Radio România Internațional

Tag: civil liability insurance

  • Competition Council fines insurance companies

    Competition Council fines insurance companies

    Nine insurance companies in Romania were handed a total of 53 million Euros in fines by the Competition Council for steering the market together so as to increase the prices of the mandatory civil liability insurance for car owners. In addition, the National Union of Insurance and Reinsurance Companies in Romania was given a 35-thousand Euro fine. Competition Council President, Bogdan Chiritoiu, told Radio Romania that the fines were applied for the companies’ activity in the 2012-2016 period.



    Bogdan Chiritoiu: “Given the crisis on the civil liability insurance market, companies worked together to have prices increased. This is illegal and unfair. At present, things are back to normal and under control, prices have stabilized. We have even seen some drops in civil liability insurances for certain categories of vehicles. Apart from our investigation, the Regulatory Authority also got involved and took action more firmly than before, given that the legislation was changed in 2016 and the system improved”.



    Part of the companies that were handed fines said they would appeal the Council’s decision in court. The Financial Supervisory Authority has taken the fines under advisement and has given assurances it will continue to check the need to modify the current legislative framework, to make sure it responds to the needs of the insurance sector. We recall that this summer the Authority carried out unannounced checks and handed warnings in writing to two insurance companies regarding their management of prices for civil liability insurances, forcing them to correct all the irregularities they identified at the time.



    Moreover, the Financial Supervisory Authority also says that the share of revenues from the sale of civil liability insurances continues to rank first at market level and has grown to 1.6 billion Euros in the first nine months of the year, slightly higher than the same period last year. Car insurances account for approximately 73% of the total gross insurance premiums for general insurances and nearly half of the total gross insurance premiums that companies have contracted in the aforementioned period. Additionally, the total value of gross civil liability insurance premiums last year stood at over 897 million Euros, by 29% more than the previous year, against the backdrop of an increase in the average premium.

  • The civil liability insurance sparks protests

    The civil liability insurance sparks protests

    Civil liability insurance premiums have been frozen for the next six months at a reference value which the Financial Surveillance Authority will make public within 30 days. The measure is part of an emergency ordinance the Government passed on Wednesday and is applied to all car owners, not just carriers. Among others, the document stipulates that insurance contracts can be signed over a period ranging from one month to one year.



    The insured party can at any time call for the termination of the contract. The insurance covers damages incurred from accidents, and the value of repair works will be reclaimed from the party that produced the accident. A Government release states that the ordinance complies with EU directives in the field, also taking into account the experience of other member states as regards insurance-related regulations, as well as proposals voiced by professional associations of car insurers and carriers. Despite the measures adopted by the Government, part of Romanian carriers decided to go through with their protests.



    Four of the six national carrier associations have staged a huge rally in front of the Government building, clogging traffic in Bucharest and 20 other cities. Carriers want insurance premiums to reflect an average value of damages reported by the Financial Surveillance Authority. Employers’ associations have called for an average value of 1,100 euros for trucks and lorries, accounting for average damages, as compared to the 4,100 euros proposed by the authorities.



    Negotiations with the Government had previously failed to settle on a ceiling for damages, while freezing insurance premiums, a measure sanctioned by the Competition Council, seemed to sit well with Romanian carriers, who have nevertheless voiced their reluctance pending the publication of the Government ordinance.



    Carriers have also called for the resignation of the head of the Financial Surveillance Authority, Misu Negritoiu, whom they accuse of being responsible for the significant increase of insurance premiums over the last year. According to carriers’ associations, premiums allegedly doubled as compared to the first quarter of 2015. Misu Negritoiu, on the other hand, claims he is blameless, as the Authority cannot set prices and has no legal right to intervene in contracts signed by insurers. The Financial Surveillance Authority president told Parliament that the current crisis has been generated by the liberalization of the car insurance market, a process started in 2007 with Romania’s EU accession.