D&O and E&O, the New Stars on the Market
Lately, in Romania, the services sector has known a more and more dynamic rhythm of growth, especially in the financial and property markets. This background, along with the awareness of the need to cover damage caused by managers of companies operating in these areas, or the imposition of concluding such a policy by third parties, is shaping the biggest potential for the insurance market: professional liability.
"The segment of the professional liability insurances has recorded a visible increase in the last 12 months and will probably maintain the same ascendant trend. The laws or regulations of a profession require the obligation of such products, thus leading to the growth of this class of insurances. For example, for doctors, notaries and lawyers this type of insurance is required by law. However, there are factors in the market that have generated an increase in this segment, and the example is the real estate market, whose development has attracted the increase in the number of policies concluded by architects, engineers, builders, consultants", Cristian FUGACIU, CEO MARSH Romania, said.
Also, "in parallel with the increasing number of requests for the professional liability insurances, the limit-value for these policies is getting higher. This evolution is due to the increasing degree of awareness of the need for insurance, as well as to the fact that the existence of such policies is required by customers", Karina ROSU, CEO of AON, stated.
Underwritings in professional liability insurances have amounted to nearly EUR 16 million after the first half of the year in course, from EUR 15.5 million in the similar period of the previous year. In the same period, paid damages in this class grew 70.13% to EUR 1.41 million.
Romania is the first country in the European Union in which this type of insurance becomes mandatory.
Introduced in December 2006, the legislation requires all administrators of stock companies to have concluded a liability insurance for their administrators and executive directors (Directors' & Officers' Liability Insurance - D&O). In this category, there are included public or private companies with Romanian shareholders or with subsidiaries registered in Romania, whose shares are fully or partially owned by foreign companies.
The D&O insurance covers the financial damages caused by error, omission and negligence of the insured persons in front of shareholders, investors, employees, customers, competitors and other third parties for which they are legally responsible.
In Romania, there are approximately 11,500 private companies registered and active, out of which 58 are listed on the Bucharest Stock Exchange and approximately 1,000 on RASDAQ.
Author: Andreea IONETE
on 01.09.2008
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