By most metrics, including density and penetration, the life segment of Romania s insurance sector is underdeveloped. As we discuss below, we believe that there remain significant constraints on growth, including the low levels of income of some households and a lack of knowledge of the advantages of life insurance. ...For example, some of the leading life insurance companies reported that premiums written in ---- were boosted by very strong sales of unit- linked products. Over the remainder of the forecast period, we believe that life premiums will generally grow by --.- annually in USD terms and by -.- annually in local currency terms, a revision from --.- and -.- forecast previously. We accept that the increase may be faster as a result of the development and distribution of innovative products, given that the segment is dominated by the local subsidiaries of major multi-nationals. ...We accept that the increase may be faster as a result of the development and distribution of innovative products, given that the segment is dominated by the local subsidiaries of major multi-nationals. In ----, total life premiums should amount to RON-.-bn (USD---mn), a downwards revision from RON-.-bn (USD---mn) forecast in the previous quarter.
...Demographic trends support the longer term growth of the life insurance sector. As is the case for much of the European Union, Romania s population is ageing. ...However, it is not clear that this will provide a major opportunity for Romania s life insurers anytime soon due to the limitations presented by average household income levels. Most households in Romania fall into lower income brackets, primarily the USD-,--- to USD--,--- and USD-,--- to USD-,--- brackets, which hampers the affordability of most traditional life insurance products. Improving employment rates and wider economic growth means we expect the number of households in the USD--,--- to USD--,--- bracket to increase throughout the forecast period, which does suggest more scope for spending on life products, but overall, with half of the population in lower income brackets, affordability will remain a key issue. ...Most households in Romania fall into lower income brackets, primarily the USD-,--- to USD--,--- and USD-,--- to USD-,--- brackets, which hampers the affordability of most traditional life insurance products. Improving employment rates and wider economic growth means we expect the number of households in the USD--,--- to USD--,--- bracket to increase throughout the forecast period, which does suggest more scope for spending on life products, but overall, with half of the population in lower income brackets, affordability will remain a key issue.
...The insurance industry is seeing some consolidation due to acquisitions and insolvencies. In Q---, VIG acquired the AXA life insurance company in Romania, confirming its lead in the local market. ...
