Many brokers post low revenue so they have neither the capacity nor the motivation to increase the share capital up to the 150,000 lei (about EUR330,000) required by the ASF.
The previous requirement to start an insurance brokerage business was RON25,000, six times less than set by the new regulations.
“It’s a good thing that the brokerage market is shrinking because the transparent brokers which comply with all the legal requirements will remain. The disappearance of some brokers does not mean an increase in business for the others, because those that will close were small,” said Stefan Prigoreanu, chief executive officer of Millenium Broker.
According to ASF data, a number of 200 brokers had taken steps to comply with the capital requirements by the beginning of December 2015, while ASF had yet to approve 86 capital increases. Under the circumstances, about 300 brokers will most likely remain in business.
The disappearance of more than 150 insurance brokers does not necessarily meanly those working for them or their founders will leave the market, instead they are expected to move to the companies that will remain in business.
Brokers’ business has increased gradually in the past few years and they became the most important sales channel of insurers, generating two thirds of their sales.
ASF statistics show more than 600 brokers, but about 100 of them are not active. A number of 500 active brokers is too much for the local insurance market, that consists of 35 insurance companies with less than EUR2 billion revenue.
The brokerage market posted fast-paced growth during the crisis, but the growth might slow down this year.
“Brokers will remain the main insurance product distribution mechanism, but I expect the intermediation growth pace to slow down compared with the previous years,” said Bogdan Andriescu, chairman of the local brokers’ association UNSICAR.
Brokers posted RON690 million revenue in the first nine months of 2015, according to the latest data available, 14% higher than in the year-earlier period.
The largest brokers in Romania are Safety Broker, Marsh, Transilvania Broker and Destine.
(English version by Loredana Fratila-Cristescu)