CSA: Insurance will remain one of the most dynamic sectors in 2009

The insurance sector will remain one of the most dynamic in Romania, in the coming years as well, even though the current economic status could cause a slowdown of revenues from insurance premiums, which is what we were expecting for 2009 anyway, estimates the Chairman of the Insurance Surveillance Commission (CSA), Angela Toncescu. "The insurance business is a long-term business and those who have opted to invest in Romania know that our country has a great number of potential insurance customers which takes time to tap", Mrs. Toncescu stated.

For the year 2009, CSA estimates a 12 to 15% rate of growth of the insurance market, down 10 - 13% as against the expectations for this year. "It is natural to expect such a slowdown given the fact that three quarters of the total amount of non-life insurance policies are car insurance policies, and given the international financial crisis, the forecasts for new car sales are pessimistic. Most likely, those who have insurance policies right now will renew them next year, and I"m talking about Casco in particular, but we expect the number of new insurance customers to shrink", the Chairman of the CSA estimates. However, Mrs. Toncescu claims that a part of the growth will go to the home insurance sector, as they will become mandatory in the second half of next year. Concerning life insurance policies, they can prove useful in times of crisis, as it is to be expected that next year"s number of underwritten life insurance policies will grow at a higher rate than non-life insurance, estimates the CSA chairman.

Given the negative context of the world financial markets, the Insurance Surveillance Commission has taken several steps to maintain the financial stability of insurers to protect the interest of the insured. These measures concern the mandatory auto liability insurance, the increase in the frequency of reports on technical reserves and the amendment of the norms concerning the assets allowed to cover the technical reserves of the insurers. The amendments made to the regulations concerning the degree of covering the reserves in allowed assets - a prudentiality index that is extremely important for any monitoring authority, CSA will adopt a more cautious approach concerning the valuation of assets within the prudentiality indicators. This thing will take place because the new provisions will allow the timely identification of any possible problems which could be caused by market risk and thus allow for a quicker reaction in taking all the steps required for protecting the insured, motivates the chairman of the CSA.

Also in 2008, preparations have begun for the implementation of the solvency regime "Solvency II" which will replace the one currently in place - "Solvency I". This supposes stricter rules concerning the solvency of European insurers, including regulations concerning the required capital for covering the risks of insurance companies. According to this directive, the companies will set their tolerated risks according to their capital, and if they want to take on bigger risks, they will need a capital increase. This directive will be applicable for a yearly volume of gross underwritten premiums of more than 5 million Euros, according to the statements of the CSA representatives.

The insurers are expected to fulfill the solvency requirements provisioned by those specific regulations regardless of whether they are based in Romania or in some other country that is a part of the European Union (and other countries) and regardless of whether we are talking about the current solvency regime - Solvency I - or the upcoming Solvency II, Angela Toncescu stated. Following a study concerning the impact of the new regulations on the insurance industry which Romania also participated in, the outcome was that even though the capital requirements for insuring solvency will increase, the number of companies which will be required to increase their capital is likely to be insignificant, Mrs. Toncescu further stated. The quantitative study that our country was involved in - QIS4, represents a simulation ran by the insurers in the European Markets voluntarily, with its main purpose being the estimation of the impact that Solvency II will have on their financial resources.

Mrs. Toncescu has explained that all insurers fulfill these operating requirements, if we take into account the fact that, in insurance contracts, the insurer undertakes obligations towards the insured that he has to be able to honor at any given time, and the role of any regulatory and surveillance authority in the field of insurance is to protect the interest of the insured.