End-September data show insurers that make up joint insurance company UNSAR had signed 5.3 million property contracts. Most of these contracts were home insurance policies, up 60% compared with end-June. The number of home insurance contracts did not exceed two million last year.
The reason behind the growth registered on the voluntary home insurance market is the significant reduction of prices, which was triggered by an increase in the number of clients. Such price cuts were not possible in the past, when few policies were sold, said Gheorghe Grad, general manager of insurance broker SRBA.
The first mandatory home insurance policies were issued in July 2010. Official data reveal there are 8.39 million homes in Romania, of which 60% are insured. The number of mandatory home insurance contracts reached around 700.000 and the segment shrank progressively over the past months.
Mandatory home insurance policies are issued by the Pool of Insurance Against natural Disasters (PAID) and cover earthquake, flood and landslide damages.
The yearly premium for the policy sold by PAID is EUR10-20, depending on the type of building, and covers damages between EUR10,000 and EUR20,000.
PAID is a joint stock insurance-reinsurance company that manages the risk fund meant for paying damages in case of natural disasters. Its 13 shareholders are: ABC Asigurari, Astra Asigurari, ARDAF, Carpatica Asig, Certasig, City Insurance, Credit Europe Asigurari, Euroins Romania, Generali, Grawe Romania, Groupama Romania, Platinum Asigurari and Uniqa Asigurari.
The law regulating mandatory home insurance was amended at the end of last year to read that homeowners who buy voluntary home insurance policies that cover earthquake, landslide and flood risks don’t have to also sign mandatory insurance contracts.
Under previous regulations, homeowners had to buy mandatory insurance policies even if they already signed a voluntary home insurance contract.
Many insurers offered voluntary home insurance policies at prices similar to those of mandatory policies, but covering more risks. Companies reduced premiums to 0.1%, thinking homeowners will insure homes at their real value, and not only to cover damages of up to EUR20,000 (as in the case of mandatory home insurance policies).
The number of mandatory policies hit 819,000 in August and decreased to 729,000 afterwards. A part of PAID clients did not renew insurance contracts, while other policyholders chose other insurers.
Homeowners whose homes are not insured may be fined 100 lei (EUR23) to 500 lei (EUR115) by local authorities. So far, there is no information about anyone being fined for not having insured their homes.
Insurers underwrote premiums of over RON1 billion (EUR240 million) on the home insurance segment in January-September, up 35% on the year.
Astra, leader on the local insurance market, registered turnover of RON280 million on this segment in the first nine months of the year. It is followed by Allianz-Tiriac (RON125 million) and Omniasig (RON91 million). Astra registered about 3 million home insurance contracts at the end of September.
Competition on the home insurance segment strengthened over the past year as insurers tried to offset the decrease registered on the car insurance market. The car insurance segment still accounts for two thirds of the general insurance market and the property segment reached one fifth of it at the end of September.
Insurers paid natural disaster claims of RON195 million (EUR46 million) in the first nine months of the year, less than 20% of the gross underwritten premiums on this segment.
On the other hand, car insurance policies generated losses for many insurers. Damage claims paid in the analyzed interval on the voluntary car insurance segment CASCO reached RON1.55 billion, while underwritten premiums were lower by about RON50 million. (EUR1=RON4.3397)
(English version by Ioana Tudor)