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Romanian Catastrophe Insurance Scheme - PRAC
Romanian Catastrophe Insurance Scheme - PRAC Co-authors: Radu Mircea Popescu Counsellor to the Minister of Interior and Administrative Reform Professor Dumitru G. Badea Ph.D. Romanian Catastrophe Insurance Scheme - PRAC Romanian Catastrophe Insurance Scheme - PRAC The Perils • Earthquake • Flood • Landslide Romanian Catastrophe Insurance Scheme - PRAC Earthquake risk in Europe – Romania and Istanbul are riskiest Romanian Catastrophe Insurance Scheme - PRAC Bucharest 1977 Romanian Catastrophe Insurance Scheme - PRAC Seismicity Most risk from Vrancea zone – Earthquakes ‘intermediate depth’ ~75 – 160 km deep – Very concentrated source – ‘Slab’ of old tectonic plate – quite different from e.g. Turkey, California or New Zealand Romanian Catastrophe Insurance Scheme - PRAC Romanian Catastrophe Insurance Scheme - PRAC The Vrancia ‘slab’ which is slowly subducting is twisted and contorted. Romanian Catastrophe Insurance Scheme - PRAC Romanian Catastrophe Insurance Scheme - PRAC Danube floods 2006 Romanian Catastrophe Insurance Scheme - PRAC Danube floods 2006 - Looking for Hope Romanian Catastrophe Insurance Scheme - PRAC Flood extent map for 100-years return period Danube river Romanian Catastrophe Insurance Scheme - PRAC Landslide hazard Romanian Catastrophe Insurance Scheme - PRAC Purpose To assist the people & the Government to repair or reconstruct dwellings damaged by natural disasters Romanian Catastrophe Insurance Scheme - PRAC Exposure Romania • • population about 21 million 8,250,000 dwellings. Types of dwelling Romanian Catastrophe Insurance Scheme - PRAC RC* Frames with some Shear Walls 8.7% RC* Large Prefabricated Panels 7.9% RC* Frames with Unreinforced Infill Masonry; and Reinforced Load-Bearing Masonry 14.9% Masonry with Rigid floors 18.5% Masonry with Flexible floors 16.7% Wood 8.5% Adobe 24.9% * Reinforced concrete Romanian Catastrophe Insurance Scheme - PRAC Origin of scheme • 2004 - World Bank Project, after Turkish TCIP scheme • 2005 - The appointment of Mister Radu M. POPESCU by the Government to plan a scheme • 2006 – Ian McLean appointed Resident Catastrophe Adviser Romanian Catastrophe Insurance Scheme - PRAC Situation The Draft law • has passed the Senate • now with the Chamber of Deputies Romanian Catastrophe Insurance Scheme - PRAC Role PRAC has social protection role Romanian Catastrophe Insurance Scheme - PRAC Insurance is Mandatory All dwellings (‘houses’) to be insured under the scheme Includes houses owned by public bodies Romanian Catastrophe Insurance Scheme - PRAC The cover - Perils • Earthquake • Flood • Landslide – Direct losses only (not indirect losses like fire-following) Romanian Catastrophe Insurance Scheme - PRAC The cover - Property Dwellings only not – – – outbuildings appurtenances contents nor – accommodation Romanian Catastrophe Insurance Scheme - PRAC Solidarity principle Community rating Same premium rate everywhere – €20 for €20,000 SI – €10 for €10,000 SI Romanian Catastrophe Insurance Scheme - PRAC Review • Limits and premiums may be varied annually • Some risk-rating may be considered Romanian Catastrophe Insurance Scheme - PRAC Distribution and Claims Approved insurers will issue standard policies and settle claims. Romanian Catastrophe Insurance Scheme - PRAC PAID Company • Reinsurance company – also acts as direct insurer for government subsidised dwellings • Structured as joint-stock pool company • Approved insurers as shareholders – Each to contribute a minimum amount of capital; – with none more than 15%, – PAID will pay dividends from profits as they arise. Romanian Catastrophe Insurance Scheme - PRAC PAID Company • Board of Directors only outside member from the Supervisory Commission. • Advisory board - representatives of – central and local government – housing associations Romanian Catastrophe Insurance Scheme - PRAC Compulsion • Local government enforces • Mayoralties share in penalties for non-insurance Romanian Catastrophe Insurance Scheme - PRAC Reinsurance • Risk to be transferred to world markets • Consortium of Brokers appointed to assist – Technical aspects of scheme – Design of reinsurance Romanian Catastrophe Insurance Scheme - PRAC Supervision Supervised like other Romanian Insurers Romanian Catastrophe Insurance Scheme - PRAC Government • Subsidises premium for those on social aid • Provides credit for initial reinsurance premiums • Government not involved in the governance of PAID • Once PAID established, disaster relief for dwellings will cease Romanian Catastrophe Insurance Scheme - PRAC Detail Subsidiary legislation (Norms) to be drafted once the Law is passed. Romanian Catastrophe Insurance Scheme - PRAC Ministries Involved Ministry of Administration and Interior - including PMU Ministry of Finance Ministry of Transport, Construction and Tourism Romanian Catastrophe Insurance Scheme - PRAC World Bank • Encouraged creation of scheme • Funding consultancies • Future role to be determined Romanian Catastrophe Insurance Scheme - PRAC Invitation Romania would be honoured to host a meeting of the Forum next year or soon thereafter and the Minister of Administration and Internal Affaires issues a warm invitation Romanian Catastrophe Insurance Scheme - PRAC Thank you for your attention QUESTIONS?
