“The market is likely to look different in five years, as several steps can be skipped within the evolution of the insurance industry in Romania. Practically speaking, distribution channels now used by life insurance companies in Romania are the same as those used by German insurance providers in 1985,” said Roland Berger Strategy Consultants Romania’s Manager, Codrut Pascu. The agents of life insurance companies serve as main distribution channel, with an 80 percent share of total sales, brokers - 25 percent, and banks - a mere five percent. According to the Roland Berger study, banks will become an important distributor, especially for life insurance, even if they now have a much less important role than in other European countries. In order to diminish the importance of their own networks, insurers will also develop relations with brokerage companies.
Operational expenses of Romanian companies rise as high as 30 percent of gross subscribed premiums for the life insurance sector, and 37 percent for non-life. Acquisition costs for non-life products, at the level of the entire insurance market, represented 19.1 percent of gross subscribed premiums, while in the life insurance sector these reached 22 percent. Administration costs in non-life are slightly lower than last year, at 17.5 percent, compared to over 19 percent, while in life insurance these climbed to 16.2 in 2006 from 13.8 percent in 2005.
A “moderately optimistic scenario” in the aforementioned study shows that the Romanian insurance market could amount to €11 billion in 2017, compared to €1.62 billion in 2006.
