Romanian and International Insurance Market

The Romanian insurance market, with its comparatively low density and penetration rate, exhibits one of the highest development potentials in the European market. The local insurance market has constantly grown at a rapid pace over the last seven years. In the context of the global financial crisis, though, the market has slowed down significantly in 2008 and is expected to stagnate in 2009. The consolidation process, begun four years ago, will most likely continue in 2009. Companies will be forced to adapt their product portfolio and increase their efficiency in order to react to the changing market environment and remain profitable. Insurance penetration in Romania and selected CEE countries, 2008

The insurance penetration rate (share of gross written premiums in GDP) of 1.8% at the end of 2008 and the insurance density (premiums per capita) of EUR 112 in Romania are considerably below the level of other CEE countries. Insurance premiums per capital in Romania, for instance, are merely one third of the value in Slovakia or Hungary.

These discrepancies reveal a solid growth potential for the local insurance market, which will most probably resume its growth after the end of the economic turmoil, albeit at a toned-down pace.
Competitive environment and market trends

As a result of the mergers and acquisitions of the last four years, the Romanian insurance market has become a battlefield of international insurers -VIG, Uniqa, Groupama, PPF General, Allianz, ING and AIG. The market consolidation process is expected to continue this year, in parallel with the post merger integration process of the recently acquired companies.

Top 10 life insurance ranking

ING continues to be the clear market leader in the life segment, reaching a share of 33% in Q1 2009, down one percentage point from 2007. The company is market leader for unit-linked insurance - around 65% of its premium income is generated by life insurance policies linked to investment funds. In 2008, ING registered a slight decrease in new policies, especially because of lower sales of unit-linked policies. For 2009, the company expects the low-risk unit-linked products to be preferred against the highrisk, high-return policies. In the context of the crisis, ING declared that it will focus on retail, while the targets for the corporate segment will remain conservative.

Top 10 non-life insurance ranking

Market leader of the non-life segment at the end of 2008, Allianz-Tiriac lost this position in the first quarter of 2009 in favor of Omniasig. In Q1 2009 a new player made it into the top 10 of the non-life segment: Euroins increased its market share to 5.8% (from less than 2% last year) and landed on the 7th rank. This quick development was triggered by a significant increase in the company's sales force, and the facility to purchase MTPL insurance policies via installments. All the top ten players accounted for around 86% of the non-life segment in the first quarter of 2009, with their share slightly decreasing compared to previous years. Five dominant insurance groups accounted for around 83% of the non-life segment in Q1 2009. Vienna Insurance Group holds around 33% of the non-life market with its daughter companies Omniasig, Asirom and BCR Asigurari. At group level the second position in the non-life segment was occupied by Allianz-Tiriac. Groupama and Generali PPF each held around 9.5% of the nonlife segment, with Groupama having lost around 3% market share compared to 2007 and Generali PPF having gained approximately 1% compared to the same period. Uniqa accounted for a around 6.5% in Q1 2009, through its company Unita. Starting 2005, international insurance groups have begun to show a keen interest in the local insurance market (it is the year when VIG - then Wiener Staedtische - considerably extended its presence on the market with the acquisition of the Omniasig companies and Uniqa entered the Romanian market through a minority stake in Astra). This prompted a wave of M&A transactions that reached its peak towards the end of 2007 - beginning of 2008, when group rankings on both the life and nonlife markets were reshaped dramatically.

It is unlikely that the consolidation process has reached its end on the Romanian insurance market, but under the current economic context, M&A transactions are expected to be postponed until the end of the downturn. Two new companies entered the Romanian market in 2008. Signal Iduna Asigurari de Viata started its operations on the local life insurance market in October 2008, following an initial investment of EUR 7 mn. The company sells private health insurance policies, and plans to become the leader on this segment in four year's time. Porsche Asigurari also started its operations in October 2008, as part of the local Porsche Finance Group. The company sells motor-hull policies for new cars acquired through leasing contracts, and estimates that over the next two years at least 40% of the cars sold by Porsche in Romania will be insured by Porsche Asigurari. During the first three months of 2009, the company sold around 1,000 insurance policies (out of the 6,000 policies targeted in 2009), as 46% of the group's car buyers applied for Porsche Asigurari motor-hull policies. On the other hand however, there are also insurers that exit certain market segments, as a direct effect of the current economic downturn. Eureko and Clal Romania, for instance, waived the motor insurance market, on account of rapidly rising claims. Even under challenging market conditions, competition is bound to intensify on the insurance market. French insurer AXA, for instance, aims for further CEE expansion, and announced Romania as a target (AXA was involved in the race for Asiban). The group recently entered a partnership with the Romanian insurer Astra Asigurari, through its AXA Krankenversicherung AG, as the two companies launched a premium health insurance policy, in May 2009. In the CEE region, AXA already deploys operations in Poland, The Czech Republic, Slovakia, Hungary and Ukraine.

http://www.iaisweb.org/Global-Insurance-Market-Report-GIMAR-962 http://oldrbd.doingbusiness.ro/ro/articole-ultima-editie http://en.wikipedia.org/wiki/Insurance