Three Risks, One Solution

Transcription

1 Romanian Natural Disaster Insurance Pool Three Risks, One Solution Romanian mandatory home insurance 22nd-23rd of June, 2015 Munich, Germany Nicoleta Radu-Neacsu CEO

2 Strategy statement for PAID: effective & sustainable

3 Three impact risks in Romania Earthquake The seismicity of Romania is clustered in several epicentral zones: Vrancea, Fagaras-Campulung, Banat, Crisana, Maramures and Southern Dobrogea. In Vrancea area 2-5 shocks with magnitude Mw~7 occur per century producing a lot of casualties and severe damage. Flood The hydrographic network in Romania consists of km of watercourses. Virtually all floodplains of rivers are prone to flooding. 97.4% of Romania's area is located in the Danube basin. Landslide Landslides are quite widespread in Romania. The total area is estimated at 900,000 hectares. Determining natural factors are: rain, snowmelt, earthquakes, flood

4 A short history of CAT risks in Romania Earthquake ,7 Mw ,4 Mw ,1 Mw ,4 Mw ,6 Mw ,0 Mw ,7 Mw Flood Landslide

5 About PAID Natural Disaster Insurance Pool (PAID) is an insurance company founded in November 2009 with private capital through the joint efforts of 12 Member companies/ Shareholders. PAID has a strong social goal by offering protection for the homeowners in Romania. PAID was a project sustained and initiated by World Bank together with Romanian Government. PAID is the only pre-event established pool, functioning under the provisions of a special law. PAID becomes an entity of national strategic importance, managing CAT risks for the entire housing stock of Romania.

6 Objectives to provide homeowners with a simple, affordable and effective insurance product to establish CAT reserves at national level. to provide long-term financial stability and to reduce the national budgetary impact of the Romanian government. to progressive increase the penetration rate up to 60% in the next 10 years through a program of education and awareness. to raise awareness within the population about the benefits of dwelling insurance

7 PAID business model An integrated model between PAID and insurance companies REINSURANCE MARKET Reinsurance INSURANCE COMPANIES

8 The Law Facts Reasons Steps to be taken Penetration 17.25% of dwellings are insured The total number of dwellings in Romania Decreased awareness on the consequences of an event Absence of application of penalties Proposal for redesigning the actual legal framework. Advertising campaign for rising awareness Dwellings insured at 31/05/ Alternatives sales channels

9 Portfolio Policies in force M M M M M M M M M M M Type of buildings Polices in force at Urban/Rural 10% 26% 90% 74% Type A Type B Rural Urban

10 PAD vs. Facultative policies PAID offers a standard first loss basis policy: Eur 10 premium/ Eur sum insured (Type B) Eur 20 premium/ Eur sum insured (Type A) The evolution of policies in force PAD and facultative policies offer complementary protection for the full benefit of the homeowners.

11 Flood Earthquake Landslide Claims Paid claims: approx Eur No of Files: Paid claims: approx Eur No of Files: Paid claims: approx Eur No of Files: 355 Events occurred in 2014 No of paid files 575 Paid claims: approx. Eur Top 5 counties affected: Arges, Olt, Valcea, Mehedinti, Prahova Events occurred in 2014 No of paid files 430 Paid claims: approx. Eur Top 5 counties affected: Vrancea, Galati, Braila, Tulcea, Bacau Events occurred in 2014 No of paid files 76 Paid claims: approx Eur Top 5 counties affected: Prahova, Buzau, Valcea, Vrancea, Gorj

12 Reinsurance CAT XL Protection Capacity EUR 450,000,000 Retention EUR 1,000,000 + EUR 1,000,000 AAD RPP Minimum rating requirement 'A-' About 60 participating reinsurers, CAT XL Protection Capacity EUR 500,000,000 Retention - EUR 3,000,000 RPP Minimum rating requirement A-

13 Long term goals to develop the contingency plan for the entire insurance market in respect of CAT risks on residential property to adjust the insurance premium based on actuarial calculations/ imposing a deductible to develop alternative distribution channels to build a solid CAT fund to develop of a nationwide households database, assigning a unique identification code for each dwelling to improve collaboration between PAID and the public institutions engaged in this project

14 Thank you! Q&A