Upload
others
View
5
Download
0
Embed Size (px)
Citation preview
Natural Disater Insurance Pool – PAID
Review of the first year of activity
Marius Bulugea, PDG
Romania is one of the European countries significantly exposed to natural disasters, especially earthquakes and floods, which cause loss of life and damages with major social and economic impact.
PRAC (the Romanian program for catastrophe insurance) was a project financed by the World Bank and resulted in a new law in the Romanian legislation (nr. 260/2008). The basis for this law was international experience in the field, with the difference that most pools were created “post event” (best example being Turkey).
Insurance - reinsurance company formed in November 2009, based on the law nr. 260/2008. PAID has 12 shareholders:
♦ ABC Insurance–Reinsurance ♦ ASTRA Insurance – Reinsurance Company ♦ CITY Insurance – Reinsurance Company ♦ CARPATICA Insurance ♦ CERTASIG Insurance – Reinsurance ♦ CREDIT EUROPE Insurance – Reinsurance ♦ EUROINS Romania Insurance – Reinsurance ♦ GENERALI Romania ♦ GRAWE Romania ♦ GROUPAMA Insurance ♦ PLATINUM Insurance ♦ UNIQA Insurances ♦
July 15th, 2010 – issue the first mandatory home
insurance policy (coverage for earthquake, flood and
landslide risks)
Potential – 8,4 million homeowners
November, 2010 – amend the law; homeowners
who have voluntary insurance are excluded from the
obligation to buy compulsory insurance policy
December, 2010 – May 2011: rate of sale for mandatory
policy decreases dramatically (amid statements by
representatives of the Ministry of Administration that
have led people to believe that is no longer required to
buy the compulsory policy)
July & August, 2011: rate of sale for mandatory policy
increases and reaches a peak of 20,000 policies per day
Currently, the average daily sales is about to 200
policies; this level is ten times lower than what we
estimated
Mandatory home insurance policy boost the
voluntary home insurance market
Insurers have developed voluntary home insurance
products similar with mandatory policy: 20.000 € sum
insured/20 € insurance premium or 10.000 € sum
insured/10 € insurance premium, depending on the type
of construction
Major difference:
mandatory home insurance policy is First Risk type
while voluntary products can be a proportional type of
coverage
e.g.:
home value = 80.000 €
sum insured = 20.000 €
claim value (total loss for compulsory policy and partial loss for
voluntary products) = 20.000 €
claim settled = 20.000 € by PAID (First Risk policy) and 20.000
€/80.000 € X 20.000 € = 5.000 € paid by voluntary products
PAID owns an excess of loss reinsurance programme for 300 mil €, designated to provide real protection for PAID current portfolio. PAID has its own retention - 250.000€/event
The placement of this programme was supported by four renowned national and international brokers, i.e. Aon Benfield, Guy Carpenter, Stellar Re and Willis Re. The reinsurance programme is placed 100%, among the participant reinsurers being Swiss Re, Munich Re, Sirius, Kiln and Lloyd's Syndicates.
Claims paid in the first year: over 69.000 €, for 32 properties affected by floods and landslides
Current situation:
Managed portfolio – 850.000 compulsory home
insurance policies (10% from total housing fund)
Underwriting rate has slowed substantially
Renewal rate for expired policies is extremely low
Conclusion:
Penalties provided by law for uninsured homeowners
frightening rather than risks that are exposed. The need
for protection is not aware.
Bucuresti 18%
Dobrogea (2) 10%
Moldova (6) 17%
Bucovina (2) 3%
Maramures (2) 2%
Crisana (2) 5%
Banat (2) 5%
Oltenia (5) 6%
Muntenia (9) 23%
Transilvania (10) 11%
Distribution per historical regions
61%
39%
Location
Urban Rural
61%
39%
Building type
A B
13414
28730
10164
0
5000
10000
15000
20000
25000
30000
35000
15/0
7/20
10
24/0
7/20
10
2/8
/20
10
11/8
/20
10
20/0
8/2
010
29
/08
/20
10
7/9
/20
10
16/0
9/2
010
25
/09
/20
10
4/1
0/2
010
13
/10
/20
10
22/1
0/2
010
31
/10
/20
10
9/1
1/20
10
18/1
1/20
10
27/1
1/20
10
6/1
2/20
10
15/1
2/20
10
24/1
2/20
10
2/1/
2011
11
/1/2
011
20
/01/
2011
29
/01/
2011
7/
2/20
11
16/0
2/20
11
25/0
2/20
11
6/3
/20
11
15/0
3/20
11
24/0
3/20
11
2/4
/20
11
11/4
/20
11
20/0
4/2
011
29
/04
/20
11
8/5
/20
11
17/0
5/20
11
26/0
5/20
11
4/6
/20
11
14/0
6/2
011
23
/06
/20
11
2/7/
2011
11
/7/2
011
20
/07/
2011
29
/07/
2011
7/
8/2
011
16
/08
/20
11
25/0
8/2
011
3/
9/2
011
12
/9/2
011
21
/09
/20
11
30/0
9/2
011
Policies sold as of
0
2000
4000
6000
8000
10000
12000
16/0
7
18/0
7
20/0
7
22/0
7
24/0
7
26/0
7
28/0
7
30/0
7
1/8
3/8
5/8
7/8
9/8
11/8
13/0
8
15/0
8
17/0
8
19/0
8
21/0
8
23/0
8
25/0
8
27/0
8
29/0
8
31/0
8
2/9
4/9
6/9
8/9
10/9
12/9
14/0
9
16/0
9
18/0
9
20/0
9
22/0
9
24/0
9
26/0
9
28/0
9
Sold policies in 2010 Sold policies in 2011
Major problem:
current legislation, who mixed the voluntary product with
the compulsory policy, which can not compete with the
voluntary products
poor financial education; low level of insurance culture
Achievements:
creating a national database with Romanian
homeowners
partnerships with local authorities
running a national campaign to increase the awareness
of compulsory home insurance
organize monthly meetings with the media
Focus on:
lobbying to change legislation
increasing compulsory insurance product rate of
coverage in total housing fund
launch a promotion campaign with emphasis on rural
zone