No. 148, January 28th, 2010
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XPRIMM
News - THE ROMANIAN INSURANCE MARKET NEWSLETTER No. 148, January 28th, 2010 Click here to subscribe! Click here to unsubscribe! |
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(Dr. Jack PENN) Used to double-digit growth rates, in an expanding economy, estimates from previous years were much easier to de done. We are talking about a field, insurance, synergistically linked to all other branches of the economy. In these conditions, when Romania goes down, it is very hard for insurance to have another direction. Moreover, a hypothetical - and unlikely - economic growth in the second half of the year would be felt in the insurance market in the beginning of 2011, at the earliest. We wish we were wrong, but we cannot talk about economic growth this year other than hypothetically, in the conditions in which the only measure against the crisis that we witness is: stretched hand to the IMF! The past has brought, for the market, a reduction of the business associated to leasing and loans. Hope seems to come from the activity of PAID this year. Is it enough to compensate the losses? Very unlikely. Even with a good insurance coverage. We also have to deal with a different effect on the market level: the deceitful joy of balancing the portfolio. There are voices that see as positive the "cleaning" of the motor portfolio, its becoming efficient and other such positive effects. Right! However, the joy should be moderate! Not just because we speak of a perverse "balancing" of the portfolio, but because anyway, in the conditions in which the market falls... the claims remain, at least for now, at a high level! Moreover, reducing the market share of motor insurance should not have been the consequence of a strong negative external impact. The share of the motor classes in the market should have decreased, in a fortunate way, once with the intensive development of life insurance, health insurance, liability or property insurance... Does it matter so much if the market wins some percentage points or loses some at the end of the year? It is enough just to observe how the speech of all the voices from the market has changed: now we talk about a few percentage points increase, in the happiest case... some time ago, we were analyzing what the next psychological threshold reached will be. Noticing this change, that exceeds the speech and it is anchored in the reality, shows us that we are in a difficult year... for everyone. by alexandru.ciuncan@mxp.ro |
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CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS |
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Ionel DIMA: From my point of view, the local insurance industry has evolved unexpectedly bad. Remember that in spring, I stated at the CNA - National Motor Insurance Conference, that if when I climb the hill the car is not moving, I must accelerate and shift the gear. Yet, unfortunately, I find that far too many people have set foot on the brake. The explanation that it is crisis and we are not selling does not work in motor insurance. Eventually, the MTPL policy is mandatory, a citizen has no choice but to pay, and then I just do not understand why the market fell. True, leasing is stagnating, the transporters have pulled over, but this sould be seen in the claims dynamics, also. But I see that the market hardly increased at all during September 2008 - September 2009, while claims doubled. This is because Romanian insurers, whom I have dared to ask to forget about the market share and to pay attention to the cuantum of the premium and of the products, have taken this step too modestly or not decided enough. XPRIMM: What happened with the claims? I.D.: They have increased, firstly and primarily because in what motor claims are concerned, the price is increasing every day, from the price of the car to the price of the spare parts. Then, in times of crisis, there is an exacerbation of the phenomenon of fraud. From the files that we work on every day, we get the feeling that this phenomenon has increased over 2009. In 2008, we appreciated the attempts of fraud in the motor field to be less than 15%; in 2009, the percentage increased compared to my previous assessments with at least 5%; fortunately, these attempts do not always succeed, especially because almost all companies have anti-fraud departments. It is true though that there is a reverse of the coin, because it comes to the situation in which companies forget that the damaged part is a client and they treat him as a potential thief. XPRIMM: Can we can draw a line and analyze what the introduction of the amicable report, from the 1st of July 2009, meant? I.D.: It is premature to talk of statistics, but one thing is certain: for the damaged parts, for those involved in a road event, the amicable report has proven to be a big gain of time - the damaged parts come and in a quarter of an hour they have solved the problem. Is it true that for insurers it is an inconvenient the fact that they stay here 20-30 minutes, but at the police they were staying for hours. Here, most of them need assistance at every word they write, and this takes time. But the idea is for the victim to win, for the damaged part to win, because from there the insurance industry draws its whole essence, from the fulfillment of the contract. When risk occurs, we must do our duty and pay the claims. Therefore, I appreciate the amicable report as a gain for those involved in a road event, primarily in terms of time, then in terms of the modality of recovery of the loss. If for me, who I am working with foreign insurers, the solving time is reduced (and I'm "tied", because I must receive confirmation from abroad), then it is clear that between two Romanians the claims file can be solved extremely fast, which is good for the damaged part. XPRIMM: Do you think the vigilance of the Police decreased following the implementation of the amicable report? I.D.: When the two people involved have agreed on guilt, they do not go to the Police, but come directly to us. Logically, however, the Police would not have a reason to be either tougher, or more tolerant than before. They just follow the law, which is what they did before, too. XPRIMM: Do you think the market was ready for the introduction of the bonus-malus system? How will it be perceived by customers? I.D.: Unfortunately, we are not ready. We, the Romanians, have never proven otherwise by our actions but the fact that we have a fantastic vigilance. We have prepared in the sense that we are talking for 10 years of bonus-malus, but I bet if we asked the insurers and the clients, now no one knows exactly what and how to do. January 1, 2010 also marks the introduction of the mandatory electronic issuance of MTPL policies, moment for which we are really not ready. I have seen, for example, a large insurance company that on December 4 didn't have completed yet the software that allowed electronic issuance. It is clear, therefore, that the market is not ready. XPRIMM: What are the main reasons why customers (society in general) are reluctant to hear about insurance and insurers? I.D.: The answer to this question can be found in the course I teach at the Insurance Institute, in the "Fraud and deceit" chapter. There are, in the '70s, some studies of Austrian sociologists on the relationship between insurers and the market. The perception is that insurers, hidden somewhere in those vast palaces of crystal, have no sympathy for the people that pass their gates, and do not know anything but to collect, and when it comes to paying, they begin to hide, cut claims, delay; or those problems are exacerbated in our case. There are unwritten theories in the Romanian insurers market, which say: "Of 100 rejected claims, only 10 have the money necessary to resort to a lawyer, and of these only 5 actually open a lawsuit". It is very hard for me to tell you about this theory, but unfortunately it seems that for a long time the insurance market has functioned based on this principle. Let's take the example of subrogations. Look around and see how many subrogations of an insurer against another are solved amicably and how many go to court. Unfortunately, most of them end up in court. In a country where justice has a very difficult road, in this country we have lawsuits over lawsuits in the insurance field. Abroad, it is totally different - for example, in Austria, the percentage of lawsuits, in terms of claims, is less than 1%. The active loss adjustment theory is bearing fruit and it is far from the practice in our country. Yet, the best court order will always be worse than the worst amicable agreement, including the insurers' case. That's the Romanian market at the end of the year 2009. XPRIMM: How is the Romanian insurance market seen by AVUS Group? I.D.: At the end of the year 2009, it can only be part of the international market, which has degraded a lot. We see that the source of which insurance was born does not exist anymore and insurance has moved completely its center of gravity: 1000 or 100 years ago we were insuring ourselves against natural disasters, and now we buy insurance against man-caused events: terrorism, accidents etc. In the same way, the primary role of insurance has changed: covering the damage. Now we talk more and more about investment schemes, funds, pillars, financial developments, global financial solutions. At the level of AVUS Group and of its management's behavior, we are not interested in the insurance market from one country. We still maintain focus on what we have been doing for 50 years: loss adjustment in insurance. And, from this perspective, the Romanian market is particularly important for the AVUS Group. It can only be very important a market with 22 million inhabitants, of the size of Romania and, in terms of a motor insurance loss adjuster, with such bad streets... XPRIMM: How did the crisis affect AVUS Group? I.D.: All western markets knew, since the summer of 2008, that a crisis of such proportions is coming, and we budgeted very cautiously, therefore we will be in a slightly paradoxical situation to end the current year over budget. In our field, unfortunately for us, the figures come at a period higher than in other businesses, in the sense that I have budgeted now 2010 even more cautiously than 2009, because I guess in our field only in 2010 the impact of the crisis will be felt in figures. In our field of activity, the figures of 2009 take upon them a lot of what happened in 2008. This means that the decrease in the number of accidents and, thus, in the number of claims files, from 2009 will reflect in 2010. But we are ready, all budgets have been approved for one month and all colleagues know exactly what to do next. XPRIMM: Thank you! |
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CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS |
| TOP PRESS |
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The loss on the MTPL segment amounted to EUR 150 million in 2009 Mandatory insurance will lead to a 5% increase of the market The "malus" applied to only 5% of the MTPL insured AXA: The acquisition of OMNIASIG Life - an excellent development
opportunity AIG Life becomes ALICO Asigurari Romania Exclusive: Marius BULUGEA, the new President of PAID Dan CONSTANTINESCU, ISC: "Life insurance will stagnate in 2010" Florina VIZINTEANU, BCR Asigurari de Viata: "We budgeted a growth
for 2010" Cornelia COMAN, ING: "The volume of new-business will increase
by 10%" EUREKO Romania aims to maintain the evolution from 2009 Silvia SIRB, AEGON: "In 2010, the optimistic variant is that of
conservation of the results" ASTRA Asigurari increased by almost 400% on the household insurance
segment Business of EUR 615 million in 2009 for VIG Changes in the management of CERTASIG Mediations of RON 200 million for MARSH, in 2009 GENERALI Romania increased by 30% on the household insurance segment Shareholders are injecting another RON 51 million to the capital
of ARDAF VIG increases the capital of BCR Asigurari |
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CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS |
| CEE, RUSSIA&CIS |
| Tashkent International Insurance Forum On April 8-9, 2010, SAIPRO holds Annual International Insurance Forum in the city of Tashkent, Republic of Uzbekistan. Click here to read more! Russian Insurance Summit 2010 On May 20-23, 2010, the Russian Association of Insurers holds the VIII Annual International Insurance Summit in the city of Vladimir, club VELES. Within the framework of the Summit there will be discussions on the present situation and problems of the national insurance market in the context of international insurance development. The main theme of the Summit will be "Insurance into the Second Decade of the XXI Century". Click here to read more! All-Russia Conference on Reinsurance has come to its 14th edition All-Russian Union of Insurers, with the support of the business center "DELOVOY Format", proudly presents their next conference "Reinsurance Efficiency: Lessons of Crisis", to take place in Moscow, National Hotel, on 25-26 March 2010. Click here to read more! By summer, new law on additional mandatory health insurance in Bulgaria will be passed The deficiency in the health care financing in Bulgaria is currently around EUR 1.5 billion. The modernization of the system and the deeper penetration of the private health insurance (PHI) funds are to set about a comprehensive reorganization of the sector, which is expected to bring positive results for both companies and patients. Click here to read more! by oana.radu@mxp.ro, 28.01.2010 VIENNA Insurance Group in 2009 - preliminary data Based on preliminary data, VIENNA Insurance Group reported a total of written premiums, on an unconsolidated basis, of EUR 8.22 billion. This corresponds to an increase of 1.2 percent. In the non-life insurance segment, Group premiums of EUR 4.75 billion were achieved (minus 0.7 percent). With premiums amounting to EUR 3.48 billion, the Group records a plus of 3.9 percent in the life insurance segment. Click here to read more! by oana.radu@mxp.ro, 28.01.2010 |
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CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS |
| FINANCIAL NEWS |
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WB: Romania is making progress Bank deposits up 13% in 2009 BNR lends over RON 6 billion to banks |
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CEE, RUSSIA&CIS | FINANCIAL NEWS | EVENTS |
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