Cristian CONSTANTINESCU: Romania has the most unprofitable non-life segment in South-Eastern Europe
"The motor market is in a difficult situation, and the year 2010 will be an extremely difficult one. Romania has the most unprofitable segment of general insurance in South-Eastern Europe, the margin of technical results already entering on a negative trend. Thus, the evolution of the technical result on general insurance in the past four years looks like this: in 2005 it was -30 million EUR, in 2006 it was -275 million EUR, in 2007, -115 million EUR, in 2008, -236 million EUR, and in 2009 we will have a higher figure for sure", said Cristian CONSTANTINESCU, President of UNSAR, at the National Motor Insurance Conference.
Also, the Motor Hull and MTPL classes have combined rates (the claims rate to which the rate of expenses is added) extremely high, of 150% on the MTPL and of 126% on Motor Hull in 2008, according to CEIOPS data, which also expresses the level of net losses from the insurance business.
"2009 was an extremely difficult year, in which the unfavorable evolution of profitability has become more visible in the context of narrowing business opportunities. In these conditions, the market stagnates, and the lack of income surplus no longer allows underwritings on cash flow. Thus, the artificial cover of losses from internal sources is no longer possible, and the capitalization reached a level that cannot be maintained. Losses on the motor segment grew at the market level, these also amplifying the financial imbalances of the insurers. Therefore, I do not think we have reasons to be optimistic about 2010, when we will see a decrease of the motor underwritings", added CONSTANTINESCU.
The UNSAR President warned that an immediate response of the insurers is required: "First of all, for a better control over claims expences, and secondly, for a rigorous correlation of tariffs with the risks insured, which will generate an increase in premiums on MTPL and on Motor Hull, provided that the application of the bonus-malus has marginal effects".
"The low level of the MTPL premiums is also highlighted in the IMF report this year, where there have been made two recommendations to the insurance industry on this segment: to supplement the capital for motor insurance business, at least for insurers who have premiums uncorrelated with the risks assumed, and to review the level of premiums and reserves for Motor Hull and for MTPL", concluded Cristian CONSTANTINESCU.
Author: Oleg DORONCEANU
on 04.03.2010
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