The insurance market ended last year in the red, a result of the pace of claim settlements (54%) exceeding the pace of gross underwritten premiums (34%). "I believe the insurance market posted losses last year. The industry made a profit of about 1% of turnover for 2005," Cristian Constantinescu, chairman of the National Union of Insurance and Reinsurance Companies in Romania (UNSAR) told an insurance seminar organised by the Insurance Supervision Commission (CSA). The insurance market recorded a 38 million-euro profit in 2005, that is 0.03% of the value of the gross underwritten premiums.

"Had ARDAF stated correctly the level of solvency reserves in 2005, the insurance market would have also posted losses in that year," Constantinescu added. ARDAF did not reveal the profit/loss figure for 2006, but it posted 30 million-euro losses for the first nine months of last year. Although he cannot estimate how large the losses are, Constantinescu believes that 90% of the 130 million-euro capital inflow on the insurance market in 2006 were directed towards offsetting the losses of previous years.

"We canet talk of significant price hikes for the comprehensive auto policies, but we can comment on an alarming trend in claims. The frequency of claims has reached 65% of the total market, which means 65 out of 100 comprehensive policy holders suffer damage every year," Constantinescu explained. One of the reasons why the UNSAR chairman feels RCA (compulsory auto liability insurance) policies are more profitable than the comprehensive policies is that the risk dispersion is better in the formeres case, of about 90-95%, while the risk dispersion for the latter stands at no more than 15%.

Constantinescu believes that prices of comprehensive auto insurance should increase by 30% on the entire market, so that the domestic insurers could cover their expenses and re