Romanian Natural Disaster Insurance Pool Three Risks, One Solution Romanian mandatory home insurance 22nd-23rd of June, 2015 Munich, Germany Nicoleta Radu-Neacsu CEO
Strategy statement for PAID: effective & sustainable
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 78.905 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
A short history of CAT risks in Romania Earthquake 1940-7,7 Mw 1977-7,4 Mw 1986-7,1 Mw 1990-6,4 Mw 1991-5,6 Mw 2004-6,0 Mw 2014-5,7 Mw Flood 1969 1970 1975 2002 2005 2010 2011 2014 Landslide
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.
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
PAID business model An integrated model between PAID and insurance companies REINSURANCE MARKET Reinsurance INSURANCE COMPANIES
The Law 260 - Facts Reasons Steps to be taken Penetration 17.25% of dwellings are insured The total number of dwellings in Romania 8.799.832 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 31/05/2015 1.518.296 Alternatives sales channels
Portfolio 1.600.000 1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 Policies in force 2010-2015 M07-2010 M12-2010 M06-2011 M12-2011 M06-2012 M12-2012 M06-2013 M12-2013 M06-2014 M12-2014 M05-2015 Type of buildings Polices in force at 31.05.2015 Urban/Rural 10% 26% 90% 74% Type A Type B Rural Urban
PAD vs. Facultative policies PAID offers a standard first loss basis policy: Eur 10 premium/ Eur 10 000 sum insured (Type B) Eur 20 premium/ Eur 20 000 sum insured (Type A) The evolution of policies in force 2012-2014 PAD and facultative policies offer complementary protection for the full benefit of the homeowners.
Flood Earthquake Landslide Claims 2010-2015 Paid claims: approx Eur 816 000 No of Files: 1057 2010-2015 Paid claims: approx Eur 250 000 No of Files: 868 2010-2015 Paid claims: approx Eur 354 000 No of Files: 355 Events occurred in 2014 No of paid files 575 Paid claims: approx. Eur 519.000 Top 5 counties affected: Arges, Olt, Valcea, Mehedinti, Prahova Events occurred in 2014 No of paid files 430 Paid claims: approx. Eur 137.000 Top 5 counties affected: Vrancea, Galati, Braila, Tulcea, Bacau Events occurred in 2014 No of paid files 76 Paid claims: approx Eur 198.000 Top 5 counties affected: Prahova, Buzau, Valcea, Vrancea, Gorj
Reinsurance 2014-2015 2015-2016 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-
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
Thank you! Q&A WWW.PAIDROMANIA.RO Email: office@paidromania.ro