Life insurance segment may reach 1bn euros by 2010

Romaniaes life insurance market is likely to get close to one billion euros by 2010 amid a yearly growth rate of 30%.
“According to the latest research conducted both by AIG Life, and by specialised firms, the life insurance market will witness an average yearly growth rate of 30% in 2010-2012, with this pace taking the market total to 1bn euros,” stated Theodor Alexandrescu, general manager of AIG Life.
He believes this development will be triggered both by legislative conditions, the diversification of distribution channels through bancassurance, telemarketing, direct marketing, and also by the development of insurerse own networks and more extensive brokerage activities.
“The market will gradually evolve from a consumption-oriented society to a savings-oriented one. By late 2010, the life insurance market will near 3bn RON (900m euros) and will total 30% of the overall insurance market,” said Bram Boon, CEO with ING Asigurari de Viata.
The Romanian life insurance market is now experiencing a phase of growth due to the low penetration level of life insurance, 0.4% in GDP, compared with the European average of 5% of GDP. At the same time, this type of policy accounts for less than 25% of the overall insurance market compared with the European level that stands at 60%.
“Legislative changes and reforms operated in the pensions and health insurance systems will generate faster growth both of individual insurance and of insurance offered to employers,” explained Alexandrescu.
He considers EU integration will lead to a higher level of professionalism and to the diversification of distribution channels, with the volume of premiums increasing amid rising awareness and greater need for insurance. The CEO of ING Asigurari de Viata, the domestic insurer that boasted the biggest gross income on the market in 2006, of 14m euros, also shares this opinion.
According to Boon, adjustment to EU directives will generate higher standards for companiese agents and create a rising transparency toward customers, so that they will know what they are buying.
According to ING officials, one of the factors prompting Romanians to buy life insurance will be the pressure placed on the social system generated by workforce migration.
In Boones opinion, domestic insurers will also start focusing on medium and low-income customers and will attempt to sell their products not only through their own agents, but also through banks and insurance brokers.
While in 2006, 80% of life insurance products were sold through insurance agents, 14% through banks and 6% through brokers, the situation may well change by 2010, with the weight of banks and insurance brokers increasing to 18% and 8% respectively.