Insurance Market Growth in Romania
The general and life insurance market in Romania has increased by 3.2% in the first three months of this year, reaching over 5.5 billion lei, according to data released by the Financial Supervisory Authority (ASF). This figure includes the underwriting activity of the 15 branches present in Romania under the Freedom of Establishment.
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The positive dynamics were supported by growth in both insurance segments. General insurance saw a 1% increase, while life insurance grew by 13.1% compared to the first quarter of 2023. A more detailed analysis by insurance classes shows that the most significant influence on the growth of underwriting activity locally came from classes A8 (Fire and Natural Disasters) and A3 (motor insurance).
Insurance Market Trends in Romania for Q1 2024
In the first quarter of 2024, the insurance market in Romania saw a significant increase in premiums underwritten by authorized and supervised companies, reaching a total of 4.8 billion lei. This represents 86% of the total volume of premiums underwritten in the country. On the other hand, there was a decrease in premiums underwritten in the A10 class (RCA and CMR) due to the expiration of policies issued by Euroins in T1 2023, before the withdrawal of their authorization, which would have expired in T1 2024.
The report from the ASF highlights the trends in the insurance market for Q1 2024. It is evident that authorized companies have played a significant role in driving the growth of the market, while branches operating in Romania under the freedom of establishment have also contributed with premiums amounting to 768 million lei in the first quarter of 2024.
Insurance Market Overview
Insurance companies have accumulated in the first quarter of 2024 gross written premiums (GWP) amounting to approximately 4.8 billion lei, a slight increase (+0.8%) compared to the same period of the previous year. The written premiums related to general insurance (GI) were worth around 3.9 billion lei, a decrease of about 1.4% compared to the first quarter of 2023, while the written premiums related to life insurance (LI) amounted to approximately 888 million lei, an increase of 12% compared to the same period of the previous year, according to a document.
RCA Market
The written premiums for RCA insurance from companies authorized and regulated by ASF amounted to approximately 1.8 billion lei in the first quarter of 2024, with the remainder up to the total of class A10 representing insurance for transported goods as a quality carrier.
Decline in Car Insurance Premiums in Romania
In the first quarter of 2024, the value of car insurance premiums subscribed by authorized companies in Romania decreased by approximately 16% compared to the same period last year. Including the activity of branches, the total value of premiums subscribed was around 2.15 billion lei, an 11% decrease from the first quarter of 2023 (approximately 2.41 billion lei, including branches).
The Financial Supervisory Authority (ASF) attributes this reduction in revenues to a decrease in the number of contracts signed during the analyzed period compared to Q1 2023. When considering annual units (to account for different policy durations, ranging from 1 to 12 months), the number of car insurance contracts signed by ASF-authorized companies decreased in the first quarter of 2024.
Decrease in the Number of Insurance Contracts in Q1 2024
The number of insurance contracts in the first quarter of 2024 was approximately 1.3 million, a 29% decrease compared to Q1 2023 (1.8 million). However, when considering branches as well, the annual number of third-party liability insurance contracts was around 1.7 million, a 23% decrease compared to the same period of the previous year (including branches: 2.14 million annual exposure units), as stated in the report.
Reasons for the Decrease
The decrease in the number of contracts concluded in Q1 2024 compared to the same period in the previous year is due to the fact that the policies concluded by Euroins in T1 2023, before the withdrawal of the operating authorization, expired in December 2023 and were taken over by other third-party liability insurance providers. As a result, there was a decrease in the number of contracts in Q1 2024, as well as a decrease in underwritten premiums (-16%).
Analysis of Insurance Contracts and Claims in Q1 2024
Comparing the number of active insurance contracts reported by RCA insurers, there has been an increase as of 31.03.2024 compared to 31.12.2023 and 31.03.2023, according to the latest report. During the analyzed period, insurance companies reported cumulative payouts (excluding amounts paid by the FGA) for both categories of insurance, totaling approximately 2.2 billion lei, a 1.2% increase from Q1 2023.
Payouts for General and Life Insurance
For general insurance, payouts amounted to 1.7 billion lei, a 2.8% decrease from the same period in the previous year (1.8 billion lei). Life insurance policies saw payouts totaling 445 million lei, an increase of around 21% compared to Q1 2023 (369 million lei).
Insurance Claims for RCA Segment
Authorized and regulated insurance companies paid out a total of 940 million lei in Q1 2024 for claims on the RCA segment, showing a decrease compared to the previous year.
Insurance Payments for RCA Claims Decreased in Q1 2024
In the first quarter of 2024, authorized insurance companies in Romania have paid out approximately 940 million lei for 93,913 insurance claims, resulting in an average claim amount of around 10,000 lei. This represents a 3.5% decrease compared to the same period in the previous year. These payments include those made as a result of the bankruptcy of City Insurance and Euroins Romania.
The Insurance Guarantee Fund (FGA) has approved a total of 352 million lei for RCA claims payments in the first three months of the current year, with 346 million lei already disbursed in Q1 2024. This amount is set to cover the claims resulting from the insolvency of the aforementioned insurance companies.
It is important to note that these figures do not take into account the payments made by FGA. However, the decrease in the average claim amount shows a positive trend in the insurance industry in Romania, with insurers efficiently managing claims and payouts.
Insurance Market Report
According to the latest report, local insurance premiums have decreased by 9%, while the number of paid claims has dropped by 6% compared to the first three months of 2023.
Distribution Channels
The most important distribution channels for general insurance products are represented by brokerage companies, through which a volume of subscribed premiums of 3.4 billion lei was distributed (79% of the total value of subscribed premiums, including the activity carried out by branches in Romania).
Trends and Vulnerabilities
The insurance penetration rate in GDP and insurance density, indicators that show the size and level of development of the insurance market, are at a low level in Romania compared to other EU member states. However, there is an increase in these indicators compared to previous periods.
A structural vulnerability of the insurance sector remains the high degree of concentration on insurance companies that.
Market Analysis of the Insurance Sector in Romania
Significant market shares are held in Romania, particularly in certain segments such as mandatory auto insurance (RCA) and other insurance classes. The market structure analysis reveals a strong dependence on the local level on the auto insurance segment, especially on mandatory auto liability insurance (RCA).
According to the report, taking into account the activity carried out by branches, auto insurance (class A3 and A10) accounts for 55% of the total premium volume in the Romanian insurance market, showing a slight decrease compared to the level recorded in the first quarter of 2023 (60.5%). There is a slight increase in concentration for general insurance activities, while concentration has decreased for life insurance.
Regarding the solvency of the insurance sector, solvency rates at the local level are at the lowest level compared to other countries in the region in the fourth quarter of 2023.
Positive Growth in the First Quarter of 2024
According to the latest report, businesses have experienced a slight increase in the first quarter of 2024 compared to the end of the previous year. This growth is a positive sign for the economy and indicates potential opportunities for further development.
