Weaker corporate market brings Romanian insurance market down 6 percent

Turbulent and immature is how the Romanian insurance market looks. Although there has been some recovery since 2009, growth is still below pre-crisis levels and at a regional level the market is a long way from reaching the development levels seen elsewhere in Europe, with the exception of Poland.

A recent report from consultancy firm Ensight shows that in 2010, Romania's insurance market saw an overall decrease of 6 percent, the biggest ever drop, but within the market, rises and falls were seen, depending on the specific sector. 2010's record 6 percent decrease in gross written premiums brought the total market value to EUR 1.9 billion. The market is almost 49-51 percent split between life and non-life gross written premiums. Life written premiums were of EUR 0.4 billion in 2010 in Romania, far from the regional leader Poland, with EUR 7.9 billion. On the non-life segment, Romania's market was of EUR 1.6 billion in 2010, while Poland was again on top of the chart, with EUR 5.7 billion. Bucharest and Ilfov still account for nearly half the gross written premiums in Romania, and the overall fall was driven mainly by the results from the corporate market, according to the report. As businesses closed, so to did their insurance policies. This contrasted with the retail insurance sector, which recorded 4 percent growth. Overall, life insurance was up 2 percent in 2010, while non life premiums went down for the first time in eight years, registering an 8 percent drop. The top ten insurance companies saw changes in 2010 compared to 2009, with Astra Asigurari leading the pack, with a 13 percent market share. Allianz Tiriac Asigurari lost first position and fell to second place, with a 12.3 percent market share. Omniasig VIG comes third, followed by Groupama Asigurari, ING Asigurari de Viata, Asirom – VIG, BCR Asigurari – VIG, Generali Asigurari, Uniqa Asigurari and BCRAsigurari de Viata VIG, according to the report. However, Vienna Insurance Group has the dominant market position, through its four companies, which bring a 27.4 percent market share. Insurance market capital remained almost exclusively foreign owned – 91 percent in 2010. France shareholders had 32 percent of the market, Austrian, a quarter, Dutch, 14 percent. Local players had only 9 percent of the pie, while UK ownership stood at 5 percent. After almost doubling in 2009 the concentration degree on Romanian market rose 11 percent in 2010. This, according to Ensight's analysts, was due to market consolidation and increased market share of big players. In 2010, the overall profit registered on the market decreased again by a quarter, as compared to 2009, while the loss decreased as well by approximately 34 percent, leading to a net negative result of EUR 9.7 million. The insurance density in Romania is showing again, in 2010, signs of deterioration, with a further decrease, to EUR 91 /inhabitant. By comparison, the amount of gross written premiums per inhabitant is of EUR 3,100 in France and of EUR 1.023 in Slovenia, according to Ensight's study. Future trends on the Romanian insurance market will include measures of increasing activity efficiency and performance, reassessing distribution channels, including the more frequent use of bancassurance as an insurance distribution channel, activity consolidation and rebranding, according to Ensight.