The insurance companies that are now operating on both the general and life insurance markets might no longer be forced to separate the two businesses, Insurance Supervision Commission sources say.
Half of the top 25 insurance companies in Romania (which account for more than 95% of the market) have joint operations and the separation of the two businesses has already been challenged by the representatives of those companies.
According to the legislative modifications regarding the insurance industry enacted this year in order to rally to the European legislation in the field, the life insurance companies and the general insurance companies should have conducted their operations separately as of January 1, 2005. However, the CSA will propose to modify this legislation in Brussels early next year, the sources say.
As a result of the modifications proposed, the only ones that will be required to separate life and general insurance into two distinct companies will be those insurers established from now on.
The companies that have the two businesses under the same umbrella at the moment will be able to go on like this in the future. After all, neither Hungary, nor the Czech Republic, which have already joined the European Union have provisions in place that stipulate companies already selling both insurance types shall separate the two businesses, only that no new companies may be established that operate in a similar manner.
The representatives of the companies that offer both types of insurance have adamantly protested against this decision, saying it will only generate extra costs. They added the activities were separated anyway in terms of reporting. Such companies are required to calculate technical reserves, keep their books and calculate solvency and liquidity quotients (insurer specific indicators) separately.
"This is good news, yet I have to see it to believe it. Anyway this had to be done from the start, not require another change of the insurance law," said Tudor Moldovan, Generali insurance company deputy chief executive.
The insurance market is estimated to total 800 million euros in 2004, an increase of 20% on 2003.
sorin.pislaru@zf.ro
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