UNSAR: Solvency II To Entail Significant Costs For Romanian Insurers

04.28.2011 By Ioana Tudor

Romanian insurers will need tens of millions of euros to upgrade IT systems in order to implement the European set of directives Solvency II, Cristian Constantinescu, president of the Romanian insurers association UNSAR, said Thursday.

Romanian insurers will need tens of millions of euros to upgrade IT systems in order to implement the European set of directives Solvency II, Cristian Constantinescu, president of the Romanian insurers association UNSAR, said Thursday.

According to Constantinescu, implementing Solvency II will mainly influence insurers operating on the general insurance segment, which will also have to increase their share capital.

Solvency II, which will be applied starting January 1, 2013, is a set of European directives amending fundamental aspects of EU laws in the insurance sector.

Insurer regulator CSA president Angela Toncescu said Solvency II will apply to insurers whose underwritten premiums exceed EUR5 million.

According to Toncescu, in 2009, 26 of the 40 insurers operating on the Romanian market exceeded the EUR5 million threshold. She highlighted data show Romanian insurers will be able to support financially the implementation of the Solvency II requirements.

In order to evaluate the impact the new solvency norms will have on the European insurance market, the European Commission called on the European Insurance and Occupational Pensions Authority (EIOPA) to carry out a series of quantitative impact studies (QIS).

Eighteen Romanian insurers participated in the QIS 5 study. The 18 insurers covered 93.9% of underwritten premiums on the life insurance segment and 79.8% of underwritten premiums on the general insurance segment in 2009.

The research revealed that the number of local insurers which should adjust their risk profile, in order to observe solvency capital requirements, is not significant.

The study also showed that insurers satisfy conditions regarding minimum capital requirements, with capital surplus amounting to EUR398 million.

According to data from insurance watchdog CSA, the Romanian insurance market declined 5.7% in 2010, to 8.36 billion lei (about EUR2.05 billion), as the general insurance segment declined 7.5%, to RON6.69 billion and the life insurance segment grew 2.3%, to RON1.67 billion. (EUR1=RON4.0760)