Romanians’ Protection Deficit Doubled From 2006, Reaching RON388B

"On average, a Romanian should insure at least RON50,000 to protect his family for the following five years in case of death. It is that much more important, at times of crisis, for people to get life insurance to protect their loved ones," the insurer’s general manager, Cornelia Coman, said Thursday during a seminar organized by business daily Ziarul Financiar and lender ING.

According to ING, the protection deficit is the difference between the financial resources needed and those available at a certain point in time to maintain the living standard of a family in case the family member with the highest income dies.

"The need for protection in Romania is very high, considering the country’s aging population and increasing indebtedness. Financial protection needs to be considered besides savings and investments,” Coman said.

She said the monthly premium for a life insurance policy for an insured sum of RON50,000 is around RON20.

Coman said the Romanian life insurance market will increase 7-10% in 2009, slower compared to a growth rate of about 25% estimated for 2008.

Data provided by the Romanian insurance regulator CSA indicate life insurance premiums accounted for 19.7% of the total market in the first three quarters of 2008, reaching RON1.315 billion.

The growth rate of premiums on this segment was 26.8%, compared to the first three quarters of 2007.

In 2007, life insurance subscriptions amounted to RON1.449 billon, up 27.3% from the previous year.

Speaking about mandatory private pensions (Pillar II), Coman estimated this market segment would reach RON2.7 billion in assets from 4.67 million contributors.

"The system will include 145,000 new employees, and the volume of contributions to be transferred into private management will reach RON1.7 billion. I also estimate nearly 30% of individual pension accounts on Pillar II won’t receive any contributions," she said.

Dutch group ING is present on the mandatory private pension segment with ING Fond de Pensii. The fund has them most clients and highest assets on the Romanian market.

On the voluntary private pension segment (Pillar III), Coman estimated 150,000 new clients would be attracted, reaching 300,000 contributors at the end of 2009.

"Contributions attracted this year on Pillar III will total RON190 million and managed assets will reach RON250 million,” she said.