Casco Light Insurance

In Holland almost 30% of the CASCO portfolio is represented by CASCO light products. In Greece, the percentage is double: 60%. In the states of Western Europe, the mandatory by law insurance includes a series of risks which in our country are only covered by CASCO: total destruction because of fire, theft of vehicle, other risks related to natural hazards. For all the other risks you can buy a full CASCO policy.

The premium paid is established according to a series of factors; for example: if the vehicle is personal property or company property, the are where it is driven ( large town or city).

The risk profile is made up using statistics on 20-25 of such factors. An interesting example is Spain, where an increase of 4-5% of the premium occurs for the drivers of black or red vehicles. Statistics have shown that drivers using cars of these colors have produced more damages.

In 2005 in Romania, the subscribed premiums from CASCO insurance policies were 364 million euros, representing 30% of the insurance market. The first ten competitors represent 95.61% of the market. The first place is held by Allianz-Tiriac, with 133 million euros, followed at some distance by Asirom at 40 million euros and Omniasig Vienna Insurance with 38 million euros. And this situation occurs even if the CASCO insurance policies are one of the most expensive products. If in case of a car insurance, the annual premium represents 4 to 11% of the insured value, while in the case of house insurance that premium represents 0.1-0.2% of the insured value.

Because of the potential of the Romanian car-insurance market, Interamerican decided to invest in a product called CASCO Light, to offer the clients a small cost and coverage of risks the driver cannot control. The insurance costs only 30% of the premium of a usual CASCO insurance.

According to Interamerican Romania, CASCO light is situated in between the RCA (the insurance mandatory by law for damages caused out of ones’ fault) and CASCO ( comprehensive and optional cover), at a cost of 30% of the premium of a full CASCO offered by the company.

This product is addressed to cautious and safe drivers that desire an insurance program covering damages occurring from causes for which the driver is not responsible.

What it covers

The CASCO light policy insures the owner against fire, theft (total or partial), natural hazards (floods, earthquakes, hale storms, etc.), windshield crack (covered once a year, unless it is an effect of the events mentioned earlier), collision with livestock or animals.

Aside from the low cost, CASCO light users also benefit from a 24h call-center, free towing to the nearest authorized service station in case of crash. Also, the repairs are paid directly to the authorized service station. You can also benefit from having the possibility of extending the policy outside Romania and the automatic renewal of the insurance contract.

What it does not cover

Most important, the policy does not cover damages caused on the fault of the driver. Therefore, damages suffered by the vehicle in case of a collision, such as bumps, scratches, turnovers, falls.

Also, the policy does not cover for damages caused by accidents caused by the poor state of the roads. Even if the damages are not the fault of the driver.

According to Andreea Hreapca, marketing and PR manager of Interamerican Romania, for a vehicle valued at 10.000€ the policy costs 180€ annually. In case of natural hazars or fire and the vehicle is completely destroyed, the client will receive the insured value in full, even if the policy is not full CASCO.

On the international market, this type of insurance is about 20 years old. In Romania, CASCO Light is an innovative product responding to the demands on the market.

Rob Imhoff says that “Interamerican wants to insure by the end of next year 1% of the 4million cars in Romania”.

”CASCO Light is an insurance program that offers us a competitive advantage because of the ratio between the risks covered and the premium paid”.

The reason behind the CASCO Light solution

The insurance companies selling CASCO insurance policies are looking for solutions to reduce the losses after some companies found out that, in comparison with the money they get from the clients, they have to pay almost double for the damages recorded in one year.

Although CASCO or full CASCO insurances are the most expensive on the market, the insurers say the business is not profitable.

This happens because most of the vehicles using CASCO are powerful, and, in case of accident, the damages they suffer or inflict are far greater than in case of a Dacia. Plus, the spare parts and working hours are expensive. To this you add the increased traffic on the Romanian roads. The insurance companies complain that one of the causes of their losses is the frequent frauds they have to deal with.

To limit their losses, some companies have differentiated tariffs according to the profile of the driver. As it is the case of Allianz-Tiriac, which took the risk of loosing clients aged between 18 and 25 where the most of the losses occur, while in the case of persons the damages are smaller and so are the tariffs.