Home insurance needs quake to get going

More than a year from the moment it was first launched, boosting the sales of earthquake insurance policies – by either fiscal stimulation, coercion or any other means, is still nothing more than a project. Or, better yet, just words and intentions. The World Bank is trying to have it revived by talks with the authorities this week.
The State’s obstinacy to be directly involved in this by setting up a special insurance company to manage the project met with the opposition of the private insurance companies and did not get support from the World Bank, either.
Subsequently, the disputes in form of seminars or talk shows between the representatives of the private insurance companies and those of the Government last fall were followed by complete silence. The idea seems to be trendy again, but remains surrounded by confusion. Everything must start again from scratch.
Moreover, the market is seeing things differently now: can we buy reinsurance for this peril and for how much, given that as the years go by, the likelihood of an earthquake above 7 degrees becomes greater so that reinsurers are growing reluctant?
Steluta Racolta, Ardaf’s chairperson, says it would be best if the State dropped this idea of a mandatory insurance contract.
“I think the State has given up this plan to introduce mandatory policies. I mean I hope it has, which would be a good sign. Making insurance of homes mandatory would have hindered the development of the insurance concept a great deal. “
Yet Constantin Teculescu, chairman of Casa de Economii si Consemnatiuni (Romanian Savings Bank – CEC), the institution, which, according to a version of the project, was supposed to hold stake in a company selling this kind of policy, says the project has potential and will go on.
“We maintain our involvement. If the current banking law modification draft allows banks to hold up to 100% in an insurer, I believe we will be able to set up the insurance company we thought of,” Teculescu said.
Is it about a failure caused by the too direct involvement of the State in this business, considering no progress whatsoever has been made for a year now?
“Failure? I don’t know if we can call it failure, because I know nothing about a certain deadline. It is a success of those who did not want what we proposed, because they were unable to understand the system,” the CEC chairman said.
He feels insurers just did not get it. ” Monopoly is out of the question. The other companies on the market will be allowed to sell such policies, too.” As for the World Bank ” it may state its point, but it is not the one to decide,” he added.
The Insurance Supervision Commission would not comment on the matter at hand.
What does the World Bank have to say about this? Is it about a failure caused by the involvement of the State? ” Things are not exactly black and white here. The State’s involvement is obviously a mandatory requirement, but on the other hand, the State is known for being a bad administrator,” says Eugene Gurenko, World Bank’s official in charge of this project in Romania.