“Politicians need to understand the effects of a natural disaster can be covered only if guaranteed by the state or the international reinsurance market. The international reinsurance market is in no way obliged to accept a politically-established price and politicians need to understand that. That means PAID is either running a deficit or is inadequately reinsured. We don’t want to participate in something that may generate loss and will not join an organization that is not adequately reinsured,” said Hagen.
He added home insurance against natural disasters is not mandatory in Austria and several other European countries.
“In Switzerland, Norway and France, each owner must have insurance against natural disasters. They have an insurance pool and the state guarantees this pool. France might not have the right solution, Norway may not have the right solution, but the way PAID is structured is definitely not the right solution,” he said.
PAID was set up in September 2009 and has a share capital of RON19.34 million. Its biggest shareholders are Astra, Groupama and Gothaer Romania, each with 15%, while Generali Romania owns 11%, and ABC Asigurari, Carpatica Asig, Certasig, City Insurance, Credit Europe Asigurari, Euroins, Grawe Romania and UNIQA Romania each own 5.5%. PAID issued the first mandatory home insurance policies in July 2010.
Romania has a housing pool of around 8.5 million homes.
Policies cost EUR10 and EUR20 for insured sums of EUR10,000 and EUR20,000, respectively.
PAID’s portfolio increased 120% last year, to over 727,000 contracts and had 1.16 million policies at the end of April.