Romania: a market waiting for the favorable moment to valorize its potential
Among the insurance markets in Central and Eastern Europe, Romania ranks 5th as volume of gross written premiums, after Poland, Czech Republic, Hungary, Slovenia. In the non-life insurance segment, our country manages to climb the third step of the podium, after Poland and the Czech Republic. Furthermore, Romania is present with 3 companies in the first 20 positions of the top of the non-life insurers in the region: ALLIANZ-TIRIAC (13th place), OMNIASIG (15th place) and ASTRA (20th). In Top 100 non-life, the number of Romanian presences is 14. On the life insurance segment, ING Asigurari de Viata ranks 27th, while in Top 100 Romania is present with 9 companies.
In all rankings Poland is at an appreciable distance from the other countries, according to its size and especially to the size of its population. Thus, with a share of 31% - 32% of the population and of the GDP achieved in the CEE region in the year 2008, Poland holds a little more than 42% of the volume of written premiums in the area. At the end of the first half of 2009, this share was down to about 36.5% - due mainly to the massive fall in the Polish life insurance market.
As population, Romania ranks second in the region, thus representing a major interest for the big operators in insurance. Considering the GDP volume, in 2008 Romania ranked 3rd, but judging by a criterion that expresses more exactly the level of individual prosperity of its inhabitants, GDP per capita, our country occupies the 10th place in the top, among the 15 that form, according to OECD definition, the CEE region. Therefore, the major potential given by the number of inhabitants is attenuated, to a large extent, by the still modest level of prosperity, in a top constructed by the value of the insurance density indicator, Romania being on the 11th place.
So, what approaches and what separates us from our older "sister", Poland? By size, Poland and Romania are considered, often, to be in the same category of value. Taking into account the macroeconomic parameters, the advance of the Polish economy, as well as the older "age" in the European Union - all these are factors of differentiation, making Romania an aspirant to the level reached by the Polish economy.
In insurance, statistics of 2008 show that Polish citizens spend, on average, about 3.5 times more money on insurance than the Romanians (about EUR 374/year, compared with about EUR 105/year). The main difference comes from the life insurance sector. Even in the conditions of the year 2009, when the Polish specialty market was largely "cleaned" of the contribution of products used as a way of avoiding tax, life insurance density is about 10 times higher than in Romania. In terms of general insurance, although differences persist, they are much smaller. In the year 2008, if in Romania there were spent about EUR 83/year per capita for non-life insurance, in Poland this indicator went up to around EUR 128/year per capita.
In short, what differentiates us essentially is still the low appetite of Romanians for life insurance and for savings in general. More specifically, if in general insurance the mandatory character of MTPL insurance and the high claims rate make Romanians spend, at least for motor insurance, enough to "raise" the values of statistical indicators, in life insurance it matters a lot the ability to save and the level of insurance education. It is significant that, according to calculations made by UNICREDIT Group CEE, while in Romania the aggregated "wealth" of households represents about 7% of GDP, of which only 0.21% is heading towards insurance, for Poland the cumulated value of financial ownings of households amounted to about 35% of GDP, of which 4.2 percent is allocated to insurance.
On the medium and long term, the difference can work in favor of Romania, in the sense of the existence of a higher growth potential. However, the real opportunity to valorify this potential depends heavily on how living standards will evolve in the coming years.
Author: Daniela GHETU
on 12.11.2009
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