Romania’s insurance market goes up by 12% despite bankruptcies and scandals

Romania’s insurance market recorded gross written premiums of over EUR 1.5 billion in the first nine months of this year, up 12% compared to the same period last year. The mandatory car insurance premiums (RCA) continued to have the highest share, according to data from the Financial Supervisory Authority (ASF). The market increased this year due to the “upward trend of the general insurance segment”, which recorded an annual growth of 14%, the ASF press release showed. The market’s increase was also supported by a small advance in the life insurance sector, which went up by 2% year-on-year. The gross written premiums on the general insurance segment reached EUR 1.26 billion in the first three quarters of this year. The Mandatory car insurance (RCA) accounted for 55% of the total value. The life insurance sector generated gross written premiums of around EUR 259 million between January and September this year. Romania had 32 active companies in the insurance sector on September 30, 18 of which were selling only general insurance policies. Seven of them were active only on the life insurance segment whereas another seven were selling various types of insurance policies. Romania’s insurance market has been shaken by several bankruptcies cases this year. This week, for example, ASF began the insolvency procedure for the small Romanian insurer LIG Insurance. The firm’s activity had been suspended since February last year due to the violations of financial rules, as well as accounting and operational management rules. In July this year, ASF decided to remove the operating license of Carpatica Asigurari after the company had entered insolvency, and ask for the start of the bankruptcy procedure. The company, which was owned by the Romanian investor Ilie Carabulea, had been managed by the Policyholders Guarantee Fund since January this year. The sale of the company failed in June this year, after the offer of the only interested buyer- the consortium International Insurance Consortium IIC- was refused by ASF on the claims that it didn’t have the financial capacity to support the insurer’s recovery. At the end of June this year, ASF decided to remove the operating license for Forte Asigurari Reasigurari and ask for the initiation of the bankruptcy procedure. Previously the ASF council had rejected the acquisition project presented by the BBP Bandenia PLC, which was interested to acquire a stake in the insurer. ASF said that the company didn’t present a completed documentation and failed to be transparent about its financing mechanism. The largest bankruptcy, though, was that of Astra Asigurari. The company lost its license and went bankrupt in August last year. Astra Asigurari was the third largest insurance company in Romania in 2014, with gross written premiums of EUR 173 million and a 9.5% market share. ASF decided to withdraw Astra’s functioning license after Astra had failed to attract EUR 95 million worth of new capital needed to rebalance its financial position. Earlier this year, Astra’s owner, Romanian investor Dan Adamescu, was sent to court for mismanaging the company. The insurance sector has also been hit by other scandals this year. The biggest one is related to the capping of the mandatory car insurance (RCA) premiums.