A look at the car insurance system in Romania.
The Financial Surveillance Authority (ASF) in Romania has recently elaborated a new regulation aimed at forcing car insurance companies to cut back on the price of the civil liability insurance for young drivers. Car insurers will also be subjected to close scrutiny, the vice-president of the Financial Surveillance Authority Mircea Ursache has warned:
Mircea Ursache: “The new regulation now allows car insurance companies to lower the price of the civil liability insurance for young people. Failure to do so will prompt an investigation by our audit teams to see whether insurers are complying with the regulation. One important change refers to the regime of sanctions”.
Lately, the civil liability insurance has become the object of repeated public debates. Many voices have complained about the fact that people under 25 years of age have to pay up to four times the price of a regular insurance, as compared, for instance, to people above 50. “We need to control the price of insurance for young people and see how the rates are being calculated by the insurer. We will start applying penalties if any abuses are identified”, Mircea Ursache also told us. Finance Minister Darius Valcov also called on the board of the Financial Surveillance Authority to analyze and rethink out the civil liability insurance system for people under 25, because most people in that category cannot afford to pay the skyrocketing prices of 450 euros per year.
In turn, Prime Minister Victor Ponta has said that current prices in the civil liability insurance sector surpass the financial power of young people. A car should not be seen as a luxury product, accessible only to certain people, the Prime Minister went on to say, adding that he supports Minister Valcov’s request to reconsider the system.
On the other hand, representatives of car insurers in Romania claim that the civil liability insurance is a loss-incurring business. The head of the National Union of Romanian Car Insurers Florentina Almajanu told us more:
Florentina Almajanu: “The increase of damages in recent years is telling. We have conducted an analysis at the level of our union and found that the average claim rate in the first nine months of 2014 increased exponentially as compared to the same period of 2009. The amount of the average claim in 2009 was 1,060 euros and in 2015, for the same claim, insurance companies pay around 1,600 euros. The average premium, and I’m referring to the average civil liability insurance premium for car owners, was 139 euros in 2009, and in the first 9 months of 2014 the premium stood at 116 euros. Insurance companies have reported loss on the civil liability insurance segment and that has shown in the total loss of the insurance market since 2006. Therefore this insurance category is not a profitable one for insurance companies because it is a big loss-maker”.
According to the pledges made to Romania’s Parliament, by the end of this month, the Financial Surveillance Authority will present the conclusions of the analysis conducted on the segment of civil liability insurance premiums as well as the solutions they find appropriate. One year ago the insurance market was faced with various problems in that a special managerial team was set up for certain companies. Asked how the Financial Surveillance Authority could prevent certain companies from becoming insolvent, the president of the Authority, Misu Negritoiu, provided the following answer:
Misu Negritoiu: “This is our mission and eventually the authority’s success action. My role is to promote a more careful, more professional surveillance, to introduce more discipline and rigour in the system. We have taken over a rather unbalanced market, there are powerful players and weak players, and we have to re-regulate the market through European norms that need to be implemented as of January 1st 2016. By that time, we will have to create the conditions for rebalancing the market and for avoiding bankruptcy situations or excessive attitudes on the market, situations involving both over-assessment and under-assessment of prices. We need to boost the transparency and credibility of the system. This is our mission!”
The following well-known foreign companies operate on the Romanian insurance market as well: Allianz, Generali, Gothaer, Grawe, Groupama, ING, MetLife, Uniqua, Signal Iduna and Vienna Insurance Group.
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