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XPRIMM News No. 175, March 24th, 2011


XPRIMM News - The Romanian Insurance Market Newsletter
No. 175, March 24th, 2011

2011: Focus on stability!

2010 ended with a decline. But another decrease was essential for the market, one that was registered in premiere for the last years by the Romanian profile industry: reduced claims on the general insurance segment.

Last year brought us two premieres: ASTRA Asigurari has become the market leader since the first quarter, maintaining its position until the end of 2010. Another premiere is the entrance of one more specialized life insurance company in TOP 10 most important Romanian insurers: BCR Asigurari de Viata.

Looking back at 2010, it seems that the figures become less important when a minus sign in front. Looking ahead at 2011, the optimistic scenarios announcing decreases of only 5% or the pessimistic ones, indicating 15% decreases, fall in the background, making room for another scenario, where the key word is stability!

In conclusion, the year 2011 announces itself as being the toughest one for the insurance market and, under these circumstances, the absolutely necessary scenario for the overall market must include the idea of stability at any cost. Stability with the price of losing customers, and therefore losing market share, of falling down in the hyerarchies, which must be viewed differently when the stakes change.

Credit Europe Asigurari
I think the biggest challenge right now is that all actors in the insurance market shift focus from price to quality. Whatever the field, strategies focused on price did not have long term succes.

Victor SRAER
Managing Partner, OTTO Broker

XPRIMM: What are the main challenges that the insurance brokerage market has to face in 2011? How did the perception of clients regarding the insurance consultant's role change in the last year?
Victor SRAER:
I think the biggest challenge right now is that all actors in the insurance market shift focus from price to quality. Whatever the field, strategies focused on price did not have long term succes.
Another challenge is to make as many customers as possible aware of the fact that insurance is a form of financial protection, and not some pieces of paper that need to be as cheap as possible. It is important that people realize they need quality insurance. Currently, many customers perceive added value only in the sense of obtaining a lower price and they disregard the arguments about the coverage that a policy offers.
In this context, insurance consultants become much more important. The insurance broker can prove his value only if he understands very well the needs of the client and finds the right solutions for him. In this period of time, we must be creative and fiind insurance solutions under the circumstances in which the population's incomes are decreasing. Even when resources are limited, the broker must and can come up with effective solutions, in accordance with the clients incomes and that cover the most important risks.


trofeu_primm_micAnd the winners are...
Insurance Market Awards Gala (GPPA), granted by PRIMM - Insurance & Pensions Magazine, awarded the best Romanian insurance companies and their local networks, during a ceremony that took place on the 21st of March, at Hotel RADISSON.
Over 300 leaders and specialists in insurance and other related fields were present at the 11th edition of this event.
THE GRAND AWARDS, granted to the insurance companies at the ceremony, were:
- ASTRA Asigurari - Grand Award - Insurance Company of the Year;
- ALLIANZ-TIRIAC Asigurari - Company of the Year - General Insurance;
- BCR Asigurari de Viata - Company of the Year - Life Insurance.

seminar_csa_martie2011QIS 5 results show the difficulties posed by Solvency II
Results of the Quantitative Impact Study (QIS 5), forerunner of the new Solvency II regime, were debated on the 16th of March, 2011, during a seminar organized by the Insurance Supervisory Commission, at J.W. Marriott Hotel.
Those present have drawn attention to the fact that in Romania, a market where small companies activate, in comparison with those in other European countries, insurers will have to take very quick and effective measures to adapt to new conditions.

profil_1_2011Market ends the year with a new leader and two life companies in TOP 10
Last year ended with an expected evolution. The decreasing trend has been maintained in the industry since the first quarter and was confirmed in each of the following quarters and, in this context, each of the main indicators of the insurance industry finds its correspondent in one from the previous years.
EUR 1,989 million is the value of gross written premiums of Romanian insurers of last year. EUR 11 million below the psychological threshold of the EUR 2 billion and over 100 less than the figure recorded at the end of 2009. So, nothing so spectacular happened for the insurance market in Q4, as to cause a significant change of the 5% dynamics anticipated by INSURANCE Profile after the first 9 months of last year.

dreamstime8End of crisis? The brokerage market reached EUR 800 million
Insurance brokerage market ended the year 2010, according to INSURANCE Profile estimates, with a total volume of mediated premiums of EUR 800 million, increasing by over 5 percentage points compared to the 2009 result published in the Annual Report on the insurance market, issued by the Insurance Supervisory Commission.

angela_toncescu_15The market share of mediations is approaching 40%
In 2010, the share of premiums mediated by brokerage companies in total market increased by two percentage points, to 38.2%, amid a decline of only 0.5% of mediations, to RON 3.2 billion, compared with the 5.7% reduction of the insurance market. Preliminary figures for 2010 regarding the insurance brokerage market were released by the Insurance Supervisory Commission on the 22nd of March, 2011, during the 6th edition of the National Conference of Insurance Brokers in Romania, organized by UNSICAR.
"In 2010, compared to the previous year, the volume of premiums mediated by brokers fell insignificantly, by only 0.5%. This percentage is much lower than the 5.7% decrease of insurers underwritings, which shows that brokers have managed, through sustained efforts, not to be affected by the economic crisis. Moreover, if underwritings had not decreased in 2010 by 5.7%, the degree of mediation by brokers would have remained at 2009 level", said Angela TONCESCU, President of ISC, during the event.

p_5333By the end of the year, we will have a proposal of the new IMD and there will be a lot of work to be done on the brokerage market
A newly debated topic at the sixth edition of the National Insurance Brokerage Conference, organized on March the 22nd, 2011, by UNSICAR, was represented by the changes for which a lot of work has been done for some time, regarding the Insurance Mediation Directive (IMD1). "There will follow an IMD2, that will modify the working system of insurance brokers", stated Bogdan ANDRIESCU, President of the Romanian professional association of insurance brokers.

ing3ING Group closes down the regional service center in Cluj, inaugurated six months ago
ING announced that it decided to shut down the regional service center in Cluj-Napoca, amid economic and legislative changes in recent years, that have considerably reduced its medium-term planned efficiency. Inaugurated in autumn of 2010 as part of a project to improve the efficiency of life insurance activity, ING Service Center Europe promised to generate 1,000 jobs by 2013.

generali4GENERALI and ARDAF shareholders have approved merger plans
GENERALI Asigurari and ARDAF shareholders approved, during the Extraordinary General Meeting held on the 21st March, the intention of both companies owned by GENERALI Group in Romania to merge. Management teams of GENERALI Asigurari and ARDAF have received from shareholders the empowerment to start merger plans, in accordance with all local regulations.

How prepared are the Romanian authorities and companies for a crisis like the one in Japan?
The requirements for Romanian companies and local authorities regarding the reaction programs in case of natural disasters are lower then those of the countries from Western Europe, North America or Japan.
Two solutions for revitalizing the health insurance market
The health reform, postponed for years, is more necessary than ever, taking into account that the sums appropriated yearly by the Executive for health are insufficient for the the population's needs.
500,000 fatalities in the event of an earthquake of 7 degrees on Richter scale in the Capital
If an earthquake of over 7 degrees on the Richter scale was to happen, the most pessimistic scenario shows that Bucharest could register over 500,000 fatalities and the collapse of the 113 buildings from the class I of seismic risk, according to Sorin OPRESCU, Mayor of Bucharest.
Life, health, accidents and household insurance will increase slightly in 2011
Although the Romanian mentality implies that we are "consumers of mandatory protection" and, therefore, mandatory insurance is the main sales line, Alexandru APOSTOL, General Manager, MAXYGO Broker, expects that life, health, accidents and household insurance will increase slightly in 2011.
Only 0.5% of the students use savings products
Only 7% of the students have money saved and only 0.5% of them own life insurance with a pension or investment plan, according to the Financial Markets Data System research, conducted by GfK Romania, which uses national level data from January - November 2010.
EUREKO Asigurari launches the first health insurance for children on the market
EUREKO Asigurari launched "Junior", a health insurance for children and teenagers aged between 12 months and 18 years, designed to cover their specific needs in terms of access to quality healthcare services.
ARDAF - back in the black in 2010, even though decreasing business
ARDAF registered, in 2010, a profit of RON 266.600, after the RON 90.5 million loss registered in 2009, although underwritings have decreased by 33.6% last year, to RON 217.4 million, according to the data published by the insurer. Non-life generated almost all of the total volume of gross written premiums (RON 217.11 million), considering that the life insurance portfolio was transferred to GENERALI during last year.
AVIVA Romania has relied on business efficiency and on quality of services, in 2010
The gross written premiums of AVIVA Romania registered, in 2010, a 12% decrease compared to last year, due to a decrease of the bancassurance segment and to reduced possibilities of the population to committing to long-term financial plans, in this difficult period, according to the General Manager of the insurer, Mihai POPESCU.
moscova6All-Russian Reinsurance Conference has come to its 15th edition
All-Russian Insurers Association, with the support of the business center "DELOVOY Format", proudly opened, on March the 24th, XV All-Russian Reinsurance Conference to be held on March 24th-25th in Moscow. So, this annual Conference has traditionally become a major social event which brings together Russian reinsures and their foreign colleagues for the 15th time already.

International Leasing Forum in Uzbekistan - at its third edition
During April 28th - April 30th, 2011, the third edition of the International Leasing Forum in Tashkent, Uzbekistan, will take place. It will reunite leaders in the insurance and leasing field from Central Asia, CIS countries and Eastern and Central Europe. PRIMM Insurance & Pensions Magazine is supporting this event as Media Partner.
ROSGOSSTRAKH Group - 120% business increase in 2010
ROSGOSSTRAKH Group Russia has underwritten, in 2010, gross premiums worth EUR 2.06 billion, up 120% compared to the level achieved in 2009, while the insurer paid claims amounting to EUR 1.1 billion. On insurance classes, the property segment reached EUR 311.70 million (up by 118%).
Bulgaria: CIBank and DZI Insurance are adopting the "Country team" model of European management
On March the 10th 2011, CIBank and DZI, both members of the KBC Group, formed a council of common management "Country team" type. An identical model already exists in the Czech Republic, Poland, Hungary and Slovakia, following the whole KBC group strategy of consistency at the level of the management structures.
EULER Hermes is expanding in Turkey
Credit insurer EULER Hermes obtained the license to operate on the Turkish market, on which it has been activating since 2005, through the mother-group ALLIANZ. This approach marks, the statement said, "a new step in its development as a global leader in credit insurance, which now offers solutions for Turkish entities and companies that are exporting in Turkey".
bani57Strongest RON in last 11 months
On the 22nd of March, 2011, the National Bank of Romania (BNR) posted a reference exchange rate of RON 4.1685/EUR and of RON 2.9428/USD. The BNR exchange rate dropped by RON 0.0335 to RON 2.9090/USD. It was the lowest exchange rate since the one reported on January 25, 2010 (RON 2.9079/USD).
In the first hour of the interbank trading session on the 22nd of March, the national currency's quotation had a downward trend, the exchange rate dropping to a low of RON 4.1480/EUR, a development that was in line with those seen at regional level.

10 pc risk premium makes Romania attractive for investors
Romania's risk premium dropped by approximately 10 percent to 267 base points since the start of the year, the lowest level in the last 9 months, informs, quoting REUTERS. Analysts point to an improvement in Romania's economy as the cause behind this development. Romania's risk premium continues to drop, almost in tandem with the RON's appreciation trend.
High level support for FORD's investments in Romania
President Traian BASESCU said, on the 22nd of March, at the Cotroceni Palace, after meeting Stephen ODELL, Vice President of FORD Motor Company and CEO of FORD Europe, that he is convinced that the group's investment at Craiova will be a success, adding that the DACIA project proves Romania is able to support such an investment, informs.
Thermal springs to the North of Bucharest, an untapped treasure
Bucharest is sitting on top of a valuable resource that was unfortunately forgotten by the authorities. Thus, the underground to the north of Bucharest has thermal waters with temperatures ranging from 40 to 80 degrees Celsius, waters that can be easily used to heat homes, informs. The method was successfully applied in Otopeni, in the vicinity of Bucharest.
HIDROELECTRICA sees pretax profit of RON 85 million
Romania's biggest electricity producer provides, in its budget for this year, a pretax profit of RON 85 million. HIDROELECTRICA estimates incomes of RON 3.06 billion, against expenses of RON 2.98 billion, according to the draft budget unveiled by the Ministry of Economy, the majority shareholder of the company, reports.

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
Senior Editors: Vlad PANCIU, Oleg DORONCEANU
Editors: Vlad BOLDIJAR, Oana RADU, Mihai CRACEA, Andreea STATE
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Accounts Manager: Georgiana OPREA
IT Department: Octavian GRIGOR, Dorin PALADE, Cosmin ARMASESCU



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