Microinsurance Pre-Feasibility Study - Romania
As Romania moves towards accession membership in the European Union, and experiences decreasing inflation and increasing GDP growth, it has also become home to a thriving insurance market. This paper has been developed as a pre-feasibility study to asses the potential for financial interventions to jump-start and rapidly expand microinsurance in Romania. The paper elaborates on the various microinsurance models used internationally:
- Partnership or 'Partner-Agent' model;
- Community based model;
- Provider model;
- Full service model;
- Social protection model.
Discussing further, it observes the key components and trends in the Romanian insurance market:
- Insurance penetration is low, compared to the other EU countries;
- Most of the large insurers sell both life and non-life products;
- With the growing middle-class, the value of non-life insurance premiums is expected to increase;
- The insurance structure is conducive for insurers to provide a comprehensive microinsurance package;
- Complying minimum capital requirements with the EU standards may lead to a temporary retarding effect on microinsurance.
The paper further notes that the key issues of the current insurers in Romania include:
- Limited understanding of the low-income market requirements and demands;
- Lack of knowledge about the risk structures within this market;
- Limited delivery channels;
- Coming up with a sound strategy for successful market education.
In conclusion, the paper remarks that Romania has significant potential for successful microinsurance interventions, with roughly ten million people as future clients. This market may be tapped, provided:
- People are further educated about what insurance means;
- A strong demonstration effect is brought in picture;
- Appropriate products are designed;
- People are shown the value in insurance.
