BUCHAREST – A revived economy and new regulations might offer foreign insurers good opportunities for growth in post-communist Romania where they already dominate life business, an official said yesterday. With a potential market of 22 million and vast, uncovered real estate sector, Romania is seen as posting one of the highest economic growth rates in Eastern Europe for the third year running while once-rampant inflation is set to fall further. Its insurance industry saw a robust advance toward 1.2 percent of gross domestic product last year from 0.87 percent in 2001, but performance still lags behind other European Union aspirant countries. Romania was invited to join the EU in 2007. «Our estimates show that we have passed the psychological threshold of 1 percent,» Nicolae Crisan, head of the Insurance Supervision Commission, told Reuters. «But from now on, it will be much harder to maintain or raise it than it was to reach it.» Official estimates show gross premium incomes totaled around $475 million last year, up from $345 million in 2001, with 10 leading insurers – of which about half are foreign operators – raising around 85 percent of the total. «In the past two years those (insurers) who made placements on the local market milked better returns than the ones that fled abroad,» said Crisan, pointing to attractive gains from government securities or bank deposits. Compulsory policies continued to form the bulk of premium revenues in non-life business, followed by motor car and property policies. Life insurance carved a niche of some 21 percent, with foreign insurers including ING, AIG, Commercial Union and Allianz scrambling to gain an edge on the market. But hopes for a boom in this area are hindered by a meager average monthly wage of about $130. New rules may help An improvement in the standard of living in a country where 45 percent live in poverty, a market consolidation and planned tax breaks for insurance expenses could also boost the market. Making some policies compulsory – vehicle and malpractice – and more developed mortgage lending would also help, he said. Crisan said the effects of the September 11, 2001 attacks in the United States, which badly hurt insurers across the world, had a limited impact on Romania’s market, as foreign operators in the country had limited their exposures. Local insurers had tried to offset the growing reinsurance costs by sharing the risk burden via joint policies or keeping reinsurance at a minimum level, he added. Crisan said compliance with new capital requirements and solvency margins by the end of this month was likely to halve the number of insurers to 20-25. He said some 18 out of 48 companies licensed at present had failed to raise their minimum capital by the end-March deadline, while portfolio transfers and mergers were scarce. Romania slowly dismantled its state insurance monopoly after the 1989 fall of communism, scrapping mandatory insurance cover for property and vehicle passengers in 1996 to keep only third-party car liability compulsory. Crisan said passenger and malpractice insurance could be made mandatory in the future as his body was assessing similar regulations in the EU countries. «Can you imagine what could happen in case of an accident on the Bucharest underground?» he said.