The
Romanian
insurance industry underwent a difficult time during the review period in
terms of growth and penetration, and its written premium value fell at a CAGR
of -2.2%. The penetration of the non-life insurance segment, which accounted
for 75.9% of the total industry written premium in 2012, fell from 1.3% in 2008
to 1% in 2012. This, combined with the European debt crisis, negatively
affected the insurance business in Romania. However, it is projected that the
industry has potential to grow and its penetration, which is presently under
2%, is expected to reach around 4–5% over the forecast period. In addition,
factors such as improving economic fundamentals in Romania and the European
Union (EU), rising motor insurance prices, an aging population, rising medical
costs and rising corporate spending on insurance are likely to drive the
Romanian insurance industry over the forecast period.
Government green
light for new regulatory authority
On
December 18, 2012, the Romanian government gave formal approval for the
establishment of a new Financial Supervisory Authority (FSA). Final details
regarding the new authority were expected in January 2013.
Implementation of
Solvency II will not have a significant impact
Solvency
II is a fundamental reform of capital adequacy requirements and risk management
standards. European policymakers are aiming to implement these new regulations
throughout all EU member states, along with Norway, Lichtenstein and Iceland.
The deadline set for meeting Solvency II requirements is January 2015. This
change will result in higher capital requirements, which may subsequently
discourage new insurers from entering the Romanian insurance industry. However,
the execution of Solvency II is likely to have a little impact on the capital
positions of insurance providers in Romania, as the Romanian insurance industry
consists of mainly smaller enterprises, which could take effective and quick
measures with regard to adopting Solvency II.
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A
highly concentrated insurance industry
The Romanian insurance industry is one of the most
concentrated in the EU. According to the Insurance Supervisory Commission (CSA)
statistics, the top 10 life insurers accounted for a combined segment share of
89.9% in 2011, while the top 10 non-life insurers accounted for over 87.1% of
their segment’s written premium in 2011.
Mandatory
health insurance from January 2013
The Romanian government introduced the health
insurance card in January 2013, which all Romanians aged over 18 years are
expected to maintain. The card is expected to make it easier to trace people
who are not insured. While medical insurance in Romania has been mandatory
since 1998, the introduction of the compulsory health insurance card will
further drive demand for medical insurance in Romania.
Growth
in travel and tourism
The number of Romanian international air passengers
grew at a healthy CAGR of 8.9% during the review period. This positive trend is
expected to support the travel insurance category over the forecast period.
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Key
Highlights
-
The Romanian insurance industry registered a decline in terms of gross written
premium during the review period due to reduced corporate spending on insurance
policies, the closure of numerous businesses, and a slowdown in bank lending
activity.
-
The decline was further aggravated by the turbulent economic conditions in the
country and the EU debt crisis.
-
The Romanian insurance industry remains underdeveloped compared with Western
European countries, and the low level of penetration reflects a potential opportunity
for global insurers, especially given the country’s liberal polices relating to
private participation.
- The
Romanian insurance industry is predominantly composed of multinational
insurers, with just a small proportion of revenue generated by domestic
companies.