Proiect asigurari si reasigurari - RCA
Content
Academy of Economic Studies, Business Administration Faculty, English Section Bucharest
Insurance and Reinsurance Project
„Romanian Motor Insurance Market”
Students: RUDA ADRIANA SIVU LAURA Group 136
2009
TABLE OF CONTENTS
CHAPTER 1: Introduction……………......……………………………….page 3 CHAPTER 2: Motor insurance generalities………………………….........page 4 2.1 Why and when do we need a motor insurance?.................page 4 2.2 Small insurance dictionary.................................................page 4 CHAPTER 3: Types of motor insurance used in Romania…………..........page 7 CHAPTER 4: The Romanian motor insurance market in 2008 and 2009..page 13 CHAPTER 5: Conclusions ............................................…………………page 15 References…………………………………………………………….....page 16
2
Chapter 1: Introduction
We are living in a world full of risks. Whether we are taking the bus to go to work or travel by car or airplane, people are constantly surrounded by risky situations. Thus, in order to avoid suck perils, one has to take an important measure, that of insuring their vehicles. This type of insurance is called motor insurance or auto insurance. Market research shows that the insurance industry is in a continuous expansion, growing proportionally with the new equipment and machinery used in this domain of activity. The characteristics of modern insurances and the factors that influence them determined the insurance companies to adopt new technologies that have the role of reducing the costs and increase efficiency. Among these, the ones that have a major role in selling insurances and in the management of damages are the internet, telephone and video. The video can be used to evaluate the damages. As an efficacy example we can mention recording a car accident. For instance, a video camera placed in an auto-shop can help the specialists of an insurance company to evaluate the damages from their office. This leads to a decrease in the costs of travel and centralizes, in a way, the evaluation activity of the damages. The telephone offers a higher security, at lower costs, and increases the risk control efficiency. Despite this, it is not a fully independent system, due to the fact that it needs, in advance, that the policy terms which will be settled by telephone to be known by the public with the help of mass-media. Not only that, but it is also necessary to have behind the whole system a team of well-trained specialists, who will sustain this technology. Furthermore, through telephone, problems concerning the management of damages can be solved, the advantage being the time efficiency and avoidance of bureaucracy, but having the disadvantage of not being able to properly evaluate the damages. The telephone is a vital instrument in the field, especially for the insurance agent, because, many times, the contact that he/she establishes with a potential client will be made through it. The key-success factor is to know and to use the art of conversation on the telephone. The internet has the highest potential as a way of selling insurances. Nevertheless, it is not used at a wide scale, because of its applications, of its limited access and of its price. But there is hope that the internet will have the most important place in the near future, because it is still used together with the traditional selling of insurances, in the subsidies of the insurance companies or in the bank assurance system. All the methods have a series of advantages and disadvantages. What we can conclude is that the insurance companies will have to search and evaluate the new technologies, without giving up the old ones. It seems that the optimal solution is the usage of both technologies: old and new.
3
Chapter 2: Motor insurance generalities
2.1 Why and when do we need a motor insurance? Why do we need a motor insurance? Having and driving a car implies taking risks. These frequently appear in traffic and can be: • • • • • • Damaging your own vehicle Damaging another vehicle Damaging or destroying other assets Hurting yourself or other persons from the vehicle that you drive Hurting other persons from another vehicle involved in the accident, or hurting a jay Your car can be damaged or destroyed while it is staying in the garage, in the parking-lot, by natural disasters or it can be stolen.
All these events affect our budget and it is possible to end up in the situation where one will not be able to use the vehicle for a long period of time, because of the high costs of the repairs, without taking into consideration the replacement of it. People who were in unwanted situations like this will realize that a motor insurance would have saved them.
When do we need a motor insurance? The best time of acquiring this type of insurance is when you buy a new or second-hand car, or better said, before using that car in traffic.
2.2 Small insurance dictionary Important shareholders – shareholders that, alone or through or in connection with other persons, have at least 5% from the total voting rights in the general meeting of the shareholders Insurance activity – the activity made in or from Romania, which designates, mainly, the offering, the intermediation, the negotiation, the closing of insurance and reinsurance policies, the cashing of bonuses, liquidation of damages, the recuperation activity, but also the investment or the increasing of own and owned funds
4
Insurance agent – natural or legal person, empowered, under the authorization of an insurance agency, to negotiate or to close contracts, in the name and in the account of the insurance company, with a third party, according to the conditions stipulated in the mandate contract, without being an insurance broker or an insurer Insurance – the operation through which an insurer establishes, with the help of the mutuality principle, an insurance fund, with the contribution of more insured persons exposed to certain risks, and which compensates those that will have an injury from the fund made out of received bonuses, and also based on other incomes received from the activity undertaken Insured – the person that has an insurance contract with the insurer Insurer – natural or legal person, Romanian or not, or a entity authorized by the State to practice insurance activities Insurance broker - natural or legal person, Romanian or not, authorized by the State, which, for its clients, negotiates or signs insurance contracts and offers other services related to the protection against risks or regularization of damages Catastrophe – an event or a series of events which cause substantial damages in a short period of time Coinsurance – the activity/operation through which two or more insured subscribe to the same risk, each one covers a certain part of it Free paid reserve fund – the total amount with which the members of the society contributed to its funds Danger – this term refers to possible causes of losing in assets insurances, like fire, storm, earth-quakes etc. Insurance portfolio – a part or all of the insurance contracts signed by an insurer Gross premiums underwritten – bonuses received or to be received, including the reinsurance bonuses received, from all the insurance and reinsurance contracts, which are reinforced in a referential period of time, before deducting them from these amounts Gross premiums received – bonuses received from which we deduct the amounts paid and to be paid as a bonus of reinsurance Gross premiums received – the amount of bonuses received, including the reinsurance bonuses received in the referential period, before deducting any amounts Net premiums received – bonuses received from which we deduct the amounts paid as reinsurance bonuses Reinsurance – the operation of insuring an insurer by another insurer, the first one being reinsured, and the second one being the re-insurer
5
Retention own – the part from the risk that remains in the duty of the insurer after the reinsurance deduction is made Risk – any situation that derives from the activity of a person or from the activity of an organization and which determines loses, material damages, physical damages, civil liability etc. Insured risk – the phenomenon (the event) or group of phenomenon, which, once produced, oblige the insurer to pay the insured (or the beneficiary of the insurance) the compensation or the insured amount Insurance society – legal person whose associates are also insured and insurers
6
Chapter 3: Types of motor insurance used in Romania
A. Vehicle crash and theft insurance What can you insure? Vehicles registered in Romania, owned by natural or legal persons
What risks do they cover? Collision, hits, inverting, scratching, falls, including the fall of other objects on the vehicle Fire, explosion, smoking, spots, carbonization and other diverse destructions which result from fire Floods, storms, hurricane, earth-quake, collapsing or landslides, actions of water flowing and by the objects in the water Torrential raining, hail, thunder, avalanche, the weight of snow or of ice Theft of the vehicle or of parts of it Damages made to the vehicle or to parts of it as a result of a theft
The risks related before are covered on the Romanian territory. Covering these risks can be extended outside Romanian territory, on a specific paid bonus demanded, or automatically when you purchase the green card from one of the representatives. What compensation do I receive? In case of partial damages: Repairs costs, respectively the costs of replacing the damaged parts The expense made by the transportation of the vehicle to the nearest auto-shop which can make the repair or to a shelter The expenses made to limit the damages
In case of full damage: The insured amount written in the insurance, less the costs of the undamaged parts, remains in the property of the insured
7
B. The insurance of the drivers and of the persons in the vehicle What can you insure? The driver and the persons in the vehicle insured for damage and theft
What are the risks covered by the insurance? Death or total or partial permanent invalidity produced in traffic or by accidents in traffic
What is the compensation? The insured amount in the contract in case of total invalidity or death An amount in the limit of the invalidity degree established by the doctor, in case of partial invalidity The amount of the medical expenditures in case a person is hurt in the vehicle for: the hospital, the diagnosis, surgical treatment or medicines, transport
C. Motor third party liability (MTPL), valid outside Romanian territory (Green Card) What can you insure? Natural or legal persons that have vehicles registered in Romania
What kind of risks does it cover? The injuries that the insured or the persons included in the insurance that have the responsibility towards third parties that suffered a damage from the vehicle accident, which take place on the countries’ territories mentioned in the international insurance document called “green card”
What are the compensations? The amounts owed to third partied that suffered a damage in case of physical damages or death The expense made by the insured in the civil lawsuit, if he/she was obliged to repay
8
D. The liability insurance of the transporter as a carrier, for the goods transported with the vehicle, outside the Romanian territory What can be insured? The entities that are involved in international shipping of goods, with vehicles mentioned in the insurance policy What risks does it cover? Total or partial loss of the goods or for destroying the goods, which is produced between the moment of receiving the goods in the vehicle until the goods are handedover, as well for overcoming the delivering deadline What are the compensations? In case of total damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured from the total quantity which was fully destroyed For the other goods, the value at the date of the incident insured, from which you deduct, with the agreement of the insured, the value at the same date as the rest of the goods which are reusable or still worth something In case of partial damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured for the loss of the quality (depreciation) of that part from the total quantity which was destroyed and which is diminishing the value of those goods. The depreciation degree is established in percentages, on the basis of examining the damaged goods For the other goods, the cost for the repairs of the components of damaged parts, or the cost for replacing or reconditioning the goods, is deducted, with the agreement of the insured, the value at the same date as the rest of the goods which are reusable or still worth something
9
E. The liability insurance of the transporter as a carrier, for the goods transported with the vehicle, only on the Romanian territory What can be insured? The entities that are involved in shipping of goods within the Romanian borders, with vehicles mentioned in the insurance policy What risks does it cover? The liability of the transporter for the damaged transported goods, caused by the transporter and/or the driver of the vehicle, including the cases resulting from not complying with the clauses stipulated in the transport contract The damage brought to the goods as a result of some technical malfunctions of the vehicle or as a result of a fault made by the persons from which the transporter rented the vehicle What are the compensations? In case of total damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured from the total quantity which was fully destroyed For the other goods, the value at the date of the incident insured, from which you deduct, with the agreement of the insured, the value at the same date as the rest of the goods which are reusable or still worth something In case of partial damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured for the loss of the quality (depreciation) of that part from the total quantity which was destroyed and which is diminishing the value of those goods. The depreciation degree is established in percentages, on the basis of examining the damaged goods For the other goods, the cost for the repairs of the components of damaged parts, or the cost for replacing or reconditioning the goods, is deducted, with the agreement of
10
the insured, the value at the same date as the rest of the goods which are reusable or still worth something
F. Motor third party liability (MTPL) What can be insured? Natural or legal persons that have vehicles registered in Romania or outside Romania
What risks does it cover? The prejudices brought by the insured person/s to third parties involved in accidents on the Romanian territory, accidents which include: o Death or body injuries o Damages and destruction of goods (including vehicles) What are the compensations? For the motor third party liability insurance, the compensations are paid to the affected natural or legal persons, in case the latter were not previously compensated by the insurer. The amounts the insured is obliged to pay for the damages and the court expenses of the persons who took the risks mentioned above The expenses made by the insured during the civil lawsuit
Each year, the government of Romania sets a limit for the compensations an insurer has to give to the insured. In 2008, the lower limit for material damages was 150,000 euro, while in case of accidents resulting in deaths or body injuries, the limit was 750,000 euro.
G. Motor third party liability (MTPL), exceeding the limits of the compulsory one What can be insured? Natural or legal persons that have vehicles registered in Romania
What risks does it cover? The prejudices brought by the insured person/s to third parties involved in accidents on the Romanian territory, accidents which include: o Death or body injuries
11
o Damages and destruction of goods (including vehicles) What are the compensations? For the motor third party liability insurance, the compensations are paid to the affected natural or legal persons, in case the latter were not previously compensated by the insurer. The amounts that exceed the limits imposed by law for MTPL and which the insured is obliged to pay for the damages and the court expenses of the persons taking the risks mentioned above The expenses made by the insured during the civil lawsuit
12
Chapter 4: The Romanian motor insurance market in 2008 and 2009
Motor insurance represents, in Romania, more than two thirds of the insurance industry’s total, as compared to the European Union, where it cumulates 13-15%. This high percent can be explained not only by the lack of knowledge Romanian citizens have concerning insurance, but also by the professional incapacity of the insurance companies, that cannot conquer the market with any other appealing products except car insurance. In 2008, the motor insurance market had an estimated value of approximately 1 billion euro, representing more than 70% from the total amount registered on the general insurance segment in Romania. Unfortunately, the damage rate is growing fast on the market, reaching a percent of 34 in case of Motor Third Party Liability and 41% in case of CASCO insurance. Among the motor insurance companies present on the Romanian market we can mention Allianz-Tiriac, Unita, Asirom, BCR Asigurari, Omniasig, Ardaf, Asiban, Generali and others. As far as the hierarchy on this market is concerned, Allianz-Tiriac Asigurari is the motor insurance leader, with 18% market share. The company had, in the first semester of 2008, subscriptions totaling €135.85 million, recording a 1.85% decrease as compared to the first semester in 2008. The second place is occupied by Omniasig, with a 17.87% market share during the opening semester of 2008 represented by a total volume of subscriptions of €131 million. While Asirom is the third motor insurance company, that managed to have a market share of 10.77%, with total subscriptions of €78.88 million. The year 2009 came with an important change regarding the motor insurance market. In order to increase their efficiency, most of the companies above agreed with revising the auto tariff systems, so as to correspond to the assumed risks. Furthermore, some representatives suggested that all these corporations should contribute to creating a common database and to introducing a more proficient system of evaluating the damages. The first step has already been made: the leader of general insurance companies in Romania, Allianz-Tiriac, initiated a new system of calculating the price of CASCO insurance. According to this new method, the fee is established not only by the type and price of the car, but also by each driver’s profile. More precisely, older drivers, the married ones, generally prudent drivers that rarely cause an accident, will pay less for a motor insurance starting July this year. While the ones involved in numerous accidents will have to pay more money. This
13
way, the corporation believes they will not only make social justice – each driver pays according to the number of damages he made – but also reduce their costs of reimbursement to the insured. The price of this type of insurance will depend on two aspects: the insured vehicle and the insured person. The information regarding the vehicle will include the brand of the car, model, year of fabrication, technical characteristics, features, safety systems etc. As for the insured person, the insurance company will ask details about his/her age, marital status, residence, date of acquiring the driver’s license, destination, frequency and way of using the vehicle, and his/her traffic conduct. Consequently, Allianz’s forecasts show that around 50% of their customers will be paying less by 10% for CASCO insurance, while 10% of their clients’ cost will remain the same. The rest of 40% of Allianz’s customers will have to pay 10-15% more for their CASCO policy. The corporation is certain that its competitors will soon modify their CASCO insurance systems as well.
14
Chapter 5: Conclusions
As we have seen in the previous chapters, the motor insurance Romanian market is a highlydeveloped field, which gained more and more ground in the general insurance sphere over the last couple of years. Whether this is because people are not very familiar with the other types of insurance, such as life insurance or property insurance, or because they consider the risk of damaging their vehicles higher than the risk of fire, no one can tell for sure. Yet, it does not take much for a Romanian citizen to realize that we have one of the most elevated rates of car damage, despite the fact that our auto fleet is one of the smallest. Any Romanian driver knows that what puts us in the top 3 countries in Europe with such a high rate is the infrastructure that can be seen throughout the country. The roads are mostly made up of holes in the pavement or unevenly-spread cement. Furthermore, our country only has 277 kilometers of highway, and it is statistically proven that 95% of car accidents happen outside the highway network. What is more, Romanians are said to be among the most stressed drivers in the world, and they act in consequence, by driving chaotically and imprudent, caring more sometimes about their pride rather than their own cars. Thus, it should not be a surprise that two out of three insured vehicles are involved in an accident. All these factors represent opportunities for the insurance companies. However, when these situations are met more often than expected, corporations’ profits start decreasing and competition on the market rises. They begin making more advantageous offers and launch new attractive products, so that the company’s revenues get back on an ascending track. Nevertheless, not all companies act the same. As we have seen in Allianz-Tiriac case, the measures of dealing with the high rate of damage can differ tremendously. They have changed their strategy and switched to rewarding the responsible clients by reducing the price of the insurance, while penalizing the reckless ones. To conclude, we can say that the motor insurance industry will continue to develop and improve as long as people will use cars as a means of transport. Look at Bucharest for example. 2 million residents, 1 million automobiles. How many cars were there 7 years ago? And how many of them had insurance?
15
References:
• http://www.1asig.ro/ALLIANZ-TIRIAC-OMNIASIG-si-ASIROM-circa-50-dinpiata-asigurarilor-auto-articol-2,3,100-33627.htm
•
http://www.businessadviser.ro/asigurari_teribilistii_vor_plati_asigurari_auto_mai_scumpe.html
• • • •
http://www.motorinsurance.co.uk/ http://www.asig.ro/asigurare_auto.php http://www.generali.ro/persoane_fizice/auto.htm http://www.wall-street.ro/articol/Finante-Banci/26849/Piata-asigurarilor-autoeste-estimata-anul-acesta-la-peste-un-milliard-euro.html
•
http://www.standard.ro/articol_557/politele_auto_domina_piata_asigurarilor.ht ml
16
Insurance and Reinsurance Project
„Romanian Motor Insurance Market”
Students: RUDA ADRIANA SIVU LAURA Group 136
2009
TABLE OF CONTENTS
CHAPTER 1: Introduction……………......……………………………….page 3 CHAPTER 2: Motor insurance generalities………………………….........page 4 2.1 Why and when do we need a motor insurance?.................page 4 2.2 Small insurance dictionary.................................................page 4 CHAPTER 3: Types of motor insurance used in Romania…………..........page 7 CHAPTER 4: The Romanian motor insurance market in 2008 and 2009..page 13 CHAPTER 5: Conclusions ............................................…………………page 15 References…………………………………………………………….....page 16
2
Chapter 1: Introduction
We are living in a world full of risks. Whether we are taking the bus to go to work or travel by car or airplane, people are constantly surrounded by risky situations. Thus, in order to avoid suck perils, one has to take an important measure, that of insuring their vehicles. This type of insurance is called motor insurance or auto insurance. Market research shows that the insurance industry is in a continuous expansion, growing proportionally with the new equipment and machinery used in this domain of activity. The characteristics of modern insurances and the factors that influence them determined the insurance companies to adopt new technologies that have the role of reducing the costs and increase efficiency. Among these, the ones that have a major role in selling insurances and in the management of damages are the internet, telephone and video. The video can be used to evaluate the damages. As an efficacy example we can mention recording a car accident. For instance, a video camera placed in an auto-shop can help the specialists of an insurance company to evaluate the damages from their office. This leads to a decrease in the costs of travel and centralizes, in a way, the evaluation activity of the damages. The telephone offers a higher security, at lower costs, and increases the risk control efficiency. Despite this, it is not a fully independent system, due to the fact that it needs, in advance, that the policy terms which will be settled by telephone to be known by the public with the help of mass-media. Not only that, but it is also necessary to have behind the whole system a team of well-trained specialists, who will sustain this technology. Furthermore, through telephone, problems concerning the management of damages can be solved, the advantage being the time efficiency and avoidance of bureaucracy, but having the disadvantage of not being able to properly evaluate the damages. The telephone is a vital instrument in the field, especially for the insurance agent, because, many times, the contact that he/she establishes with a potential client will be made through it. The key-success factor is to know and to use the art of conversation on the telephone. The internet has the highest potential as a way of selling insurances. Nevertheless, it is not used at a wide scale, because of its applications, of its limited access and of its price. But there is hope that the internet will have the most important place in the near future, because it is still used together with the traditional selling of insurances, in the subsidies of the insurance companies or in the bank assurance system. All the methods have a series of advantages and disadvantages. What we can conclude is that the insurance companies will have to search and evaluate the new technologies, without giving up the old ones. It seems that the optimal solution is the usage of both technologies: old and new.
3
Chapter 2: Motor insurance generalities
2.1 Why and when do we need a motor insurance? Why do we need a motor insurance? Having and driving a car implies taking risks. These frequently appear in traffic and can be: • • • • • • Damaging your own vehicle Damaging another vehicle Damaging or destroying other assets Hurting yourself or other persons from the vehicle that you drive Hurting other persons from another vehicle involved in the accident, or hurting a jay Your car can be damaged or destroyed while it is staying in the garage, in the parking-lot, by natural disasters or it can be stolen.
All these events affect our budget and it is possible to end up in the situation where one will not be able to use the vehicle for a long period of time, because of the high costs of the repairs, without taking into consideration the replacement of it. People who were in unwanted situations like this will realize that a motor insurance would have saved them.
When do we need a motor insurance? The best time of acquiring this type of insurance is when you buy a new or second-hand car, or better said, before using that car in traffic.
2.2 Small insurance dictionary Important shareholders – shareholders that, alone or through or in connection with other persons, have at least 5% from the total voting rights in the general meeting of the shareholders Insurance activity – the activity made in or from Romania, which designates, mainly, the offering, the intermediation, the negotiation, the closing of insurance and reinsurance policies, the cashing of bonuses, liquidation of damages, the recuperation activity, but also the investment or the increasing of own and owned funds
4
Insurance agent – natural or legal person, empowered, under the authorization of an insurance agency, to negotiate or to close contracts, in the name and in the account of the insurance company, with a third party, according to the conditions stipulated in the mandate contract, without being an insurance broker or an insurer Insurance – the operation through which an insurer establishes, with the help of the mutuality principle, an insurance fund, with the contribution of more insured persons exposed to certain risks, and which compensates those that will have an injury from the fund made out of received bonuses, and also based on other incomes received from the activity undertaken Insured – the person that has an insurance contract with the insurer Insurer – natural or legal person, Romanian or not, or a entity authorized by the State to practice insurance activities Insurance broker - natural or legal person, Romanian or not, authorized by the State, which, for its clients, negotiates or signs insurance contracts and offers other services related to the protection against risks or regularization of damages Catastrophe – an event or a series of events which cause substantial damages in a short period of time Coinsurance – the activity/operation through which two or more insured subscribe to the same risk, each one covers a certain part of it Free paid reserve fund – the total amount with which the members of the society contributed to its funds Danger – this term refers to possible causes of losing in assets insurances, like fire, storm, earth-quakes etc. Insurance portfolio – a part or all of the insurance contracts signed by an insurer Gross premiums underwritten – bonuses received or to be received, including the reinsurance bonuses received, from all the insurance and reinsurance contracts, which are reinforced in a referential period of time, before deducting them from these amounts Gross premiums received – bonuses received from which we deduct the amounts paid and to be paid as a bonus of reinsurance Gross premiums received – the amount of bonuses received, including the reinsurance bonuses received in the referential period, before deducting any amounts Net premiums received – bonuses received from which we deduct the amounts paid as reinsurance bonuses Reinsurance – the operation of insuring an insurer by another insurer, the first one being reinsured, and the second one being the re-insurer
5
Retention own – the part from the risk that remains in the duty of the insurer after the reinsurance deduction is made Risk – any situation that derives from the activity of a person or from the activity of an organization and which determines loses, material damages, physical damages, civil liability etc. Insured risk – the phenomenon (the event) or group of phenomenon, which, once produced, oblige the insurer to pay the insured (or the beneficiary of the insurance) the compensation or the insured amount Insurance society – legal person whose associates are also insured and insurers
6
Chapter 3: Types of motor insurance used in Romania
A. Vehicle crash and theft insurance What can you insure? Vehicles registered in Romania, owned by natural or legal persons
What risks do they cover? Collision, hits, inverting, scratching, falls, including the fall of other objects on the vehicle Fire, explosion, smoking, spots, carbonization and other diverse destructions which result from fire Floods, storms, hurricane, earth-quake, collapsing or landslides, actions of water flowing and by the objects in the water Torrential raining, hail, thunder, avalanche, the weight of snow or of ice Theft of the vehicle or of parts of it Damages made to the vehicle or to parts of it as a result of a theft
The risks related before are covered on the Romanian territory. Covering these risks can be extended outside Romanian territory, on a specific paid bonus demanded, or automatically when you purchase the green card from one of the representatives. What compensation do I receive? In case of partial damages: Repairs costs, respectively the costs of replacing the damaged parts The expense made by the transportation of the vehicle to the nearest auto-shop which can make the repair or to a shelter The expenses made to limit the damages
In case of full damage: The insured amount written in the insurance, less the costs of the undamaged parts, remains in the property of the insured
7
B. The insurance of the drivers and of the persons in the vehicle What can you insure? The driver and the persons in the vehicle insured for damage and theft
What are the risks covered by the insurance? Death or total or partial permanent invalidity produced in traffic or by accidents in traffic
What is the compensation? The insured amount in the contract in case of total invalidity or death An amount in the limit of the invalidity degree established by the doctor, in case of partial invalidity The amount of the medical expenditures in case a person is hurt in the vehicle for: the hospital, the diagnosis, surgical treatment or medicines, transport
C. Motor third party liability (MTPL), valid outside Romanian territory (Green Card) What can you insure? Natural or legal persons that have vehicles registered in Romania
What kind of risks does it cover? The injuries that the insured or the persons included in the insurance that have the responsibility towards third parties that suffered a damage from the vehicle accident, which take place on the countries’ territories mentioned in the international insurance document called “green card”
What are the compensations? The amounts owed to third partied that suffered a damage in case of physical damages or death The expense made by the insured in the civil lawsuit, if he/she was obliged to repay
8
D. The liability insurance of the transporter as a carrier, for the goods transported with the vehicle, outside the Romanian territory What can be insured? The entities that are involved in international shipping of goods, with vehicles mentioned in the insurance policy What risks does it cover? Total or partial loss of the goods or for destroying the goods, which is produced between the moment of receiving the goods in the vehicle until the goods are handedover, as well for overcoming the delivering deadline What are the compensations? In case of total damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured from the total quantity which was fully destroyed For the other goods, the value at the date of the incident insured, from which you deduct, with the agreement of the insured, the value at the same date as the rest of the goods which are reusable or still worth something In case of partial damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured for the loss of the quality (depreciation) of that part from the total quantity which was destroyed and which is diminishing the value of those goods. The depreciation degree is established in percentages, on the basis of examining the damaged goods For the other goods, the cost for the repairs of the components of damaged parts, or the cost for replacing or reconditioning the goods, is deducted, with the agreement of the insured, the value at the same date as the rest of the goods which are reusable or still worth something
9
E. The liability insurance of the transporter as a carrier, for the goods transported with the vehicle, only on the Romanian territory What can be insured? The entities that are involved in shipping of goods within the Romanian borders, with vehicles mentioned in the insurance policy What risks does it cover? The liability of the transporter for the damaged transported goods, caused by the transporter and/or the driver of the vehicle, including the cases resulting from not complying with the clauses stipulated in the transport contract The damage brought to the goods as a result of some technical malfunctions of the vehicle or as a result of a fault made by the persons from which the transporter rented the vehicle What are the compensations? In case of total damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured from the total quantity which was fully destroyed For the other goods, the value at the date of the incident insured, from which you deduct, with the agreement of the insured, the value at the same date as the rest of the goods which are reusable or still worth something In case of partial damage: For the goods where quantity is expressed in kilograms, liters, pieces, linear meters, square meters or cubic meters, the value at the date of the incident insured for the loss of the quality (depreciation) of that part from the total quantity which was destroyed and which is diminishing the value of those goods. The depreciation degree is established in percentages, on the basis of examining the damaged goods For the other goods, the cost for the repairs of the components of damaged parts, or the cost for replacing or reconditioning the goods, is deducted, with the agreement of
10
the insured, the value at the same date as the rest of the goods which are reusable or still worth something
F. Motor third party liability (MTPL) What can be insured? Natural or legal persons that have vehicles registered in Romania or outside Romania
What risks does it cover? The prejudices brought by the insured person/s to third parties involved in accidents on the Romanian territory, accidents which include: o Death or body injuries o Damages and destruction of goods (including vehicles) What are the compensations? For the motor third party liability insurance, the compensations are paid to the affected natural or legal persons, in case the latter were not previously compensated by the insurer. The amounts the insured is obliged to pay for the damages and the court expenses of the persons who took the risks mentioned above The expenses made by the insured during the civil lawsuit
Each year, the government of Romania sets a limit for the compensations an insurer has to give to the insured. In 2008, the lower limit for material damages was 150,000 euro, while in case of accidents resulting in deaths or body injuries, the limit was 750,000 euro.
G. Motor third party liability (MTPL), exceeding the limits of the compulsory one What can be insured? Natural or legal persons that have vehicles registered in Romania
What risks does it cover? The prejudices brought by the insured person/s to third parties involved in accidents on the Romanian territory, accidents which include: o Death or body injuries
11
o Damages and destruction of goods (including vehicles) What are the compensations? For the motor third party liability insurance, the compensations are paid to the affected natural or legal persons, in case the latter were not previously compensated by the insurer. The amounts that exceed the limits imposed by law for MTPL and which the insured is obliged to pay for the damages and the court expenses of the persons taking the risks mentioned above The expenses made by the insured during the civil lawsuit
12
Chapter 4: The Romanian motor insurance market in 2008 and 2009
Motor insurance represents, in Romania, more than two thirds of the insurance industry’s total, as compared to the European Union, where it cumulates 13-15%. This high percent can be explained not only by the lack of knowledge Romanian citizens have concerning insurance, but also by the professional incapacity of the insurance companies, that cannot conquer the market with any other appealing products except car insurance. In 2008, the motor insurance market had an estimated value of approximately 1 billion euro, representing more than 70% from the total amount registered on the general insurance segment in Romania. Unfortunately, the damage rate is growing fast on the market, reaching a percent of 34 in case of Motor Third Party Liability and 41% in case of CASCO insurance. Among the motor insurance companies present on the Romanian market we can mention Allianz-Tiriac, Unita, Asirom, BCR Asigurari, Omniasig, Ardaf, Asiban, Generali and others. As far as the hierarchy on this market is concerned, Allianz-Tiriac Asigurari is the motor insurance leader, with 18% market share. The company had, in the first semester of 2008, subscriptions totaling €135.85 million, recording a 1.85% decrease as compared to the first semester in 2008. The second place is occupied by Omniasig, with a 17.87% market share during the opening semester of 2008 represented by a total volume of subscriptions of €131 million. While Asirom is the third motor insurance company, that managed to have a market share of 10.77%, with total subscriptions of €78.88 million. The year 2009 came with an important change regarding the motor insurance market. In order to increase their efficiency, most of the companies above agreed with revising the auto tariff systems, so as to correspond to the assumed risks. Furthermore, some representatives suggested that all these corporations should contribute to creating a common database and to introducing a more proficient system of evaluating the damages. The first step has already been made: the leader of general insurance companies in Romania, Allianz-Tiriac, initiated a new system of calculating the price of CASCO insurance. According to this new method, the fee is established not only by the type and price of the car, but also by each driver’s profile. More precisely, older drivers, the married ones, generally prudent drivers that rarely cause an accident, will pay less for a motor insurance starting July this year. While the ones involved in numerous accidents will have to pay more money. This
13
way, the corporation believes they will not only make social justice – each driver pays according to the number of damages he made – but also reduce their costs of reimbursement to the insured. The price of this type of insurance will depend on two aspects: the insured vehicle and the insured person. The information regarding the vehicle will include the brand of the car, model, year of fabrication, technical characteristics, features, safety systems etc. As for the insured person, the insurance company will ask details about his/her age, marital status, residence, date of acquiring the driver’s license, destination, frequency and way of using the vehicle, and his/her traffic conduct. Consequently, Allianz’s forecasts show that around 50% of their customers will be paying less by 10% for CASCO insurance, while 10% of their clients’ cost will remain the same. The rest of 40% of Allianz’s customers will have to pay 10-15% more for their CASCO policy. The corporation is certain that its competitors will soon modify their CASCO insurance systems as well.
14
Chapter 5: Conclusions
As we have seen in the previous chapters, the motor insurance Romanian market is a highlydeveloped field, which gained more and more ground in the general insurance sphere over the last couple of years. Whether this is because people are not very familiar with the other types of insurance, such as life insurance or property insurance, or because they consider the risk of damaging their vehicles higher than the risk of fire, no one can tell for sure. Yet, it does not take much for a Romanian citizen to realize that we have one of the most elevated rates of car damage, despite the fact that our auto fleet is one of the smallest. Any Romanian driver knows that what puts us in the top 3 countries in Europe with such a high rate is the infrastructure that can be seen throughout the country. The roads are mostly made up of holes in the pavement or unevenly-spread cement. Furthermore, our country only has 277 kilometers of highway, and it is statistically proven that 95% of car accidents happen outside the highway network. What is more, Romanians are said to be among the most stressed drivers in the world, and they act in consequence, by driving chaotically and imprudent, caring more sometimes about their pride rather than their own cars. Thus, it should not be a surprise that two out of three insured vehicles are involved in an accident. All these factors represent opportunities for the insurance companies. However, when these situations are met more often than expected, corporations’ profits start decreasing and competition on the market rises. They begin making more advantageous offers and launch new attractive products, so that the company’s revenues get back on an ascending track. Nevertheless, not all companies act the same. As we have seen in Allianz-Tiriac case, the measures of dealing with the high rate of damage can differ tremendously. They have changed their strategy and switched to rewarding the responsible clients by reducing the price of the insurance, while penalizing the reckless ones. To conclude, we can say that the motor insurance industry will continue to develop and improve as long as people will use cars as a means of transport. Look at Bucharest for example. 2 million residents, 1 million automobiles. How many cars were there 7 years ago? And how many of them had insurance?
15
References:
• http://www.1asig.ro/ALLIANZ-TIRIAC-OMNIASIG-si-ASIROM-circa-50-dinpiata-asigurarilor-auto-articol-2,3,100-33627.htm
•
http://www.businessadviser.ro/asigurari_teribilistii_vor_plati_asigurari_auto_mai_scumpe.html
• • • •
http://www.motorinsurance.co.uk/ http://www.asig.ro/asigurare_auto.php http://www.generali.ro/persoane_fizice/auto.htm http://www.wall-street.ro/articol/Finante-Banci/26849/Piata-asigurarilor-autoeste-estimata-anul-acesta-la-peste-un-milliard-euro.html
•
http://www.standard.ro/articol_557/politele_auto_domina_piata_asigurarilor.ht ml
16
