Artur BOROWINSKI: The MTPL prices and the high claims frequency on Motor Hull are the main problems of the Romanian motor insurance market
“As far as the MTPL segment is concerned, the market’s main problem is the unsustainable price of policies, resulting from the fierce competition, as certain insurance companies underwrite for cash-flow. Regarding Motor Hull, the main problem consists in the extreme high frequency (over 50%) of claims, and as a result, the Romanian insurers have the highest prices in Central and Eastern Europe”, Artur BOROWINSKI, Vicepresident, OMNIASIG VIG, declared during the Motor Insurance Day at FIAR 2013.
For VIG, “I can state that the Romanian insurance market is a very important one, but it is also a market on which we encounter the biggest problems, especially because of motor insurance. Nevertheless, we are determined to invest in Romania, since we are convinced that the market will become profitable”, BOROWINSKI continued.
According to data presented by the VIG representative, between 2008 and 2012, the underwritings on MTPL slackened around EUR 500 million, while the value of paid claims increased by more than 25 percentage points. “The situation is a difficult one on this segment. The competition is fierce as far as prices are concerned, and this is why the market has remained at the same level for the past 5 years. Moreover, the concentration is high, over 50% of the operations belong to the local companies, if we consider EUROINS a partly local company. If the situation continues, in the near future, the value of premiums underwritten by insurers will reach the level of paid claims”, the OMNIASIG representative continued.
As far as Motor Hull is concerned, “the situation is even more dramatic, although the main players on the market are multinational companies. Here, the paid claims exceeded underwritings, which might come as a shock for many players. A lot of money was lost on the Motor Hull segment.”
According to Artur BOROWINSKI, on the MTPL market, in the future, the main problem is represented by the bodily injuries claims, which are difficult to control: “The main reinsurers refuse to cover the Romanian companies on MTPL segment. They are afraid of large moral damage claims.” According to presented data, Romania is below Poland as far as the average claim is concerned (EUR 900 vs. EUR 1000), but this is due to the fact that in most CEE countries, the insurer “must offer a rented car in exchange, this being reflected in the average claim’s value.”
On the Motor Hull segment, when comparing the claim rate, we observe that: “In Romania, it is 50%, three times larger than Poland, the Czech Republic and Slovakia, which means that in Romania, each second car will suffer a damage. It’s a gamble, because for the insurers, it is an unforeseeable event. Basically, we don’t insure, we gamble. This can be observed in the average premium value, a Romanian paying double for a Motor Hull product compared to a Czech citizen”, Artur BOROWINSKI explained.