Private Health Insurance Poised For Growth, Held Back By State
BMI View : Private healthcare insurance has had relatively small market penetration in Romania, but is expected to pick up significantly in the long term, albeit from a low base. Issues around deductibility and the pace of healthcare reform continue to impede the market's potential. The market for private health insurance will continue to be marginalised unless authorities undertake serious liberalisation of the healthcare sector and allow the private sector to assume some of the burden.
The private health insurance market in Romania is continuing to face the impact of the eurozone slowdown, with declining numbers of policies taken out by consumers. Macroeconomic uncertainty is feeding into consumer behaviour and purchasing decisions. Although the local private health insurance sector has huge potential, it is a very small market at the moment, representing 1% of the total insurance market in the country. This is despite the fact that out-of-pocket contributions by Romanians were RON6.3bn (US$2.1bn) in 2011, indicating that a large proportion of healthcare costs are borne by patients.
The relatively undeveloped private healthcare insurance market is a marginal market worth RON80mn (US$24mn) in written premiums in 2012, with most of these premiums coming from employer provided policies. Despite this, the private health insurance market grew by 54% in 2012, according to data from the Romanian Insurance Supervisory Commission. The private health insurance market lags behind European peers in terms of scale.In the Netherlands, it accounts for some 6.7% of GDP and 1.2% in neighbouring Slovenia and given the chronic dysfunction within the national healthcare system, there are plenty of incentives for Romanian consumers to turn to the private sector. The main issue has been financing and pricing matters. The dependency on the corporate sector to buy insurance products meant that during the downturn, demand for policies has been moderated as companies cut costs and reduce headcounts. Nevertheless, as Romania's economy recovers and experiences growth over the medium term, we expect to see the private healthcare insurance market resume its growth trajectory, especially once individual policies become more palatable to consumers.
|Out Of Pocket Payments A Large Proportion Of Healthcare Spending|