Cyber risks, political risks and terrorism are the key issues relating to motor insurance of 2016, according to the Europe, Middle East and Africa (EMEA) Insurance Market Report 2016 by Marsh. Prices increased in many countries in the region, with Romania posting increases of 20 to 30 percent.
The auto insurance market still posts poor loss ratios, especially for transportation companies and green card exposures (claims outside Romania), the sector registered a 20 to 30 percent rise.
“Astra Insurance Company’s bankruptcy may have had a slight impact on the market because all insurers are now increasing their rates. For motor own damage, the bonus-malus system continues to be used by all companies and, therefore, rates vary from one client to another, although there is an overall upward trending of rates,” details the report.
Romania’s general liability rates dropped by up to 10 percent this year. However, the report states, this market “continues to be one of the few profitable lines of business for insurers and, as a result, competition for new and existing business is stronger than ever. Products remain under-developed; however, broader coverage can be obtained with extensions (consequential loss, pure financial loss, and moral damages are not usually included in standard cover)”.
Additionally, moral damages claims are increasing in frequency and value, therefore premium rates may increase as a result of the extent of the coverage needed and claims history.
In terms of medical malpractice insurance, rates went up by 10 percent. “Although rates for health insurance rose significantly due to higher service usage and loss ratios of more than 70 percent at the portfolio level, this still remains a main growth area,” states the report.
In aviation also rates increased by 20 to 30 percent mainly due to high loss ratios in 2014, which continued into 2015. The trend is expected to maintain into this year.
Although rates for health insurance rose significantly due to higher service usage and loss ratios, this still remains a main growth area as it responds to growing demand. Going forward, the chances of rates changing for life or personal accident (PA) are slim in the case of employee benefits.
On the property insurance market, rates remained stable, with a -5 to 5 percent range, for both catastrophe-exposed and non-catastrophe-exposed real estate.
“Romania has a high exposure to catastrophic risks, especially earthquakes. Rate decreases are the result of market competition, but they are normally small and range from 2 percent to 5 percent,” Marsh says.
Most of the smaller insurers are expected to increase their capacity and costs involved, in a bid to access risks that are currently underwritten by main insurers. While foreign insurers are still not competitive enough, the market continues to employ coinsurance for major risks.
There is still limited interest from buyers in environmental impairment liability cover in Romania, so rates are expected to remain stable.
In terms of D&O (directors and officers) rates were stable and are not expected to change during 2016, as no criminal or regulatory investigations or trials for D&O are currently under way.
Cyber security, terrorism and political violence are the main risks that will dominate the market during 2016. There was a spectacular growth throughout the region in questions about the role of insurance in cyber risk management, according to Marsh data. Amid last year’s terrorist attacks, political violence and terrorism risk matrices are present in the majority of companies and interest for options that provide cover for these risks has increased.
“The companies, mainly those with a good track record of claims and a portfolio of attractive risk can expect a positive context in terms of tariffs during 2016 while the capacity of insurance and competition in the insurance market remain high and the losses caused by natural disasters remain low. Companies that choose to take into account data and analysis of management strategies and risk transfer this year will achieve the best results when they renew their insurance,” said Jeremy Cooke, head of placement, International Division Marsh.