Clients who cancelled their life insurance policies before maturity received a record-high 430 million lei (EUR96 million) from insurance companies in 2012, according to data from Romania’s Insurance Supervisory Commission (CSA). This is a 9% rise in early redemptions against 2011, with thousands of requests to cancel policies before maturity being filed.
“I think most people use this money to cover their daily expenses, not in order to make any major purchase,” said Bogdan Andriescu, president of UNSICAR, the professional association of insurance brokers.
Almost three quarters of the payments, RON309 million (EUR69 million) made by the insurance companies were “full redemptions”, i.e. the policy holders severed all ties with the insurer. The number of policies cancelled rose last year after the market had calmed down somewhat in 2011 amid expectations of an economic rebound.
Amounts redeemed by life insurance companies exploded in crisis because people’s income declined, unemployment rose and clients became increasingly concerned with the decline of investment yields. Although yields have stopped declining in the past year, clients’ need for cash continues to be reflected in the volume of policies cancelled.
The rise of policy redemptions comes after life insurance sales were basically flat during the crisis years. Insurers collected around RON1.8 billion (EUR400 million) from life insurance policies last year, a similar level to that recorded in 2008. In the four years before that the life insurance market had risen by an overall almost 80%.
(English version by Daniela Stoican)