Human Resources, where to go?

Romania is now fighting a human resources crisis, reflected worldwide, and the specialists estimate that the scarcity of competent staff will be worsen.
Among the main causes of this occurrence are population's ageing, based on birthrate decrease, and the know-how drain.
Also, according to some recent studies, managers consider that ones organization's profitability depends, first of all, on the intangible assets' quality.

This situation is reflected in the insurance sector too, where at the end of year 2005, were cater for 15,430 persons, 1,427 persons less than at the end of 2004. Human Resources Managers forming this field are also beware of the fact that the number of young persons who want to follow a career in the insurance market is going down, and those who still decide to choose this field are not adequately qualified.
Which are the solutions?

The insurance companies offer generous budgets for intern and extern training activities, the employees being initiated in the basic insurance conceptions, sale methods and persuasion.
Also, the insurance companies allocate generous budgets to the internal and external training activities, the employees being initiated in basic knowledge about insurance, selling techniques and persuasion.

At the initiative of 4 organizations present on the insurance market (UNSAR, UNSICAR, ARA and ADAR) the Romanian Insurance Institute has been created. Its mission is to provide a professional education for the persons that work or intend to operate in this field.
At the same time, very important are also the conferences and seminars on different technical aspects of this activity. These thru the topics approached and the speakers, the interested persons can find the latest news in the insurance field.

The best opportunity in this matter would be the seven conferences within FIAR - The International Insurance-Reinsurance Forum, which will take place between 21st of May - 25th of May. With this occasion interesting topics like the evolution of the international insurance and reinsurance markets, insurance mediation, the IT&C influence in this field, the motor insurance, private pension's market and heath insurance will be debated.


Click here for details!
Click here to see the participants' list!

by mihaela.circu@mxp.ro

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Interview with Mr. Antonio SOUVANNASOUCK,
Managing Partner,
ASIGEST

XPRIMM: At this moment, we already know the results in insurance for 2006. What is the perspective of insurance brokers on the market's evolution?
Antonio SOUVANNASOUCK: I think the Romanian brokerage market is now going through a unique situation. This will become more obvious in 2007 when, for sure, we won't find more than 2 independent companies in the top first 10 brokers, besides the captive leasing companies. It would be good if MARSH and AON, independent companies, were still in Top 10, but they contracted with major leasing companies. It may sound weird, but I think the real competition for a Romanian broker is not the other brokers, although numerous, but the leasing companies and the banks. The legislation on leasing allows leasing companies to impose on their customers a captive broker and, implicitly, the insurers. I wish this unfair competition did not exist. I think that nowhere in the world the leader of a brokerage market is a captive broker.
I consider it a major drawback for the brokerage market. Basically, this situation allows the majority of brokers to have access only to a small part of the most productive insurance line. Obviously, income is also affected and, what is worse, their ability to provide services in other less productive lines, but whose development would be extremely useful for the market. Thus, 70% of the business volume is distributed among the first 10 brokers, and if we talk about the first 20, the percentage is 95% and, in fact, even though we are dealing with a market that has 400 operators, in real terms, less than 30% of them don't manage to grow and become strong enough to have an effective contribution to market development.

People talk about our role of consultants in risk management but, unfortunately, we reached the conclusion that brokerage on corporate segment, except for the motor lines, is a luxury, as it does not provide a high volume, and the margin is low. There is a false belief that volume comes from the corporate segment. The investments are not that many, nor that large to substantially generate business. Besides property insurance, the range of insurance policies requested by corporate customers is not too wide. Liabilities are insured for very small amounts as, on the one hand, there are many legislative gaps, and on the other hand, there is no justice that operates quickly and efficiently. Thus, most disputes are settled amicably, through a deal involving relatively low amounts, especially since they concern property damages. There are some policies with business interruption clauses, but very few. As for managers' liability, although the relevant law exists since December last year, we only wrote several such policies. Anyway, few customers ask for coverage other than direct material damages.

With regard to large corporations, with foreign shareholders, most policies are written directly abroad, in their country of origin. In fact, this is one of the major risks on the Romanian insurance market, namely that a large part of the major contracts will actually bypass our specialized market.
We are still facing issues related to the characteristics of the market, which is still a primitive one. I am talking here about the habit of concluding contracts with payments made in installments, cash or split. All these imply, in addition, the management of a large number of documents, which is time-consuming and generates difficulties in using the management software.
Besides these still primitive procedures, the current offer on the market is not too extensive. The products are, in general, simple and non-sophisticated.

XPRIMM: Is the opportunity to work directly with European insurers an alternative?
A.S.: Of course, the free movement of services might be considered a solution for the access to complex products, but in reality things are not quite like this. Many of the respective products require a physical representation of the insurer in Romania. The risk assessment and certain services must be provided locally. I shall give you an example: we do not have a series of products that are complementary to CAR and EAR policies for constructions, such as the bonds, namely the financial guarantees related to various phases of the construction operations. The offer is very poor and the products have low reinsurance ceilings per each customer. Basically, I cannot find the necessary coverage in Romania, a country where constructions represent one of the most important factors for economic growth. Europe is not a convenient solution because, although the products exist, it is very difficult for a European insurer to assess the financial solvency of the customer in Romania, for no other reason but for the fact that Romanian accounting balance sheets are not entirely adapted to the IFRS norms. So, the solution should be searched for on the Romanian market.

XPRIMM: In the same context of an explosive development in construction activity, I cannot but notice that construction insurance doesn't seem to follow the same growth rate. What would be the reasons?
A.S.: Indeed, construction insurance does not have a dynamics comparable to the one existing in the construction field itself. I think this is largely due to the insurers, who did not capitalize on this potential. It's true that, in terms of risk management, the construction activity in Romania is not conducted under such strict conditions, as it happens in western countries. This situation leads to certain difficulties in correctly assessing and rating the risk and would require an extra effort from the insurance companies to train specialists in this field. From my point of view, the argument that says there is no sufficient demand on the market to justify these efforts does not apply. I believe the demand is there and must be encouraged, especially by approaching the beneficiaries who can force the construction company to get insurance. But in order to do this, there is a need for a training effort and, of course, the "education" of investors in constructions. However, for now insurers prefer to focus on insurance lines that sell easily and quickly.

XPRIMM: I assume you mean the motor line of business. Don't they also cause numerous problems?
A.S.: Actually, motor insurance produce very good results, namely exactly what insurers want most: rapid growth of the market share. For years now, market share has been and will continue to be a priority objective. The motor lines of business offer exactly this, but everything comes with a price. Making efforts to gain market share implies making an investment, and bearing the non-profitability of these insurance lines is practically the investment that companies make so as to occupy a better position on the market. But there comes a moment when you realize that your portfolio is stable, you don't get any significant increase, and this means that it's time to be concerned with profitability and take measures. But as long as you want to grow, you must keep on investing. Unfortunately, motor insurance and especially CASCO are capable of generating significant results at present, because here we can see the most considerable growth. The bad news in my opinion is that no efforts are made to develop other insurance lines that could generate growth and simultaneously give a balance to the portfolio's structure. I am thinking about house insurance, life insurance… in general, all types of insurance for individuals and families, retail products.

XPRIMM: Could mandatory house insurance become an incentive for the market?
A.S.: It's debatable. In house insurance things progress at an extremely slow pace: a few years ago we had 7% of the houses insured, it seems that now we head towards 10%. But the next question comes up: what did insurers do to contribute to "launching" this market, with such a high potential? In as far as I know, nothing significant. I am aware of only a few isolated initiatives. It is also true that the state did not do anything in this respect, although it had a direct interest in having a strong house insurance market. I have not even heard from the government, upon granting the aids after the flooding, to require for uninsured reconstructed houses to be insured for a period of several years, and by doing so to emphasize the need for insurance. In fact, how many state buildings, some enlisted as national patrimony, are insured? How many infrastructure works are insured? I haven't really heard of any. Briefly, if the state does not set a good example, how can it create a culture of insurance? In my opinion, making it mandatory is not a form of education. On the contrary, I think it will generate a rejection effect, both from the population and from insurance operators that have numerous objections regarding the drafting of the law.

XPRIMM: What about agricultural insurance? I know you have approached this segment.
A.S.: In theory, things should have worked out. Romania has a very good agricultural potential, state subsidies are granted for agricultural insurance, and more than this, there are even compensations paid by the state for those who have agricultural insurance. In practice, however, only 70% of the total area is used. Prices for agricultural insurance are extremely low, partly due to the competition, partly due to the fact that many farmers buy insurance only to have access to the state aid. On the other hand, we are mainly dealing with subsistence farming, and the respective farmers cannot afford to pay their part in such a policy. Even major farmers just manage to survive from one crop to the next.
However, our company managed to progress quite a lot, but this only happened because we indicated our availability to assist customers not only in the settlement of claim through the insurance policy, but also in drafting the documentation to be submitted at the county agricultural directorate in order to get the compensation from the state. This goes to show that the brokers' role is to bring a net added value, besides negotiating the policy. But market development depends directly on the evolution of agriculture.

XPRIMM: Finally, what should change right now in order to strengthen the insurance brokerage market?
A.S.: I will go back to the idea I started with: I would like to see a truly free brokerage market. A less concentrated market would mean more brokerage companies, stronger, a real chance to invest in making it more professional and in the development of other insurance segments that Romania really needs.


XPRIMM: Thank you!

by daniela.ghetu@mxp.ro

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Mr. Antonio SOUVANNASOUCK,
Managing Partner,
ASIGEST

Average income, GNP grow
According to a National Prognosis Commission study, the average income in 2007 will be RON 1.019 (about EUR 300), 19.2% more compared to 2006. The average income is expected to grow with an 8% annual rate, reaching 1.735 RON in 2013.
The unemployment rate is expected to decrease between 2007 and 2013, down to an average 4.6%, compared to 5.2% expected in 2007 and 5.1% in 2008.
The gross national product (GNP) is estimated at RON 390.3 billion (EUR 115 billion) in 2007 and is expected to grow to RON 703.7 billion in 2013.
The national currency will strengthen to an average exchange rate of 3.1 RON/EUR in 2013, compared to the 2007 average rate of 3.37.
by costi.boroda@mxp.ro, 30.04.2007

BCR reports net profit of EUR 44.3 million in Q1 2007
The Romanian Commercial Bank-BCR, part of the ERSTE Group, reported a profit of EUR 44.3 million in the first quarter of 2007, according to financial results published in April 30th. Mother company ERSTE reported a net profit of EUR 302.1 million overall, a new quarterly maximum for the Austrian group.
ERSTE's net profit grew 25.1% in Q1 2007 compared to the same period last year. And it reported an all-segment improvement in terms of income, with the elimination of the first effects of BCR assimilation. ERSTE eyes a net profit growth of at least 25% for 2007.
When it comes to BCR, the bank profit was supported by increased lending activities. BCR's operational results stood at EUR 83.3 million in the first quarter of the year. The Romanian bank expectes a 40% growth of the net profit in 2007.
by costi.boroda@mxp.ro, 30.04.2007

RON reaches new historic highs
Romania's national currency, the RON, reached last week a new high of the past four and a half years against the euro, of 3.3104 units, and a last six and a half years high of 2.4314 units against the USD. The National Bank of Romania (BNR) announced for Thursday an official exchange rate lower by two bans compared to the previous day, of RON 3.3104/EUR, a record level of the RON from October 31th, 2002, when it stood at 3.3085 units The central bank posted a RON/USD exchange rate of RON 2.4314/USD, quite close to the RON 2.4264/USD of October 4th, 2000. On the international markets, the dollar slightly appreciated against the euro, following Wednesday's slump, around 1,3620 units. On the local currency market, the EUR/RON quotation even fell under 3.31 units, to a low RON 3.3060/EUR, due to investors' high demand for RON, caused by the high interest on the monetary market. Interest to one-day and one-week due-days reached a level of up to 30 per cent during the session, as some of the banks don't have enough liquidity to make the payments from customer accounts and into the state budget. The currency session opened at RON 3.33230-3.3260/EUR, and the rate continued falling all throughout the trading, amid aggressive hard currency sell orders. The last time that dealers traded the EUR at so low a level was in October 2002.
by costi.boroda@mxp.ro, 27.04.2007

Commercial banks to move to Basel program II in 2008
All commercial banks will have to move to Basel II on January 1st, 2008, without derogations. The information provided by the Banks Association shows that the lending institutions are ready for that, stated the Prime-Vice-Governor of the Central Bank of Romania (BNR), Florin GEORGESCU, at a seminar on economic matters, yesterday. The Central Bank official showed that the banks would enforce the new regulations given if they opted for the standard version that is the simplest method of Basel II. Florin GEORGESCU estimates that, even after January 1st, 2008, consumer credit will keep its rather high growth rate, necessary in Romania where financial brokerage is still low. The Basel II norms introduce new risk-assessment criteria and methods for the calculation of minimum capitals necessary to hedge for banking operational risks. On the other hand, BNR might approve this next week the first lending norms proposed by a commercial bank, having received the paperwork form 11 lending institutions, Florin GEORGESCU announced. He showed that BNR had retuned the suggested norms to some commercial banks in order for them to be revised, without indicating which banks.
In early March, BNR decided to abrogate the mandatory advance payment for consumer loans, representing 25 per cent of the lent amount in mortgage loans and 30 per cent in consumer loans, as well as the maximum permissible indebtedness of individual persons. Lending institutions will extend the loans in keeping with their own regulations that need to be validated by the BNR Supervising Directorate. Before validation, credit institutions will operate under the current regulations and will enforce the required maximum indebtedness standing at 40 per cent of the total income. If the banks had internal norms provided for an indebtedness level below the maximum limit of 40 per cent they will continue to apply the percentage used so far, before the new norms are approved by the Central Bank.
by costi.boroda@mxp.ro, 26.04.2007

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MUNICH Re, Official Partner of FIAR 2007
The reinsurance company MUNICH Re has become the Official Partner of the anniversary edition of FIAR - International Insurance and Reinsurance Forum, which takes place between 21st and 25th of May, at Sinaia.
"Romania's EU membership will further accelerate the insurance industry's growth, and thus open up new business opportunities. The Romanian insurance market has been of considerable interest to MUNICH Re for many years. Double-digit growth rates, planned infrastructure investments and increased construction activities, together with legal changes in the supervisory regulations or solvency rules will increase our focus on Romania still further in the future", Andreas GROSSE, Market Coordinator Romania of the German reinsurance company, declared.
Also, "as main reinsurer in Romania, we can say we are a trustful partner of this event, our purpose being the clients" support for the excellent period which announces", the representative of MUNICH Re added.
At its 10th edition, FIAR, considered the most important European spring event B2B dedicated to the profile market, is proud with the large significance international participation, being the recognition of the insurers' value and of the profile market from Romania and from Central Europe and South-East.
Over 220 leaders and specialists from 20 countries have confirmed their presence at the whole event's program.
by andreea.ionete@mxp.ro, 25.04.2007

GENERALI becomes the first insurer in CEE area
Italy's first insurer, Assicurazioni GENERALi S.p.A., will become also the leader insurance company in Central and Eastern Europe (CEE) by taking the majority stake in CESKA Pojistovna the largest life and non-life insurance group in the Czech Republic.
Under the Prague-based deal between the Italian insurer and PPF Group, until now the majority owner of CESKA Pojistovna, Trieste-based GENERALI will pay PPF Group EUR 1.1 billion in cash for a 51% share of the joint-venture.
Through this deal, the number of the insurers' clients will climb to over 9 million in all the 12 countries GENERALI operates.
With EUR 2.63 billion, the new entity will thus excel the CEE market leaders, ALLIANZ and VIENNA Insurance Group.
The battle for territory within the Central and Eastern Europe market is now growing high as insurance international group are more and more interested in big potential countries like Czech Republic and Poland and, also, in the new member states, Romania and Bulgaria. They, in fact, consider the estimated growth rate of these countries, which here is above 5 per cent, almost double than in western European countries.
The Romanian subsidiary of GENERALI posted a gross written premium volume of EUR 90 million in 2006, a real growth of 129% from last years' figures.
In spite of some recent information regarding CESKA Pojistovna's entering in the Romanian insurance market, this action has not been started.
For avoiding misleading, we must mention that PPF Group is another different entity from PPF Investments, which holds majority stakes in Romanian insurers ARDAF and RAI.
"Although they both use the same brand, PPF Group and PPF Investments are two different entities regarding their assets, activity and management", Ivo NEJDL, Investment Manager of PPF Investments, Romania Responsible, has declared.
by andreea.ionete@mxp.ro, 30.04.2007

Invasion of insurers from European Union
After 4 months from Romanian's integration in European Union, 66 insurers have notify the Insurance Supervisory Commission over their intention of operating on the Romanian market without to be under its supervision.
Among these insurers, there are subsidiaries of important groups as ALLIANZ, AXA, QBE, VIG and so on. In the same time COFACE is the only company which has notify its intention of opening a branch in Romania according to the settlement right.
Also, 44 insurance mediation companies, as AON Denmark, NORWICH Union and Lloyd's & Partners issued notifications to the Insurance Supervisory Commission. According to estimations, the number of companies which announce their intention of entering Romanian market will increase in the next period.
This estimation is motivated by the great number of companies that notified the insurance supervisory authorities from the countries which entered the European Union in 2004. So, in one year and a half, in Slovakia 329 operators notified their intention, in Slovenia 220 and in Hungary 324. Recently, the President of the Insurance Supervisory Commission, Angela TONCESCU, had warned that foreign insurers which intend to operate in Romania should be taken in serious consideration.
by mihaela.circu@mxp.ro, 2.05.2007

GARANTA has taken over NBG Insurance
The emerge between GARANTA and NBG has been approved by the Insurance Supervisory Commission, the decision being published in the Official Gazette of Romania.
So, GARANTA absorbed NBG Insurance, the license of the last being withdrawn.
The Greek company, ETHNIKI, which holds 93.26% of GARANTA, bought in October 2005 ALPHA Insurance from ALPHA Bank Group paying EUR 2.7 million. ETHNIKI is part of the National Bank of Greece (NBG), which took over Banca ROMANEASCA at the end of 2003. Through it, the Greeks hold 20% of ASITRANS.
ETHNIKI has considered the emerge necessary for a more efficient administration of assets and for the simplification of the decision making process, for the flow of the execution process and for the administrative cost-cutting.
In 2006, GARANTA registered a volume of gross written premiums of RON 91.13 million (EUR 25.86 million), in real growth with 118.96% comparing to 2005's results.
by mihaela.circu@mxp.ro, 3.05.2007

WILLIS Re, Principal Reinsurance Broker Partner at FIAR
WILLIS Re is the Principal Reinsurance Broker Partner of FIAR - The International Insurance Reinsurance Forum.
"WILLIS Re is very much looking forward, as Principal Reinsurance Broker partner, to this year’s special anniversary edition of FIAR. Each year FIAR has grown in terms of numbers of delegates, quality of presentations", Guy HUDSON, Executive Director, WILLIS Re stated.
Also, "we should take into consideration the fact that this year FIAR takes place in a European Union's state, which gives it a higher significance", the representative of WILLIS Re added.
At its 10th edition, FIAR, considered the most important European spring event B2B dedicated to the profile market, is proud with the large significance international participation, being the recognition of the insurers' value and of the profile market from Romania and from Central Europe and South-East.
Over 220 leaders and specialists from 20 countries have confirmed their presence at the whole event's program.
by andreea.ionete@mxp.ro, 25.04.2007

Facultative Private Pension, the offer starts to be substantial
The Council of the Romanian Private Pension Supervisory Commission announced on 24th of April 2007, that two new facultative fund administrators were authorized: ALLIANZ - TIRIAC Administration Society of the Facultative Pensions Funds and BCR Life. Also, the prospects of the facultative pension schemes, AZT MODERATO, respective BCR PRUDENT were authorized.
Crinu ANDANUT, General Director of the pension company ALLIANZ - TIRIAC exclusively declared:"For us, it is another won battle out of a war. We are glad with this important step, but in the same time we think about the others we have to make and for whose success we hope in a more efficient collaboration with the Romanian Private Pension Supervisory Commission: the authorization of other funds, the authorization of the prospects and of the agents.
Commenting over the perspectives opened for the company, the quoted official added: "We appreciate the fact that we have a net competitive advantage, the decision of administrating pension funds on both pillars through the same pension company allows us an unitary administration and efficient from the economical point of view. Besides, according to the norm which is going to appear soon regarding this subject, we'll change the company's name in order to reflect both components of the activity - the facultative and compulsory one.
As for the authorized scheme of facultative pensions, AZT MODERATO, Crinu ANDANUT has explained that it is about a pension fund with good efficiency with moderate risk, from where its name, inspired by the terminology of the classic music. It will be a "middle" product of the society, in the following period other facultative pension schemes going to be authorized, with investment risk and different efficiency as to cover the all options".
Anterior, Romanian Private Pension Supervisory Commission has authorized the prospects of the facultative pension funds ING CLASIC of ING Asigurari de Viata and PENSIA MEA of AVIVA.
by daniela.ghetu@mxp.ro, 26.04.2007

UNIQA has big plans for Romania
Within the European expansion strategy, UNIQA Group Austria intends to take over the seventh-largest Romanian insurer, ASTRA-UNIQA, by buying the majority stake in the company.
UNIQA now holds 27% of the insurers' share capital and the second shareholder in NOVA Trade Group, with a 72% stake.
The Austrian group aims to become the market leader on the Romanian insurance market in the future, by utilising the solid basis of both partners and innovations in its broad product spectrum for private and corporate clients. The high expectations of the management for 2006 have been fulfilled by an over 80% increase in premiums since last years' figures.
For 2007, ASTRA-UNIQA aims gross written premiums earnings of EUR 140 million, rising 63% from the last years' figures, as well as growing the profitability and the portfolio and carrying on the territorial expansion.
The Romanian insurer is also interested in developing the partnership with RAIFFEISEN Group and with other banks and at the same time, wants to include the clients in a follow-up program since the moment the contract is made until the claims are resolved.
ASTRA-UNIQA has 215 territorial offices after it opened, last year, 25 branches and local offices. In 2006, the insurer has also grown its sales force with 20 per cent.
by andreea.ionete@mxp.ro, 27.04.2007

AON - 20 years of listing on the New York Stock Exchange
AON Corporation celebrates an important moment - on 24th of April 1987 AON was for the first time listed on New York Stock Exchange, listing symbol AOC.
The accelerated development of AON started in 1982 when RYAN Insurance Group merged with COMBINED International Corporation. In 1987, the new company started to be listed on Wall Street as AON, a Gaelic word meaning "unity". Between 1980 and 1990, strategic acquisitions and organic development supported the expansion of AON on the global insurance market up to its actual position, the great insurance and reinsurance broker.
In the last 20 years AON has acquired best known insurance and consultancy companies, one of the most historic importances being of the first commercial insurance brokerage company in the world, HUDING-LANGEVELDT, established in 1680. Though not all acquisitions had historic importance, most of them brought together important players in their field: ROLLINS BURDICK HUNTER, ALEXANDER&ALEXANDER, JAUCH-HUBENER, Le BLANC de NICOLAY, GIL y CARVAHAL, MILLER, MASON&DICKENSON and BAIN HOGG.
As to mark this moment, the AON office from Romania has organized a meeting of the team in the middle of nature, at the stud from Saftica and has done a donation to the Civitas Mediensis Foundation.
"We are excited that in short time from our entrance in the AON's family such an important event, palpable for us because we were witnesses and also participants to a part of the recent success of AON, is celebrated", Karina ROSU, CEO, AON Romania, stated.
AON Corporation (www.aon.com) is the world's leading provider of the risk management services, insurance and reinsurance brokerage, consultancy services for the human capital and management and underwriting of special insurances. AON has 43.000 employees which work in 500 offices in over 120 countries. With varied resources, industry's knowledge and technical experience, AON's experts help vary clients to develop efficient solutions of risk management and working force's productivity.
AON launched its direct activity in Romania after the acquisition of KaRo Servicii de Asigurare at the end of 2005, its exclusive correspondent for Romania for over 10 years and the first specialized company in general insurance brokerage.
by mihaela.circu@mxp.ro, 24.04.2007

One EUR for an one day CASCO
ASITRANS Asigurari has launched a new CASCO product, which is the only one of this type, on the Romanian insurance market. Daily CASCO covers for only EUR 1 per day, damages incurred by the vehicle, following an accident, as well as events unrelated to the driver of the car.
"The Romanian insurance market is a conservative one. We have tried thru our new product to get out of this conservationism, Daily CASCO being a product invented by us and not one copied from the Western Europe markets", Bogdan STAN, the CEO of ASITRANS has stated.
"Daily CASCO is basically an alternative to the traditional CASCO products, present today everywhere on the market… It is a policy that can be signed right-away, without many additional documents, at a very reasonable price, which covers all the risks a vehicle is facing", Bogdan STAN has explained.
Daily CASCO's target is, according to ASITRANS' officials, the clients that don't drive their vehicles every day. They can be persons that drive office-cars for a couple of days a week, retired people, persons that work abroad and spend less time in the country etc.
Therefore the clients can make a "CASCO subscription", thru which they can choose exactly the days in a year or the period when they want to be insured.
This policy will pay-up up to EUR 5,000 after the first 7 days of validity. Nevertheless the risks not covered by the policy are theft and vandalism.
For the current year, ASITRANS intends to increase the volume of underwritings with 50% and a capital growth by EUR 3 million. On a long term the company has as a major target a market share of 4-5% until 2012.
by vlad.panciu@mxp.ro, 26.04.2007

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Bancassurance in Rusia - over USD 1 billion premiums in 2006
The total amount of insurance premiums wrote in 2006 on the bancassurance segment in Russia reached USD 845 million, with a capacity of market that can exceed USD 1.1 billion. The average share of risks insurance for the banks clients has made about 78% of "bank portfolio" of the leading insurers.
This were the conclusions recently published by the agency EXPERT Ra, according to a research regarding the cooperation between banks and insurance companies.
"The result of this partnership between banks and insurers will launch a lot of complex and inovative products which will move forward the entire financial market and develop the population's financial culture. Overlapping of these two components of the financial market will generate a higher efect than just simple summation of actives, experience and technologies - though these are important too", analysts of EXPERT Ra agency consider.
The basic direction of bancassurance is still the insurance of mortgage property (75-85% of bancassurance). Nevertheless, there is an increase of demand for own risks insurance from banks, expressed in steady high rates of growth of the premium on this segment of the insurance market.
Under forecasts of analysts from EXPERT Ra, within the nearest 4 years, the cooperation of banks and insurers will grow not less than twice. Thus the number of directions of their cooperation will increase and raise the services' quality of the financial institutions rendered both physical, and legal persons. In a prize there will be first of all consumers, and also banks and the insurers who have managed in time to reconstruct business-processes according to modern market tendencies.
by oleg.doronceanu@mxp.ro, 2.05.2007

Russia: Broker vs. Agent
Starting with July 1st, 2007 Russia will begin the implementation of insurance brokers' licensing. In the opinion of the market's players, about 80% of the companies that practice brokerage activities will reshape in agency structures.
For now, it is known the fact that four companies will keep the broker structure, since they already got the necessary license, these are: MALAKUT, WILLIS CSI, TIBORG and SibBrok. In Russia 50 companies applied for licenses at the Federal Insurance Supervising Service (FSSN).
For instance, the main intrigue is the fact that those companies which decide to activate as insurance brokers won't be able to receive commission from the insurance company, this being the actual manner of their business until now: the brokers were selling policies to the insurance company for a specified commission. Further on, the agents will be the only ones to receive commission from the insurers.
For the time being, brokers don't realize entirely the difference between these two terms, broker and agent. Many of them are not aware of the commission payment aspects and can not understand yet the functionality of the system. It is pretty hard for them to drop out this commission. Besides, the insurance companies' clients don't have an insurance culture, don't see clearly yet the meaning of this product, that's why paying a commission to a broker is still something strange. Brokers try to postpone the moment of new system's implementation, which, in their point of view, will generate primary effects such as loosing clients and profit decrease.
The situation is not actually unfavorable. There are obviously solutions. Two companies, united under the same brand, can become allied, broker and agent without dropping out the commission. A more simple solution would be in this case choosing the agent status. This way the intermediary is allowed to work with the contracted insurance company. In general, the difference between the agent activity and the broker activity consists in the commission provenience. Others want to maintain the broker status and image. Many of those who want to keep being brokers will do it rather because of maintaining their credibility in front of the clients.
by irina.galasanu@mxp.ro, 30.04.2007

ALLIANZ Negotiates for Acquisition of PROGRESS-GARANT
Germany-based financial insurance group ALLIANZ is carrying on negotiations for acquisition of Russia-based insurer PROGRESS-GARANT, Deutsche Welle reported on April 17 citing the official statement made by ALLIANZ in Munich on the same day.
ALLIANZ said it has been conducting talks for acquisition for a long time, but hasn't come to any agreement. The company's representative declined to disclose the value of the possible deal.
ALLIANZ and PROGRESS-GARANT declined to comment on the fact of negotiations. As explained by Vyacheslav LOYSHA, adviser to chairman of the board at PROGRESS-GARANT, in autumn 2006 his company provided ALLIANZ with presentations prepared for FITCH Ratings. Since then, ALLIANZ hasn't shown interest in Progress-Garant and the companies haven't reached any agreements, LOYSHA said.
ALLIANZ became the main shareholder of ROSNO Group in accordance with the purchase agreement signed with AFK Sistema on February 21. As a result, the German insurer increased its stake in ROSNO JSC from 47.4% to 97%. At the same time, Sistema retained a 3% interest. In 2006 ROSNO wrote EUR 547 million in direct insurance premiums and paid EUR 197.5 million in claims. In the same period, premium income of Russia-based insurer ALLIANZ CJSC came to EUR 27.2 million and claims paid amounted to EUR 2.6 million.
PROGRESS-GARANT was set up in 1994. Its shareholders are Progress CJSC and Cyprus-registered Lex-casta Enterprises. According to the Federal Service for Insurance Supervision, in 2006 PROGRESS-GARANT wrote EUR 115 thousands in premiums and paid out EUR 40.3 thousands in claims.
by RP Newsline, 30.04.2007

Russia and Ukraine, between M&A
In 2006, 23 mergers and acquisitions took place at the Russian insurance market. M&A deals at the Ukrainian market numbered 9. The major part of M&A transactions was arranged in the non-life insurance segment. The purchasers had different targets: in Russia they aimed the increase of their market share while in Ukraine they mainly had the market entry for a main object, according to RP Newsline.
Also, 83% of all M&A deals in Russia worth over USD 130 million were closed in the non-life insurance segment. The CMEI segment accounted for 14% of total deals arranged (USD 22 million), the reinsurance market - for 4% (USD 6 million).
As for Ukraine, 86% of M&A deals totaling about USD 109 million in value occurred in the non-life insurance segment, 14% came about in the life insurance segment (worth USD 1 million).
According to experts estimates, 14 out of 23 M&A deals at Russia's market were aimed at increasing the market share. The investment consortium TBIH-Russian Funds concluded the largest transaction of the previous year as sold the controlling stake in Russia-based insurance company Standard-Reserv. Assessed value of this transaction amounts to about USD 606 million.
The market entry was the main purpose of 6 deals out of 9. The largest one was made by GENERALI Vienna Group which acquired controlling shareholdings in Ukraine-based insurers GARANT-Auto and GARANT-Life approximately for USD 72 million. The next expected stage of development of Ukraine's market will be the common tendency to increase market share.
The statements were made at the II International Conference "Insurance Business in Russia: Integration Challenges", held recently in Moscow.
The PRIMM Insurance & Pensions Magazine was Media Partner of the Conference.
by oleg.doronceanu@mxp.ro, 26.04.2007

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