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XPRIMM News No. 178, May 5th, 2011


XPRIMM News - The Romanian Insurance Market Newsletter
No. 178, May 5th, 2011
FIAR 2011

Can we make healthy insurance lemonade out of a vicious health system lemon?

Health insurance represents, for more than 10 years, some kind of "fata morgana" of the Romanian profile market. Year after year, we talk about the impressive potential of this segment, we are elaborating development strategies, we are designing products... However, results are still awaited... And discussions are starting again and again each time when the political factor changes.

Defining the basic package, the co-payment, deductibilities - are only a few of the solutions to revive the system that have been circulating. All have remained, up to this moment, just projects.

However, it seems that things have slowly begun to move... Thus, we were recently announcing the signing of one of the largest contracts in the health insurance market: SIGNAL Iduna will offer health insurance for 9,000 employees of TAKATA Petri, for a premium rising to EUR 6 million.

This is a sign that the economy beginning to grow again will also have positive effects on the health insurance system...

Until that time, however, insurers are setting-up development strategies, they are designing products... and are still waiting for clarification of the legal framework.

To see what can be done so that health insurance does not remain the "fata morgana" of the market, we invite you on Tuesday, May 24th, to Life and Health Insurance Day within this year's FIAR - the International Insurance-Reinsurance Forum.

Click here for details!

The European insurance sector was and still is very positive about Solvency II. We believe that it will really change not just how companies operate but also how a supervisor operates, regulation should react ultimately.

Michaela KOLLER
General Director CEA - European Insurance and Reinsurance Federation

XPRIMM: First of all, what is the purpose of your visit in Romania?
Michaela KOLLER:
The purpose of my visit here is to get a deeper insight into the Romanian market. Certainly for our work at European level, it is extremely important to have a clear insight into how the markets react on any potential general regulatory development and Romania is a very important market. We have seen a lot of positive development coming from this market and of course, we are in permanent contact with our members, because UNSAR is represented in many committees, but it is best to be in place to get a feeling from the market. I had a meeting with some members of the board of UNSAR, which was very instructive and gave me also a lot of feedback on where the problems are, on which issues we need to work at European level, what we can do to advance things in a positive direction.

XPRIMM: The European insurance market passed a very difficult period lately. Would you say that this crisis is it over or do we still have to work for that?
M. K.:
First let me state, that it wasn’t the insurance segment that triggered the crisis. If anything, the insurance segment played a stabilizing role in the crisis. We have really stayed with our investment and we have a long term perspective as an industry. What we see now, is that we are affected by reactions had by regulators on the financial crisis.


Credit Europe Asigurari
p_5692At European level, the attitude towards Solvency II is a positive one
We have positive signals, especially from the European Commission, that problematic segments were identified and it will focus on them. Therefore, the insurance industry is offering all its support, in order to obtain a proper regulatory regime in the long term. With these issues resolved, the market impact is more likely to be positive, rather than a negative one, because this system represents a very good chance to create a healthy business environment, said Michaela KOLLER, Director General of CEA, Federation of European Insurers and Reinsurers.

p_5693Solvency II may indirectly influence premiums value
"Solvency II will not translate into a price increase, although it will definitely have an effect. Thus, the results registered during QIS 5 exercise, compared to QIS 4, show that, for many business lines, more capital will be required. The capital has a cost and its cost can only be financed from premiums. There will be a limitation of growth, not an avoidance, since price increase is inevitable", said Cristian CONSTANTINESCU, President of UNSAR.

marie_kovarova3GENERALI: Romania, the country with the highest medium and long term potential
Even though the forecast for 2011 sees a one digit decrease and a slight increase for 2012 - 2015, GENERALI representatives appreciate that, on the long term, the Romanian insurance market will keep its development potential.
"This is the opinion of international financial analysts, whom consider Romania, along with Poland, a country with extreme development potential on long and medium term. If we consider the present insurance penetration rate in Romania, we come to see room for improvement and development. Of course, in order for such to happen, we need a favorable economic context", Marie KOVAROVA, General Manager of GENERALI Romania and Responsible for GENERALI's Group Operations in Romania, has declared for XPRIMM Newsletters.

ionel_dima_1Ionel DIMA: Our current development level does not yet allow us to outsource claims
As a niche area in Romania, claims handling is still at a relatively reduced level. Internationally speaking, claims handling, which implies claims outsourcing has a long history and has now become a usual practice. "We have not yet reached a level that allows us to outsource: in Great Britain, that level is close to 70% of the total activities in the insurance field; in Western Europe it is at approximately 30%, with an increasingly strong tendency", stated Ionel DIMA, Vice President, AVUS Group.
Claims handling is almost considered a necessity for most insurance companies, once they start operating at an international level. Ongoing from motor insurance or marine insurance and all the way to life insurance, this practice is now necessary because insurers do not own physical ways to manage or handle certain cases outside the countries in which they activate.

james_grindley2CERTASIG's non-motor hull portfolio strategy is paying off
CERTASIG continues portfolio diversification through products with a low claims rate, thus following profitability improvement, trend that also manifested through the strategically positioned branches in Constanta, Timisoara and Cluj. "We are glad to confirm an excellent start in terms of underwritings volume for the first quarter of 2011, especially February and March which recorded a significant growth. Brokers still count for 80% of the underwritten premiums, which maintains our trust in this collaboration's success", declared James GRINDLEY, General Manager, CERTASIG, for XPRIMM Newsletters.
Regarding the motor hull portfolio, the underwritten volume shrank, mainly due to applying a new strategy, namely the introduction of a less used deductible application system.

alin_bucsa3EUROINS targets portfolio balancing and compensation services improvement for 2011
Bringing a balance in the structure of the portfolio is the strategic measure through which EUROINS Romania will counteract the negative effects brought by the motor segment evolution. Iulius Alin BUCSA, General Manager, EUROINS Romania stated for XPRIMM Newsletters that "spectacular growth in the property, liabilities and travel assistance lines make us believe that we are on the right path". For 2011, the company is also aiming for improvement in all service categories available to all clients, especially compensation related ones.
As for the insurance market as a whole, the EUROINS leader estimates profitability impairment, in the context of dramatic rates reduction for two of the main insurance market engines - Motor Hull and MTPL.

anca_babaneataPLATINUM Asigurari is counting on specific tailor-made products
The business lines targeted by PLATINUM Asigurari - property insurance and liability - have improved their stake in the portfolio by almost 200% since the beginning of the year. The company shall maintain this pace as business along 2011 are expected to come mainly from property insurance, warantees, liability and cargo and marine insurance. "For these business lines and not only, we will continue to offer classic insurance products as well as launching, in line with our niche insurer status, specific, tailor-made products", declared Anca BABANEATA, CEO, PLATINUM Asigurari, for XPRIMM Newsletters.

MARSH: No sudden cost increase with insurance
Although the price increase from the first quarter of the current year have limited to risks affected by claims, eroded budgets belonging to insurance and reinsurance companies and the threat represented by the hurricanes are putting pressure on the insurance markets worldwide, according to a recent MARSH report.
SAFETY Broker: In 2010, brokers might reach 40% of the whole insurance market
The insurance brokerage market has lately been gaining from the economic crisis, the role of insurance consultant being more and more important for citizens whom desire was to contract the best insurance product considering the quality - price report.
ING Life launched a new edition of ING Selectis, the single premium unit-linked insurance
ING Asigurari de Viata launched a new edition of the ING Selectis product, completing the range of unit-linked insurance with single premium and 100% protection of the invested capital offered to clients, in which other two ING Selectis products were launched in 2010. The new edition will be available during May 2nd - May 27th, 2011. Like the previous edition, the duration of the product is six years, and the single premium of at least EUR 2,000 is paid at the beginning of the contract.
GaranT - unit-linked life insurance with guaranteed profit, from GENERALI Asigurari
GENERALI Asigurari has announced, on the 27th of April, 2011, the launch of GaranT, a unit-linked insurance which offers, besides the protection component of a life insurance, the guarantee, at the maturity of the policy, of the highest value of the fund unit registered during the contract. Thus, customers are protected from possible negative variations of investment funds, especially near maturity of contracts.
Travel insurance - down by 2 percent
In 2010, according to INSURANCE Profile, on the travel insurance segment, insurers underwrote premiums worth EUR 9.8 million, 2.4% less than in 2009.
Leader on this segment is GENERALI Asigurari which, with the taking over of the RAI Asigurari portfolio, owns a market share of about 31%.
RON 3.8 million profit for GARANTA Asigurari in 2010
The shareholders of GARANTA Asigurari will receive this year dividends of RON 3.6 million correspondent to net profit registered last year, representing 94% of the total value of the 2010 financial result, of RON 3.83 million, according to a report published by the insurer.
REPUBLIC OF MOLDOVA - now available for Russian speakers
On the 27th of April, the Russian language version of the web-portal was launched. This way, all information regarding the insurance markets from the Republic of Moldova and other countries in the region will also be available for Russian speakers.
Since its official launch and until now, became one of the main sources of information for those interested in the evolution of insurance markets in Central and Eastern Europe. Every month, over 5.000 visitors access the portal and their number is expected to increase as a result of the launch of the Russian version.

reclama_euroasigVIDEO: EUROASIG launched a public insurance awareness campaign
EUROASIG Grup has recently launched an awareness campaign entitled "It is good to be insured!". This initiative has as main purpose increasing the population's education regarding insurance products and their benefits.
The action consist in broadcasting three different TV spots for motor, property and life insurance, and also delivering informational materials in the written press and not only.
cernobil125 years since the Chernobyl disaster. Ukraine renew calls for more money for the reactor's shelter
25 years since the disaster in Chernobyl, the threat of a radioactive contamination has not vanished. The huge concrete shelter, 29,000 tones and 110 meters high that covered the damaged nuclear reactor and the 200 tone of radioactive fuel, has started to crack and is currently in danger of collapsing. Hence, the Ukrainian government used the 25th anniversary to renew calls for the international community to raise money up to EUR 1.5 billion for building a new shelter.

moscova6Russian insurers reported gross premiums of EUR 25.8 billion in 2010
Insurance companies in Russia underwrote, in the former year, gross premiums valued EUR 25.8 billion, up by 14.5% in comparison with 2009, according to XPRIMM Special Report publications, based on the data supplied by the local supervisory authority. At the same time, profile societies registered claims worth EUR 19 billion, while in 2009 the figure went to EUR 16.9 billion.

EUR 2 billion for the Ukrainian insurance market in 2010
The volume of gross written premiums for 2010 by the insurance companies in Ukraine totaled EUR 2.13 billion, 12.9% more than in 2009 (EUR 1.78 billion). At the same time, the paid claims volume decreased by 9%, down to EUR 576.9 million (from EUR 585.2 million in 2009), according to the results published in INSURANCE TOP Magazine.
INGO Ukraine - a 4.2 percentage growth for underwritings in the first trimester of 2010
INGO Ukraine totaled EUR 8.73 million in gross underwritten premiums in the first trimester of 2010, on the non life segment, 4.2% higher when comparing to the similar time of the former year. At the same time, solved claims reached EUR 3.32 million, according to the data presented by the insurance company.
bani61OXFORD Economics improved Romania's GDP estimates for 2011 to 1.2 pc
Analysts of the British institute OXFORD Economics modified Romania's gross domestic product (GDP) growth estimate for 2011 from 0.1 pc to 1.2 pc this year, due to optimistic perspectives for exports and industry and following some encouraging signals from the other economic sectors, Mediafax reports.

EXIMBANK activity on behalf of the state rose by 40 pc in 2010
EXIMBANK's activity on behalf of the state rose by nearly 40 pc in 2010, compared to the end of 2009, while the total volume of contracts (loans, guarantees and insurance) is about four times larger than in 2008.
Number of tourists surpasses one million
The number of tourists reported in Q1 of this year is larger than the one reported in the same period last year. Thus, the number of tourists grew by 13.2 percent to 1.12 million during the aforementioned period.
Investors, interested in renewable energy sector
Renewable energy sector deals in Romania is going to see an upward trend, stated Alexandru LUPEA, Partner, Assurance Services, Energy, Utilities and Mining Industry Group Leader with PwC Romania.
ENERGY Rose investing EUR 10 million in wind park
The company ENERGY Rose, owned by Israeli investors, is building its first wind park in Romania, in Casimcea, following a EUR 10 million-investment, Mediafax 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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