Vienna Insurance Group controls one third of the local market via Omniasig, Asirom and BCR Asigurari de Viata.
“The only market VIG group is present on that did not post profit last year is Romania. The question under the circumstances is why do we want to stay in Romania? Even VIG group shareholders ask me this question: ‘Why do we still have operations in Romania?’,” said Peter Hagen who was in Bucharest on Wednesday to participate to an event organized by the Austrian Embassy and Societatea Companiilor Hoteliere Grand.
VIG has confidence in the economic potential of the country, which is far from being reached and demand for insurance matches the Gross Domestic Product (GDP) per capita, still below the European average. Per capita GDP stood at about EUR6,200 in Romania last year, while the EU average was EUR25,500, according to Eurostat, Hagen added.
Whereas a Romanian spends an average of EUR87 on insurance a year, an Austrian pays EUR1,921, so there is room for growth. According to VIG’s estimates, Romania’s middle class will be 1.5 times Austria’s by 2020.
Home insurance penetration is six times lower in Romania and the number of cars is 5 million lower, even though Romania’s population is 2.5 times larger than Austria’s, VIG CEO said. “This is the reason why we want to stay on the local market.”
VIG Posted about EUR20.4 million loss in Romania last year, and its CEO says the loss was largely because of the dumping policy certain insurers resort to.
VIG’s gross written premiums stood at EUR196 million in Romania in January-June 2013, down 17% on the year-ago period. Still, the decline slowed down in the second quarter after a 25% drop in the first. The Austrian group has lost more than one third of its local revenue.
(English version by Loredana Fratila-Cristescu)