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Initiated by the World Bank, a technical knowledge exchange meeting was held in Bucharest with PAID Romania representatives and a delegation consisting of high-level representatives of the insurance market and the Kyrgyz parliament, on the topic of the Romanian experience in building a compulsory home insurance scheme.
Organized as part of an experience exchange tour on the mandatory home insurance schemes against the risks of natural disasters in Romania and Turkey, the meeting in Bucharest aimed at transferring information on the functioning and technical details of the Romanian catastrophe insurance program, considered as a successful model that can underpin the reform and improvement of the similar system implemented in Kyrgyzstan.
A predominantly mountainous country, Kyrgyzstan is exposed to a series of natural catastrophe risks among which seismic and meteorological risks pose threats with a high potential to produce important social effects. Implemented three years ago, the local home insurance system faces a number of real technical difficulties that impede its efficient development and functioning. Coverage of an excessive number of risks – 18 risks, including common fire risk – procedures for certifying the occurrence of risks that are difficult to meet, lack of sufficient territorial penetration of insurance providers, etc. are some of the main shortcomings of the current system. “We are particularly interested in finding as much details as possible on the functioning of the Romanian disaster insurance scheme, so that we can take over the valuable elements of this experience in reforming our own system,” explained Sanzhar MUKANBETOV, President of State Service for Financial Markets Regulation and Supervision, Kyrgyzstan.
“First of all, we need a more judicious dimensioning of the system so that we can access the reinsurance market and give financial stability to the state-owned company specializing in the underwriting of compulsory housing insurance policies in our country,” added Nurlan BAIBOSUNOV, a member of Board of Authority.
“In order to fulfill its social role and to function on a financially sustainable basis, the mandatory home insurance system must focus on the risks that have the potential to generate, through the size of events and the impact of large masses of citizens, real social problems, “explained Nicoleta RADU, CEO, PAID Romania, how the Romanian system was configured. “In addition, the system must have both a broad distribution base and the preparedness required to manage a significant amount of damage in the event of a catastrophic event of great magnitude. Undoubtedly, a quality reinsurance program is essential to the stability of the system and its ability to fulfill its assumed role, “she added, explaining the steps that PAID Romania is undertaking to improve its own business.
“The World Bank is constantly supporting the development of schemes to improve insurance coverage for the risks of natural disaster. There is a wide variety of solutions around the world, each country having to set up a scheme that meets both its social needs and its economic, cultural characteristics,” commented Luis ALTON, Financial Sector Specialist, World Bank.
The meeting of the two delegations in Bucharest was attended by PAID Romania specialists, representatives of the Financial Supervisory Authority and of UNSAR – the Romanian insurers’ association. The Kyrgyz delegation was composed, besides MPs of the Committee on Economic and Fiscal Policy, of the members of the board of directors of the State Insurance Supervision and Regulation Authority and the management of the State Insurance Company, the state-owned market player that underwrites and manages the compulsory housing insurance. The meeting took place with XPRIMM support. The Kyrgyz delegation will also visit the next days TCIP – the Catastrophe Insurance Pool in Turkey.