Ernst & Young: Two difficult years for Romanian insurance

Preliminary results from the third quarter of 2011 show that the continued downward trend on the Romanian insurance market has meant decreases of 10 percent on life insurance, 6 percent on general insurance and 7 percent overall, compared to the 2008 peak. This resulted in a decrease in 2011 in gross written premiums across the market by 4 percent over the same period in 2010, according to a study by Ernst & Young.

Life insurance has performed above expectations, increasing by 5 percent in the first three quarters of 2011, but this was offset by a decrease of 6 percent overall. The Ernst & Young study suggests that 2012 will be another difficult year for insurance in Romania and beyond. Major market players are expecting stagnation or, at best, a modest increase (1-2 percent). The main cause of pessimism in the insurance industry is the prolonged economic crisis, which has eroded the population’s purchasing power and incomes. Mandatory insurance, especially the mandatory car insurance (RCA), will continue to exercise a decisive influence on the general development of the market. Housing insurance has shown, and is expected to continue to show, a positive trend due to the mandatory insurance of housing. The life insurance sector shows a little more optimism, justified by the positive developments in 2011 and by the opportunities created by the health reform, according to Ernst & Young. For the entire Romanian insurance market, 2012 promises to be a year of efforts to streamline operations and strengthen the financial position and to diversify portfolios and increase the quality of the subscription. Alex Camburu, alex.camburu@romania-insider.com (photo source: Sxc.hu)