, for a limit of EUR 15 million, the insurance premium reached around EUR 20,000. In 2009, for the same insurance limit, the premium may be EUR 15,000 or even less.

XPRIMM: What are the risks against which the owners of office spaces should be insured?
In general, policies that best cover the risks which an office building can confront with are: Property, Loss of Rent (Business Interruption), Terrorism and Civil Liability (related to third parties and to tenants).

XPRIMM: What are the tendencies occuring now regarding office space insurance?
Even if the economic recession hit directly in the construction market in general, for the moment there are enough office buildings that were put in use or are to be put in use in the months to come. In the same sense, the insurance culture of the clients on this segment, but especially the fact that throughout time this insurance has proven useful, make our expectations for this segment to be positive.
With the economic crisis, we notice a change of attitude from the customers, regarding reducing costs related to insurance. This reduction is usually done through the internalisation of risks. Thus, the companies decide how much risk they can take and how much they can raise the value of the deductible and to eliminate some types of insurance.
We believe that the development of this segment is closely related to the number of office buildings, but we also believe that developers understand the utility of insurance, and the fact that there were enough claims in the past has done nothing but convince them accordingly.

XPRIMM: Thank you!


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Cristian FUGACIU
Cristian FUGACIU,
General Manager
MARSH Romania


ISC: Insurance companies will be subjected to stress tests
The Romanian Insurance Supervisory Commission is analyzing the opportunity of running stress tests for companies from the insurance market, in order to measure their capacity to face the assumed obligations.
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by, 3.07.2009

SWISS Re: Romania, top growth of the insurance market
The Romanian insurance industry is on the second place in the top increases of gross written premiums, as compared with other European countries, according to the Sigma - World Insurance in 2008 report, carried out by SWISS Re.
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by, 6.07.2009

ROSGOSSTRAKH enters the Romanian insurance market
ROSGOSSTRAKH, the leader of the Russian insurance market, intends to expand its business in Romania after 2010, according to statements made by company President, Danila KHACHATUROV, quoted by INTERFAX.
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by, 25.06.2009

AXA, attracted by the Romanian market
The French insurer AXA aims to expand its presence in the emerging countries of Central and Eastern Europe, as the CEO of the regional division of the European insurance market leader stressed that Romania represents an extremely interesting market for the group.
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by, 30.06.2009

NBR: Insurance increases stability of the financial system in periods of crisis
The main risks for the insurance market in Romania are the underwritings slow-down, growth in the motor claims segment, as well as the surrenders on life insurance, the National Bank od Romania (NBR) specialists appreciated, in the 2009 edition of the Financial Stability Report, published yesterday.
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by, 1.07.2009

GENERALI owns 99% of ARDAF and it can delist the company
In the public takeover offer concluded on Friday, July 3, GENERALI PPF Holding has acquired from the minority shareholders 16.87% of the ARDAF capital, for the sum of RON 20.23 million, thus increasing its participation from 82% to 98.87%. Under these conditions, the legal requirements for the withdrawal of shares from trading are fulfilled, so GENERALI can delist ARDAF from the RASDAQ market, as announced with the launch of the offer.
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by, 6.07.2009

Deductibility on life was put on hold
The corporate segment represents not more than 6% of the total volume of underwritings made on the life segment and the evolution of this market clearly shows that life insurance does not develop enough only by placing the stakes on retail. "As a result, it is absolutely necessary to introduce a tax deductibility for this type of product", Cornelia COMAN, General Manager of ING Asigurari de Viata, said at a seminar organized last week by MEDIAFAX.
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by, 7.07.2009

SWISS Re: Romania, still on the last places in terms of insurance density and penetration rate
Romania still offers a very high potential of growth at the level of insurance underwritings, being placed, in terms of degree of penetration and insurance density, among the least developed countries in Europe. Although on general insurance we find ourselves behind our neighbors from South of the Danube in this chapter, the growth of insurance density on the life segment has helped Romania recover the gap, according to the latest SIGMA report, published by the reinsurer SWISS Re.
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by, 8.07.2009

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Casco Ieftin

Safety Broker

November Business Meetings in Moscow

On 24-25 November 2009, for the 8th time, Moscow will be the venue of the November Business Meetings of Reinsurers, organized by All-Russian Insurance Association and "Business Character" Group, with the support of PRIMM - Insurance & Pensions Magazine as Media Partner. The event will be held at Holiday Inn SOKOLNIKI.
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by, 9.07.2009

INSIS Forum is gaining more popularity
The 3rd INSIS Forum took place on 17th and 18th of June 2009 in Estoril, Portugal. Again this year, regardless of the world financial crisis, FADATA managed to bring together considerable amount of attendees, interested in the latest INSIS developments, the future plans of the company, as well as the latest trends and business development scenarios in the insurance business.
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by, 9.07.2009

Ukraine: The introduction of unique standard for insurance contracts is postponed
State Commission for the Regulation of the Ukrainian Financial Market postponed the introduction the unique standards for insurance contract, initially scheduled for the beginning of June 2009. The Commission didn't succeed to finish development and implementation of these standards due to a conflict between Authorities and insurance companies.
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by, 3.07.2009

Emergent market growth slowed but remained solid
In the emerging markets, growth remained solid at 7.1% in 2008, although it was below the long-term trend of 8.7%, according to SWISS Re report, SIGMA. Premium growth was led affected in the emerging markets because the global economic downturn initially had a large impact in the industrialized countries. The deceleration was most pronounced in Central and Eastern Europe, which is more directly tied to developments in Western Europe, the report says.
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by, 9.07.2009

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10,000 people want to enter the "First Home" program
Over 10,000 Romanians demanded information from banks for the acquisitions of a home through the "First Home" program, according to Prime Minister Emil BOC, who signed yesterday the first contract of this program.
The number of people who looked for information on this program in less than 30 days represents some 25 percent of the number of mortgages granted by banks on the Romanian market in 2008.
According to the President of the National Fund for Guaranteeing Loans for Small and Medium-Sized Enterprises, Aurel SARAMET, the current data indicates that over 25 percent of the requests will be filed for the acquisition of new housing units. At present, there are four banks that can grant loans through this program - BRD SocGen, Bank Leumi, BANCA Romaneasca, and ALPHA Bank.
This week, the conventions for the guarantee of loans will be signed will all selected lenders. The government received offers from 20 lenders for loans worth a total of EUR 1.4 billion, above the maximum guarantee ceiling set by the government at EUR 1 billion. The "First Home" program is part of the Government's anti-crisis program, as is meant to unblock the real estate market.
People who apply for the "First Home" program will make a down payment of five percent for a home worth a maximum EUR 60,000 or of EUR 3,000 plus the difference resulting from the acquisition price, and the interest rate will be EURIBOR (Euro Interbank Offered Rate) on three months plus a maximum four percent per year, on euro loans, and ROBOR (the interest rate on loans on the Romanian interbank market) plus a maximum 2.5 percentage points.
Prime Minister Emil BOC reminded that the system of guaranteeing bank loans by the state will be expanded to the agriculture sector and the local authorities.
by, 9.07.2009

Romania's largest banks in 2008
VOLKSBANK, BANCA Transilvania, ALPHA Bank, and BANCPOST are the lenders which registered the most spectacular moves in 2008 among top largest banks in the local system in terms of assets.
According to the annual report of the National Bank of Romania (BNR), VOLKSBANK became the third-largest player in the system, with total assets worth EUR 5.8 billion, even though this company ranked eighth on this list in 2007. Alpha Bank is now in fifth place from seventh, while BANCA Transilvania and BANCPOST each dropped three places.
"We fell in 2008 because we slowed the lending activity in the third quarter of the year. However, I understand that at the end of the first quarter of 2009, BANCA Transilvania ranks fifth among top banks in terms of assets, so the 2008 decline is inconclusive. These fluctuations appear all the time. What is important is how we are facing this crisis. Our priority is the end of 2009 results, and not the position among this top," BANCA Transilvania's General Manager, Robert REKKERS, told Business Standard.
Small banks, which entered the market recently, registered the most significant increases in terms of assets. Thus, MILLENNIUM Bank ended 2008 with total assets worth EUR 326 million, up 279 percent year-on-year.
BANCA Comerciala Romana, the largest player in the local banking system, lost market share to 20.3 percent in 2008 from 24 percent the year before. In 2007, the assets of the lender controlled by the Austrian ERSTE Group rose a mere seven percent, to EUR 17.4 billion.
by, 1.07.2009

Romania, attractive for investors despite skilled labor shortage
Romania can improve its coefficient for attracting foreign direct investments, the mobility and relative openness of its labor market, but will maintain its skilled labor shortage and the poor quality of the environment to nurture talent and compulsory education, universities, and business schools, according to a survey by the HEIDRICK and Struggles executive search company in Central and Eastern Europe.
Romania ranks 11th out of 13 countries in the region in terms of Talent Index, surpassing only Croatia and Serbia. Romania holds the same position in terms of the education system, the quality of the environment to nurture talents, and proclivity to attracting them.
"The performance of Romania repeats a common finding in previous versions of the Talent Index - a country will struggle to attract talent if it does not develop and improve its own education systems, from primary to tertiary level. For example, by 2012 Romania has raised its score in the 'Mobility and relative openness of the labor market' and performs well in the 'Stock and flow of foreign direct investment' but is undermined by its performance in the education measure," the Country Head HEIDRICK and Struggles Romania&Bulgaria, Loredana SERFEZI, told Business Standard.
However, Romania has a strong demographic advantage and registers performances in terms of mobility and relative openness of the labor market, ranking fifth among 13 countries in the region. Romania ranks fifth also in terms of foreign direct investments, climbing two places since it joined the European Union.
by, 6.07.2009

JD Power study: Dacia surpasses Renault and Ford in terms of vehicle owner satisfaction
The DACIA brand finds itself listed midway in an index ranking on vehicle ownership satisfaction, carried out by the JD Power consultancy company, in partnership with the German Auto Test magazine, ahead of brands such as RENAULT, SEAT, NISSAN, CITROEN, HYUNDAI, and FORD. The domestic car brand, which excels in terms of low ownership and insurance costs, obtained a total of 810 points, ranking it 13th of 27 in the JD Power index ranking.
The most important factor in setting the score was vehicle appeal (32 percent), which includes performance, design, and comfort. Other criteria were vehicle quality and reliability (26 percent), ownership costs (22 percent), including fuel consumption, insurance, and service/repair costs; and dealer service satisfaction (20 percent).
Clients in Germany, Dacia's main market, were more satisfied with the Romanian brand than with VOLKSWAGEN, FIAT, and OPEL. The study indicates that, beyond choice subjectivity, the most satisfied people do not necessarily own expensive cars.
Daihatsu, a brand of the Toyota group, that obtained a total 843 points, ranked first in the German Vehicle Ownership Satisfaction Study, followed by ALFA Romeo, MERCEDES-BENZ, BMW, AUDI, and TOYOTA.
The study considered 27 brands and 113 models, and is based on more than 16,200 online interviews with German vehicle owners after an average of two years of ownership.
by, 26.06.2009

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Claims Management and Processing in Insurance
September, 7th-8th, 2009
Amsterdam, The Netherlands
Organizer: Marcus Evans
Media Partner: PRIMM Magazine - Insurance & Pensions

Les Rendez-Vous de Septembre
September, 4th-10th, 2009
Monte Carlo, Monaco
Organizer: RVS
Media Partner: PRIMM Magazine - Insurance & Pensions

9th International Yalta Finance Forum
September, 14th-18th, 2009
Yalta, Ucraina
Organizer: The League of Insurance Organizations of Ukraine
Media Partner: PRIMM Magazine - Insurance & Pensions

Health 2009
October 8th & 9th, 2009
Berlin, Germany
Organizer: UNIGLOBAL Research
Media Partner: PRIMM Magazine - Insurance & Pensions

31st Baden-Baden Meeting 2009
October 25th-29th, 2009
Baden-Baden, Germany

5th International Conference "World Views for LIFE INSURANCE in Eastern Europe, CIS and Asia"
November 17th-18th, 2009
Hotel Baltschug Kempinski, Moscow
Organizer: Russian Polis Information Group
Media Partner: PRIMM Magazine - Insurance & Pensions

November Reinsurance Meetings
November 24th-25th, 2009
Holiday Inn Moscow Sokolniki Hotel
Organizer: All-Russian Insurance Association (ARIA)
Coorganizer: Business Character Group
Media Partner: PRIMM Magazine - Insurance & Pensions

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XPRIMM Newsletters


President: Sergiu COSTACHE CEO: Adriana PANCIU
Business Development Director: Alexandru D. CIUNCAN

Editor in Chief: Mihaela CIRCU
Scientific Advisor: Daniela GHETU
International Column Coordinator: Andreea IONETE
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