Japan Earthquake Might Raise Romanian Insurance Premiums By 10-20% On Medium-Term

Mihnea Tobescu, general manager of Chartis Romania (formerly AIG Romania) said the Japanese market is one of the largest and host to every reinsurer. The earthquake is expected to increase reinsurance premiums all over the world, although short-term policies should be unaffected, at least until 2012, he said.

Cristian Fugaciu, head of broker Marsh Romania, said the local property insurance market is "quite cheap" because of high competition. He also sees a 10-20% increase in premium prices on the medium-term.

Japan was hit Friday by an earthquake measuring 9 on the magnitude scale, which also caused tsunamis and strong aftershocks. The economic damage is estimated at $170-180 billion dollars, according to a Credit Suisse analysis. Analysts cited by the Wall Street Journal said the costs to insurance companies could range from $10 billion to $25 billion.

After the 7.2-magnitude earthquake in Romania in March 1977, state-owned insurance company ADAS paid $5 billion in damages, of which almost half were recovered from reinsurance.

The Romanian general insurance market shrunk 7.5% last year, to 6.69 billion lei (EUR1=RON4.1865), while underwritten life insurance policies brought in RON1.67 billion last year, up 2.3% from 2009, according to the preliminary data of insurance regulator CSA.

The fire and natural disaster segment increased 3.9%, to RON934.75 million, making up 14.5% of the total value of underwritten premiums, from 12.9% in 2009. Insurers paid RON248.77 million in damages, up 17.9% on the year.

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