Last year’s loss is the second heaviest insurers have posted after the all time high of more than half a billion lei in 2008.
The year 2005 was the last year in the black for the insurance industry, when profit stood at RON39 million, according to the market regulator data. The cumulated losses of the last eight years amount to RON2.1 billion.
The best year of this eight-year period was 2010, when insurers cut their losses down to merely RON40 million.
“Insurance is like a sick market looking for its cure. The fierce price competition is the main factor that caused losses in the market,” said Valentin Tuca, chief executive officer of AON, one of the major insurance brokers in Romania.
“I am convinced the industry will bounce back but tariffs and service quality must go where they should be. The changes operated at ASF (the Financial Supervisory Authority i.e.) are making us optimistic.”
A number of 17 insurers posted cumulated losses of RON665 million, while a similar number of insurers posted profit, though only RON215 million. Out of the 37 insurers licensed by ASF, three did not file their financial statements with the Finance Ministry. The three are Astra, Euroins and Asito Kapital.
Heaviest losses last year were those of Asirom and Omniasig, two companies of Austria’s Vienna Insurance Group, RON236 million and RON217 million. Third and fourth biggest losses were those of AXA Asigurari and Groupama, about RON46 million each.
Also in the red were German-held Gothaer (RON34 million), which has not completed its investment phase in Romania yet, Carpatica Asig (RON30 million), a company selling most auto liability policies, and BCR Viata (RON15 million), another VIG company, which is now undergoing restructuring.
Signal Iduna, the local subsidiary of German group by the same name, agricultural insurance company Fata and state-owned insurer EximAsig are on the bottom places of the highest losses ranking, with RON12 million, RON11 million and RON7.9 million.
Even though some companies are still making investments, most losses stem from inadequate development strategies and unsustainable tariffs for certain types of insurance, according to industry experts.
Victor Sraer, managing partner of Otto Broker, believes that insurers did not do more to adjust their business to the crisis. They did not restructure visibly at the onset thereof and took steps to close a significant number of offices and shed jobs only in the last couple of years.
Foreign insurers have injected hundreds of millions of euros into their local subsidiaries in the last few years to keep their solvency and liquidity ratios within the required parameters.
On the other hand, there are also some insurers that made profit, either constantly in the past few years or returned to profit after spending one or two years in the red.
Allianz-Tiriac was last year’s top profit maker, with RON89 million, followed by Metropolitan Life, the company created by the merger of Alico with the former subsidiary of UK’s Aviva, RON29 million.
City Insurance and Generali, too, posted more than RON20 million profit, with the latter returning to profit after two years of losses. Austrian-held Uniqa made profit for the first time since its entry on the Romanian market, almost RON19 million.
(English version by Loredana Fratila-Cristescu)