One look at the insurance market results for the first nine months of last year leads us to the idea that they represent a last radiography of the market before we can talk about figures in a crisis context. Having already started in the last quarter of the previous year, at least psychologically, the crisis reached Romania as well, its real effects being obvious in the second quarter of this year.
Although we did not talk about clear effects of the crisis over the reference period, the insurance market results were, however, lacking any glamour. The upward trend reflected modest values, compared to the same periods in the previous years, the deterioration of the national currency versus the European currency accentuating the low growth values denominated in euros.
Bucharest 46%, rest of the country 54%
According to Insurance PROFILE, the total gross written premium value after the first nine months of 2008 was EUR 1.84 billion, as this indicator had a 13.5 points positive dynamic compared to the same period in 2007, a value much lower than the increases reported in the past.
Also, the period prior to the onset of the world crisis in Romania meant, for the national insurance market, maintaining and even stabilizing the share around the figure of 46% (the equivalent of EUR 859 million) in the total business volume for the insurers from Bucharest and the county of Ilfov. At the same time, Bucharest covers a considerable share in the “claims chapter”, more than 42% of the approved and paid claims between January and September 2008 being reported in this region.
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Actually, the situation at national level is balanced with regard to the two indicators (underwritings and claims): the counties bringing the highest underwritings volumes also generate most claims. The most eloquent example in this respect is the county of Cluj, positioned first (Bucharest excluded) in both rankings developed at national level, namely underwritings and claims approved and paid by the insurers. On the other hand, outside Bucharest, the better positioned counties in this hierarchy are the strongly industrialized and economically developed ones, such as Arges, Timis, Prahova, ConstanÈ›a, Brasov or Bihor. They each contributed with a share between 2 and 3 points to the total gross written premium value, while at the top of the “paid claims column” we have counties crossed by the most important national roads: Cluj (3.7% of the total claims), Brasov and Prahova (a little over 3 points), respectively Timis, Constanta, Buzau, Arges, Dolj, Bihor (between 2%-3% of the total value of claims approved and paid, as reported at national level).
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Why this concentration in the Capital?
In the future, we could witness a depreciation of the underwritings in the Capital. Two of the main reasons why the share are the highest here is the clearly higher level of salaries, together with the economic concentration in this region. By comparison, in September 2008, the average gross salary in Bucharest was RON 2,456, while in the county of Cluj or Giurgiu, over the same period, the value was RON 1,829, respectively RON 1,671. These figures also impacted the value of insurance density (EUR 390/inhabitant for Bucharest, respectively a little over EUR 22 in the county of Botosani, ranking last from this point of view). A trend of a higher insurance density outside Bucharest will be possible after an overall development of the insurance phenomenon in the field, starting from the infrastructure, the increase in the number of agencies, employees, collaborators, a wider range of products adjusted to the customer’s requirements and needs, up to developing the brokers’ activity and, last but not least, promoting and raising the awareness of the need for insurance among the population. The gap between the Capital and the rest of the country in terms of insurance indicators is also deepened by the so-called “centralization phenomenon” of the contracts with the leasing companies, therefore the difference between Bucharest and the next ranking county (namely Sibiu), during the reference period, reached a level of over EUR 300/inhabitant.
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Rankings per county
For insurers, the first three quarters of last year meant a real struggle for the first positions countywide, the majority share in the underwritings volume being reported outside the Capital. Thus, as reflected in the ranking presented for the Capital, some insurance companies strongly concentrate their operations outside Bucharest, such as ARDAF (77% concentration in the field), GENERALI (a little over 62% of their operations are conduced outside Bucharest) and ASIROM (80% of the total underwritings).
Obviously, the concentration we are talking about is present at least on paper. We cannot tell exactly how risks are actually allocated in the field or what is the real share of insurance, usually under contracts entered with major corporate customers having their headquarters in the country, but negotiating directly with the head offices from Bucharest.
Overall, in the counties, only six insurance companies are placed on top positions in the rankings per county, structured based on the criterion of gross written premiums: ASIROM, ALLIANZ-ŢIRIAC, OMNIASIG, ASIBAN, UNITA and ARDAF.
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Thus, after the first nine months of last year, ASIROM was positioned first in most counties, 16: Bacau, Bistrita-Nasaud, Mures, Timis, Tulcea, Braila, Constanta, Caras-Severin, Dambovita, Olt, Neamt, Vaslui, Hunedoara, Ialomita, Prahova and Vrancea.
The leader of the national insurance market, ALLIANZ-ŢIRIAC, besides Bucharest, was also positioned first in other 10 counties, over the reference period, mainly in the Ardeal region: Cluj, Alba, Covasna, Sibiu, Bihor, Satu Mare, Maramures, Buzau, Calarasi and Salaj.
OMNIASIG also stood out, like ALLIANZŢIRIAC, and was leader in ten counties: Botosani, Giurgiu, Gorj, Suceava, Valcea, Arad, Arges, Galati, Harghita and Iasi. ASIBAN ranked first in two counties from the southern region of Romania: Dolj and Mehedinti, while ARDAF and UNITA were leaders on the county insurance markets from Teleorman and Brasov.
Territorial distribution via mediation
The above mentioned process, namely “centralization of key accounts” also affected greatly the geographical distribution of the insurance premiums mediated through brokers, therefore in 2008, out of the total EUR 650 million representing the volume of mediated premiums, 76% were reported in the Capital. The counties with a more significant contribution to the total mediation figure were Cluj (4.8% of the market), Prahova (3.8%), Constanta (3%), Timis, Braila, Bihor, Sibiu, Arad and Galati (around 2 points), the rest of the counties having a less that 1% contribution to the total value. It is worth considering the fact that, if we take out of the total figure the contribution of the “captive brokers”, the ones associated to certain leasing companies or the ones having privileged relations with motor dealers, the shares would be much more balanced, the brokers from Bucharest producing about 60% of the mediations conducted nationwide.
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Future: double impact of the retail focus!
All insurance experts state that the future development of the market will be generated by focusing on the retail segment. Beyond the implications of this objective on the companies’ sales strategies, there is another aspect, quite relevant if we consider the county results of the insurance companies. It won’t be possible to centralize the retail business in Bucharest. Actually, retail underwriting will be reported where the risk is underwritten, which means that, from this perspective as well, the share for the rest of the country might increase in the insurance industry, in the future.
Note: The figures published are based on the results sent by the insurance companies, excepting the following ones: AIG Life, AVIVA, BCR Asigurări de ViaÈ›ă, BT Asigurări, CLAL România, GRAWE România, ING Asigurări de ViaÈ›ă and OMNIASIG Asigurări de ViaÈ›ă.
