Irregularities on the Romanian insurance market
Romania’s largest insurance firm Astra has been recently placed under special administration by the country’s Financial Surveillance Authority, following a series of irregularities found here. In an earthquake-prone country, Astra policyholders would not be properly covered in case of a big tremor, because the company undervalued the damages it was supposed to pay, so its financial reserves were 40 percent below the required level.
Roxana Vasile, 19.02.2014, 13:41
Romania’s largest insurance firm Astra has been recently placed under special administration by the country’s Financial Surveillance Authority, following a series of irregularities found here. In an earthquake-prone country, Astra policyholders would not be properly covered in case of a big tremor, because the company undervalued the damages it was supposed to pay, so its financial reserves were 40 percent below the required level.
The situation is very serious, considering that Astra has 3 million customers, and that 2 millions of them signed property insurance policies. In order to support the company’s recovery, the Financial Surveillance Authority decided to place Astra under special administration. During this period Astra is not allowed to make investments on the real estate and financial markets.
The new administration will take the necessary steps to retrieve loans granted within the group, worth 110 million lei or 2.5 million euros. Granting further loans will also be forbidden. Head of the Financial Surveillance Authority, Dan Radu Rusanu, has said Astra policy holders have no reason to worry:
Dan Radu Rusanu: “All policies issued by Astra Insurance are valid until they expire. Astra will have to resort to its own financial resources or to funds obtained while under special administration, to meet its obligations. “
Businessman Dan Adamescu, who holds the majority stake in Astra Insurance, has deemed the Financial Authority’s decision to place the firm under special administration ‘a mafia-style move. ”I think this is an absolute first in the insurance industry”, Adamescu was quoted as saying. He has also said he will challenge the Financial Authority’s decision in Court.
There are people, however, who say that placing Astra under special administration is an attempt to cover up another recent scandal regarding the big salaries at the Financial Surveillance Authority. Its president, Dan Radu Rusanu, has said he will propose to have these salaries halved. That means reducing his own monthly salary of 14 thousand euros to 7 thousand euros. It’s worth mentioning that in Romania, the average net salary is 500 euros.
Moreover, the Association of Romanian Financial Services Users has asked for a parliamentary inquiry into the Financial Surveillance Authority’s staff policy, following information in the media that many of the people employed here are relatives of high-level Romanian officials.
