The Romanian insurance market will have an approx. 25-30 per cent increase rate this year, similar to the one in 2006, when gross underwritten premiums exceeded EUR 1.6 bln, head of the Insurance Overseeing Commission (CSA) Angela Toncescu stated in a seminar on the insurance market, Mediafax reports. A 25 per cent increase rate this year would take the market to over EUR 2 bln in value.
Life insurance premiums totalled EUR 300 M last year, up 13 per cent as against 2005. Significant increases are also expected in the health insurance segment, motor liability insurance and property insurance. “We hope the law on home insurance will come into force on July 1, as stipulated in the normative act. The Ministry for Finances has several signatures still to get on the normative act, and then the bill will be sent to the Government for endorsement and to Parliament for debates,” the CSA head also stated. The same figures are forecast by head of the National Union of Insurance and Re-Insurance Companies in Romania, Cristian Constantinescu. “The market has a huge development potential, considering that in the property insurance segment we have an 80 per cent potential not exploited,” Constantinescu said. CSA data indicate a 30 times increase in the volume of gross underwritten insurance premiums over the past 15 years, from approx. EUR 50 M in 1992 to approx. EUR 1.6 bln in 2006.
Insurers believe casco tariffs should be raised
Insurance companies should raise prices for optional motor insurance by 30 per cent, in order to cover loss costs, head of the National Union of Insurance and Re-Insurance Companies in Romania, Cristian Constantinescu. “The motor insurance market cannot cover costs with vehicle repairs from other sources than motor insurance premiums, which means that companies should increase prices in order to cope with the expenditure,” Constantinescu believes. According to the official, companies keep insurance costs constant, whereas costs incurred with the covered losses are substantially increasing. In fact, the Romanian insurance market worked in the red last year, as opposed to profits of approx. one per cent of the turnover in 2005, UNSAR president Cristian Constantinescu estimated. As much as 90 per cent of the capital inflow in the insurance market in 2006, accounting for approx. EUR 130 M, was spent on covering losses from previous years, the official added. He also explained that the unprofitable segment for specialised companies is precisely the optional motor insurance (CASCO), for which costs incurred with covered losses are very high.
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