No use for Greek money

The uncertainty reigning on the Romanian insurance market, triggered by the delay in endorsing the enforcement norms for the insurance companies Law, is a serious problem for those who want to start a new business.

Greek company Agrotiki Hellenic, Greece’s third-largest insurer, has been waiting for these norms to be endorsed for the past six months, in order to start up its own business in Romania.

The insurance market is practically closed to investors, therefore the only solution is to buy an already established company, regardless of its poor activity.

“I would suggest foreign investors who are planning to enter the insurance market to buy some of the lowest ranked companies, for which they would have to pay only the equivalent of one monthly salary,” Cristian Constantinescu, president of Allianz-?iriac Asigurari and of the National Association of Insurance Companies in Romania, said on Tuesday.

In his turn, one of the representatives of Agrotiki Hellenic, Dimitri Vidalis, says he was expecting something different. “This solution is not appropriate, as we want to comply with the laws and not to go around them,” Vidalis told Ziarul Financiar at the International Forum of Insurance-Re-Insurance, held these days in Sinaia and organised by XPrimm.

The deadlock was caused by the delay of Law 32/2000 endorsement. Parliament still has to appoint the members of the Insurance Supervision Commission.

Once this panel is established, its role on the insurance market will be similar to NBR’s (National Bank of Romania) attributions on the banking market or CNVM’s (Securities National Commission) activity on the capital market.

According to Agrotiki officials, some 1.3 million dollars will be invested in the company to be founded, together with the World Bank, which will hold a 10% stake in the new company to be called AGB Siguranta.

Agrotiki Hellenic, held by the Agricultural Bank of Greece, is Greece’s third-largest insurance company, after Ethniki and Interamerican, which are already present in Romania through Garanta and Interamerican Romania.

A number of 73 companies have been granted the licence to operate on the Romanian market, but only 25-30% of them actually conduct operations.

Among these, the first ten insurance companies hold an 80% market share, estimated to have stood at 300-310 million dollars (6,500 billion lei for an exchange rate of 21,000 lei/dollar) last year. Romanians spend 12 dollars on average for insurance every year.