Dwellings insurance - alternative to a risky future?
Romania is located on the list of countries with high exposure to natural disasters and extreme weather events, such as earthquakes, floods, landslides.
Actually, it is estimated that in Bucharest, in case of an earthquake with intensity exceeding 7 degrees on the Richter scale, there will be 35,000 buildings destroyed or damaged, according to Mihai ATANASOAEI, Prefect of Bucharest.
Despite all this, only a small percentage of the total number of houses in Romania benefit of protection through voluntary insurance, and the uncovered damages resulting from such a phenomenon are becoming an increasingly pressing issue.
In this context, Media XPRIMM, in partnership with the Ministry of Administration and Interior, organized the 6th edition of ICAR - International Catastrophic Risks Forum - Europe's main event on catastrophic risks.
This year’s edition was held on October 12, 2009 at the Parliament Palace and focused both on ways to boost voluntary household insurance, and on various aspects regarding the implementation of mandatory household insurance. Over 150 leaders and specialists took part to the challenging debates from the Parliament Palace.
Dwellings insurance, mandatory from July 1, 2010
Household insurance will probably become mandatory since July 1st, 2010, announced Constantin TOMA, President of PAID, during the event.
This deadline still surpasses by 6 months the originally announced one. The delay of the law enforcement is also caused by the steps that are further necessary to form PAID – The Insurance Pool Against Natural Disasters.
The most important aspect is creating the IT system to manage the sold policies.
Since getting legal personality, we have two months to fully develop the law and to organize the IT system, in order to include in the database those 8.3 million homeowners. The fact that only 40% of the database is on an electronic support will make our task even harder, so that the time limit for introduction of mandatory household insurance cannot be less than July 1st, 2010, Constantin TOMA added.
The penetration degree of mandatory insurance - 30%, in the first year
The degree of mandatory household insurance coverage will rise, in the first year of activity of PAID, to 30%, Radu MUSTATEA, President of the Directorate, ASTRA Asigurari and Vice-President of PAID said.
No one assumes the risk of inefficient management of existing resources, considering the context of applicability of the law and its social character. In terms of degree of insurance coverage, we estimate that if we join efforts the penetration rate will amount to 75%, three years after the introduction of mandatory insurance. The role of making this insurance popular belongs to all of the participants in this program, Constantin TOMA completed.
World Bank supports amending the household insurance law Amending the law on mandatory household insurance (AOL) is an important step in creating its functionality, but the process is not yet completed.
In this regard, Eugene GURENKO, Lead Insurance Specialist, World Bank, draws attention to several proposals to amend the Normative act, that have not been incorporated into Law No. 260/2008, but there are particularly important for an effective implementation of AOL.
All references to introducing rate payment of insurance premiums must be removed and the commission collected by the agents of insurance companies it must be established. Also, this requires a regulation of the solvability of the Insurance Pool, as well as a clear definition of its attributions regarding claims management, Eugene GURENKO stated.
He also enumerated the steps that must be followed after PAID’s establishing, regarding the developing of a business plan, recruiting the management team and ensuring effective IT systems. These measures should be subsequently completed with obtaining the insurance license, reinsurance placement of risk and launching public information campaigns.
Last but not least, certain cooperation agreements between insurers regarding product distribution must be obtained, as well as sales agents' and claims inspectors' training, GURENKO completed.
The World Bank official underlined once again the support that the institution he represents is ready to provide to the Government and to the local insurance market, regarding its implementation, as well as to ensure the start of PAID's activity.
EFRP supports the Private Pensions Conference in Bucharest
Chris VERHAEGEN, General Secretary of EFRP - European Federation for Retirement Provisions (photo) visited Romania as Special Guest to the 4th Edition of the Private Pensions Conference, the most important event, dedicated to this area organized yearly in Romania.
With this occasion, Chris VERHAEGEN presented the latest regional trend and the current preoccupations in the private pensions’ field, generated by the global effects of the financial crisis.
Noting the regional trend to impose increasingly restrictive guarantees to the private pensions systems, the EFRP official underlined that providing short-term guarantees is very costly and causes devastating effects on pension funds’ yields.
Absolute guarantees are easily perceived by the public, so they enjoy a positive echo, but the cost is so large that practically undermines the saving action, stated Chris VERHAEGEN.
The event gathered more than 150 professionals in this line of business. ALLIANZ-ŢIRIAC Pensii Private was the Strategic Partner, while GENERALI Fonduri de Pensii has supported the event as Main Partner.
