THE HISTORY OF INSURANCE IN ROMANIA

The history of insurance in Romania started before 1871 with the help of different manifestations of protection on mutual bases. This kind of manifestations appeared in Transilvania in the XIVth century.

The first establishment of this kind was set up in 1744 in Brasov, CASA DE INCENDIU, as result of the merger between mutual associations.
After almost 100 years, in 1848, the General Institute of Pensions was founded. This organization appeared also in Brasov and it was a mutual association that insured to its members an annual pension.
After the Treaty of Adrianopole from 1829, in Bucharest, Iasi and in Danube ports different organizations that practiced transport, fire and life insurance were established.

The year 1871 is an important year for the insurance industry because in March, the first Romanian insurance company was founded by a royal law. Its name was DACIA and it had a capital of 3 millions ROL.
The second Romanian insurance company called ROMANIA with a capital of 2 millions ROL was created in 1873.
This Romanian insurance companies had as founding members and as members in their Committee Boards outstanding members of political, economy and social life from that period

In 1881, those two insurance companies merged and they created a new insurance company called DACIA-ROMANIA. Later on, this company became a very strong one.
A year later, also with the help of some important members of the Romanian social community an insurance company named NATIONALA was set up. This company had a social capital of 3 millions ROL.
Following the creation of these companies and following the development of local insurance market, many foreign companies gave up their business in Romania giving their portfolios to Romanian companies.

A new company called GENERALA was founded in 1897, in Braila, with the collaboration with Marmorosch Bank. This insurance company was specialized in marine insurance. The Italian company "Asicuratzioni Generali" from Trieste participated as a shareholder of GENERALA, helping it to obtain the recognition of insurance polices and the process of ceding in reinsurance on international insurance markets. After this, the company GENARALA moved its headquarters (head office) in Bucharest and diversified its portfolio, including life insurance. In 1935, taking into consideration the premium income, GENARALA was the leader of insurance companies in Romania.

Another insurance company named AGRICOLA was set up in 1906. AGRICOLA did mainly agricultural insurance but also other types of insurance. This company merged in 1930 with the insurance company FONCIERA from Cluj resulting a new company named AGRICOLA - FONCIERA.

The insurance company PRIMA ARDELEANA was established in 1911 and in 1920 another insurance company called STEAUA ROMANIEI appeared. The last one merged in 1932 with the ANCORA. The company, that was set up this way, took over the insurance portfolio that belonged to the Romanian investors of the PHOENIX insurance company from Vienna, which was put then into liquidation.
The insurance company called VULTURUL was established in 1923 at Chisinau. This company had a social capital of 740 thousand ROL and it was created by the founder members of the insurance section of the CRENTALEI COOPERATIVELOR from Basarabia.
In the same year (1923) with a social capital of 4 millions ROL the company ASIGURAREA ROMANEASCA was created. This company was specialized in life insurance without medical exams. The income from insurance premiums made by the company put it in the 6th place in that period.

The types of insurances sold by the insurance companies until the beginning of the First World War were fire insurance and life insurance, the transport insurance being only for the fluvial transport. The hail insurance was not sold very much and also not for a long period of time.

After the Second World War another 22 insurance companies appeared. Some of them were the successors of international insurance companies: STEAUA ROMANIEI that took over the portfolio of MUNCHENER, PRIMA ARDELEANA that took over the portfolio of ERSTE UNGARISCHE and ADRIATICA (Italian insurance company). After 1927, the Romanian government authorized the establishing of the foreign insurance companies, namely: NORWICH, PHONIX, STANDARD and SUN.
In the 30's the economy and the insurance activity knew the biggest development of all types of insurance done on international markets. The number of the insurance companies was between 20 and 24.

The beginning of the Second World War and the Romania's engaging in this war led to the decline of insurance activity. The British insurance companies CALEDONIAN - ROMANA, NORWICH UNION F.D. and SUN INSURANCE LTD ceded their portfolios to the insurance company VATRA DORNEI and closed their business in Romania.

After the war, in 1945, in Romania were in business only 13 Romanian insurance companies (GENERALA, DACIA-ROMANIA, ASIGURAREA ROMANEASCA, STEAUA ROMANEASCA) and 5 branches of foreign insurance companies. The Romanian companies collaborated with the foreign companies, branches and agencies of foreign companies form Italy, UK or Germany.

Once with the appearance in 1942 of a new law, which reorganized the activity of insurance activity, The Insurance House of the Ministry of Internal Affaires (established in 1915 and reorganized in 1936) had been transformed in REGIA AUTONOMA A ASIGURARILOR DE STAT (R.A.A.S.) This establishment did all types of insurance and held the monopole of stat and local property insurance. Taking into account that R.A.A.S. was stated owned, it was doing only public services and had no profit. The insurance premiums were below the levels of those written by private insurance companies. This public institution supported from the collected insurance premiums all the administrative expenses and the claims.

In the same period, there was other institution that insured public property: EFORIA BISERICII ORTODOXE (insured churches properties), CASA ARMATEI (insured the horses that army used and were state owned) and REGIA MONOPOLURILOR DE STAT - R.M.S. (insured tobaccos crops against of risk of hail).

In 1949, "REGIA AUTONOMA A ASIGURARILOR DE STAT" became state owned insurance company.
Following the nationalization in 1948, the insurance companies become state owned with all their assets and liabilities, and the public insurance institutions were also included in the new structures of planned economy.
In the same period the soviet capital appeared in many fields of Romanian economy. In insurance activity it appeared by setting up an insurance company named SOVROM - ASIGURARE.

The Administration of State Insurance - ADAS having 100% Romanian capital, was created in 1952. This was an institution specialized in insurance, reinsurance and loss adjustment activity. ADAS carried on the activity under the general management of Ministry of Finance upon special laws. The Ministry of Finance approved the regulations, the general and special insurance conditions, the tariffs and the insured sums for facultative insurance. The only things that ADAS decided were what risks will be ceded in reinsurance, the limits of own retainments and the reinsurance conditions.

Following the appearance of the ADAS, the insurance business becomes state monopoly, being the only Romanian insurance company that did insurance and reinsurance. ADAS had as its object of activity the compulsory insurance and the facultative insurances.

The compulsory classes of insurance (by the order of the law) sold by ADAS were the property insurance (for the goods of agricultural and production cooperatives, inter cooperatives associations, of individuals), accident and health insurance and third party liability for motor insurance.

The facultative insurance sold by ADAS (in Romanian currency or hard currency) were property insurance against damage, destruction, theft, or other like: accident and health insurance for the cases of invalidity, death and endowment; public liability insurance against bodily injuries or death and damages.

The incomes of ADAS earned from insurance premiums were mainly from compulsory insurance until the 60's, in the 70's and 80's the ADAS portfolio has been modified, the incomes being obtained mainly from facultative insurance. Between 1955 and 1989 the ADAS's volume of collected premiums increased by 14,4 times and in the same time the national income increased only by 10,2 times.
The founds of which ADAS ordered were as following: the by-laws found (200 millions ROL), reserves found, fixed assets, premium reserves for insurance of persons and other special founds.

The incomes obtained by ADAS were used to cover the damage caused by calamities or accidents, the payment of the insured sums for persons (accident) insurance, the expenses for the creation and administration of insurance found, the establishment of the reserves found and special founds and the development of the company.

After 1990 the changing of the legislation induced the removal of the state monopoly, the setting up of many insurance companies and the establishing a competitive environment in Romanian insurance market.

By the Government Executive Order no. 1279 from 8th December 1990, regarding the set up of some insurance joint-stock companies in the insurance field, the insurance companies, beginning with 1st January 1991, can be created as commercial joint-stock companies. Also, by this order, ADAS ceased to exist.

The assets and the liabilities of ADAS were took over by the insurance companies ASIGURAREA ROMANEASCA S.A., ASTRA S.A. and by the CAROM S.A.. These companies were established following the regulations of the above executive order.
The insurance company ASIGURAREA ROMANEASCA S.A. took over the assets and related liabilities for the following types of insurance: life insurance, compulsory insurance, facultative motor insurance and other. Also, ASIGURAREA ROMANEASCA S.A. took over from ADAS the movable goods that were included in the social capital.

The ASTA S.A. insurance company took over the assets and liabilities related to mixed foreign companies (ex ADAS joint-venture) and to all insurance and reinsurance operations between ADAS and foreign companies.
The CAROM S.A. took over the activity concerning the loss adjustments and the indemnity payments for the losses produced in Romania, when the responsibility was to those insured at a foreign insurance company and in for the damaged caused outside the country by Romanians drivers insured to the Romanian insurance companies.

These three companies were created with state capital of 100%, this situation being changed in 1991 when by the Law no.58 from 14 august 1991 regarding the privatization of commercial companies, 30% of the social capital of economic entities was privatized and passed under the administration of Private Property Found (created by the same law).

By the Government Executive Order no. 1356 from 28 December 1990 the Export Import Bank of Romania S.A. - EXIMBANK, a bank 100% state owned, was set up. This bank started effectively its activity in April 1992. With the help of its department of credit and guaranty insurance EXIMBANK sell insurance for export credits and insurance against the risk of not paying.

In 1991, a new Law was issued, Law no. 47 from 1991 regarding the establishing, organization and the functioning of commercial companies in the insurance field. According to this law the insurance activity was carried out by the insurance companies, insurance and reinsurance companies, reinsurance companies and also, by the intermediary insurance companies (intermediary agencies). The law foresaw the fact that insurance commercial companies had to be set up with the prior notice of the Supervisory Authority Insurance and Reinsurance Activity from the Ministry of Economy and Finance. According with this law, the insurance companies that were present could be constituted as stock companies or limited liability companies.

By the Government Executive Order no. 574 from 23 august 1991 regarding the attributions of the Supervisory Office of Insurance and Reinsurance Activity - OSAAR was established the supervisory committee of the Romanian insurance market as a department within the Ministry of Finance.

So, in September 1990 the first insurance company 100% private from Romania, S.C. UNITA S.R.L., with its headquarters in Timisoara, was set up. UNITA S.A. activity started in January 1991 by selling mixed life insurance with capital accumulation. In 2000 the controlling interests (majority block stock) was bought by the Wienner Staedtische from Austria, and in company's portfolio are present now all types of insurance.

Later, other insurance companies with private capital, Romanian and/or foreign capital were set up, (taking into account that the Law did not permit establishing of a insurance company 100% foreign capital), mostly having their headquarters (head offices) in Bucharest.

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In 1992 were established the companies AGRAS, ASIGURARE REASIGURARE ARDAF, ROUMANIE ASSURANCE INTERNATIONAL, etc.

* In 1993 appeared the companies ASIGURAREA ANGLO - ROMANA and GENERALA ASIGURARI (named since 1999 GENERALI ASIGURARI) etc.

* In 1994 another companies were set up: ASITRANS, ASIGURARI ION TIRIAC - ASIT (that in 2000 changed its name in ALLIANZ TIRIAC ASIGURARI because ALLAINZ from Germany bought the majority block stock), ARINCO SOCIETATE DE ASIGURARI (that changed its name in INTERAMERICAN ROMANIA ASIGURARI), SAT TRANSILVANIA etc.

* In 1995 were established the companies ASIGURAREA POPULARA ROMANA (named from 2001 ASIGURAREREASIGURARE AGI - ROMANIA because the insurance company AGI from Germany bought the controlling block stock), OMNIASIG (this company bought the insurance company MONTRAGON established in 1992), SARA - ASIG (that in 1996 changed its name in SARA MERKUR by buying the controlling block stock by the MERKUR VERSICHERUNG from Austria), etc.

* In 1996 were set up ASIBAN SOCIATATE DE ASIGURARE SI REASIGURAE, ATLASSIB SOCIATATE DE ASIGURARI -with headquarters in Sibiu) etc.
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In 1997 NEDERLANDEN Life Insurance was established. This company changed its name in 2000 in ING NEDERLANDEN Life Insurance.

* In 1998 was set up OMNIASIG ASIGURARI DE VIATA, etc

* And in 1999 the COMMERCIAL UNION ASIGURARI DE VIATA was established, (which in 2002 changes the name in AVIVA Asigurari de Viata) etc.

In 1994, at the initiative of 13 insurance companies, the National Association of Insurance and Reinsurance Companies from Romania - UNSAR was founded. In present UNSAR has as members 21 insurance and reinsurance companies.
After 1990, on the Romanian insurance market, appeared many companies intermediary companies in insurance (in 2000 being more than 800 companies) that acted also as agents and brokers in insurance (but brokers being only few). The word "broker" was introduced by Law no. 32/2000 regarding the insurance companies and the insurance supervision. At the beginning of the year 2002, 105 insurance brokers companies were licensed to function, some of them being important international insurance brokers as: MARSH, AON, GRAS SAVOYE, etc.

Following the issuing of the Law 32 from 2000 the Insurance Supervisory Commission was formed. It is an independent organization, self-governing, financed by the insurance companies having the objective to regulate, control and supervise the insurance market.

Insurance Supervisory Commission is lead by the Board of 5 person (one president, one vice president and 3 members).
The members of the Insurance Supervisory Commission Board are appointed from the common list proposed by the Commissions for Budget, Finance and Banking of the Senate and the Chamber of Deputies and they are nominated for 5 years for president, 4 years for vice president and 3, 2 and respectively 1 year for the members. The first members of the Insurance Supervisory Commission Board were nominated in July 2001.