Domestic insurance market, up by 9.16 pc in Q1, reaching financial balance for the first time


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Gross underwritten premiums in the local insurance market in the first quarter of this year totaled RON 2.43 billion, up 9.16 percent compared to the same period in 2015, the Financial Supervisory Authority (ASF) data reveal, a press release informs.

Growth has been fueled by the general insurance segment, which recorded an advance of 9.74 percent, approaching the threshold of RON 2 billion, as well as the life insurance segment, in which underwritings increased by 6.6 percent, amounting to RON 438 million.

Insurance market was still dominated by auto policies, the share of civil liability insurances (Class X) climbing in the first quarter to over 56 percent, with 20 percentage points over the last three years. Adding land vehicles insurance, excluding the railway (Class III) gives an overall auto insurance accounting for 76.34 percent of the general insurance underwritings.

Civil liability insurance (MTPL) exceeded the first quarter the threshold of two million contracts concluded, the number of new policies being by 64,386 more than in the corresponding period of 2015, while the increase of enrollment is an essential precondition for market recovery. In total, on 31 March 2016, there were 4,652,631 MTPL policies in force, of which 3.5 million concluded by individuals, up 3 percent compared to the first quarter last year. The volume of gross underwritten premiums in the MTPL segment thus surged to over RON 1 billion, being by 31.6 percent higher than in Q1 of last year.

The average MTPL damage paid in the first quarter of 2016 fell to RON 6,874, compared to a peak of RON 7,769 reached in Q4 of 2014, but was by RON 205 higher than in the first quarter of last year.  If the evolution of the average damage confirms in the following quarters the decline posted compared to Q4 of 2015, there are prerequisites to cap the MTPL tariff increase, given that the damage is the main cost influencing the price of policies. The average premium for MTPL insurance was in Q1 RON 747, up 26.2 percent compared to the same period of last year, respectively 0.9 percent vs. Q4 of 2015.

According to ASF data, an important signal of rebalancing of the MTPL market was the decrease for the first time in the combined damage rate (damage rate plus expense ratio) to 101.66 percent, compared to 127.5 percent two years ago, in conditions in which the damage rate plunged to 69.8 percent and the expense ratio fell to 31.8 percent, compared to 40.7 percent in Q1 of 2014. In the auto insurance segment of Class III (Insurance for land vehicles, other than railway), the combined damage rate fell below 100 percent.

In the MTPL segment, the share of expenses with fees for brokers in the gross underwritten premiums fell for the third year in a row, from 17.3 percent in Q1 of 2014 to 14.13 percent in Q1 of 2016. The average share of expenses with fees in all the general insurance classes fell from 16.67 percent in Q1of 2014 to 13.49 percent in Q1 of this year.

The 35 insurance companies active in the market in the first quarter of this year paid gross indemnities of RON 913 million in the general insurance market, down 16 percent compared to Q1 of 2015, respectively RON 186 million for life insurance, i.e. a total of around RON 1.1 billion.



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