The Insurance Supervision Commission (CSA) yesterday submitted to Parliament the 2002 Report on the insurance market. This is the first report where CSA presents the solvency level of the insurance companies, in accordance with the new regulations.
Ten of the 42 insurers authorised to sell general insurance are insolvent or feature a low or high insolvency level. Of the 21 life insurance companies, 19 do not feature a high insolvency level. The calculation methods employed by CSA for the solvency level differ for the two insurance segments (life and general), even if a company is involved in both sectors.
But what is the opinion of CSA? According to the solvency level calculated on December 31, 2002, which is below 1, insurers AGI Romania, Asigurarea Anglo-Romåna (Anglo-Romanian Insurance), Croma, Global and Metropol are insolvent on the general insurance segment.
Also in general insurance, Asirag sports a high insolvency risk (the solvency level - R - ranges between 1 and 1.5), while Asirom, AIG Romania, Petroas and RAI have a low insolvency risk (R ranges between 1.5 and 2).
In life insurance, Asirag was granted a negative solvency level, which means it is insolvent, while Garanta, with a 1.48 level, is on "high insolvency risk" territory.
The solvency level, which will be published annually by CSA from now on, had been eagerly awaited by the insurance market. Theoretically, this level points to the financial health of the insurers, namely to what extent they are able to pay damages on time and to match the contract value.
However, the market is teeming with talks regarding the classification into insolvency risk categories (low, high) of those insurers with a solvency level above one, as this segmentation does not exist in European Union countries. On the other hand, CSA members say such a regulation is necessary, given the circumstances on the developing insurance market in Romania.
What do the companies think?
"We are aware we have a problem. However, we have managed to overcome this issue in the meantime, because we are about to increase capital and are taking all the steps decided during the latest general meeting of shareholders. The company posted 8.5 billion ROL in net profit during the first five months," said Tudor Mihai, marketing, products and advertising director with AGI Romania.
Mihnea Tobescu, AIG Romania general manager, says he cannot comment on this classification that sees the Romanian branch of one of the world's leading insurers put under the (low) solvency risk category.
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