Radio România Internațional

Tag: guarantee

  • Scandal in the insurance sector

    Scandal in the insurance sector

    City Insurance, Romania’s leading issuer of civil liability insurance for
    car owners, went under the special administration of the Insurance Guarantee
    Fund in early June, and has failed to submit in due time the amount stipulated
    in the relevant minimum capital requirements. ASF has announced that without this amount, of over 150 million
    euro, the company, which has issued some 3 million car insurance policies, can no longer
    continue to operate in Romania. Dan Apostol, spokesman for the Financial Supervising Authority:




    Dan Apostol: The authority ordered the
    company to submit, by the deadline stipulated by law, a short-term financing
    plan-in other words, to prove it has the money to cover the minimum capital
    requirement. Then they were supposed to come up with a recovery plan to prove
    they meet the solvency capital requirement. Also, to ensure a prudential
    management of this company, the Financial Supervising Authority appointed the
    Insurance Guarantee Fund as a temporary administrator.




    The
    investigation into the company’s bankruptcy points to possible frauds and
    operations conducted in tax haven countries, says the head of the Insurance
    Division of the Financial Supervising Authority. According to Valentin Ionescu, City Insurance
    declared fictitious amounts in its accounts, and the reinsurance was conducted
    via offshore accounts difficult to verify:




    Valentin Ionescu: This company placed
    outwards reinsurance on 90% of its contracts, going to tax havens. We
    investigated with the authority in the Cayman and Barbados, the answers took a
    year to reach us, and we found there are also problems with respect to the
    insurance of this company.


    The Financial Supervising Authority cancelled City Insurance’s license,
    declared the company insolvent and initiated the bankruptcy procedure.




    At
    present, there are tens of thousands of cases involving damaged cars with City
    Insurance policies, and the claims will be taken over by the Insurance
    Guarantee Fund, which will cover the damages.




    Meanwhile,the government is
    working on 2 emergency orders on the insurance sector, which are currently
    pending approval by the Competition Council, PM Florin Cîţu announced. One of
    the orders concerns policy prices, and the other one provides for some form of
    protection for the clients of City Insurance, if necessary. The latter is aimed
    at stepping up the payment of claims for policy owners.




    Under the current legislation, car owners have to wait
    months and even years for the court to rule the company bankrupt, as it was the
    case with 2 other companies, Carpatica and Astra, which left the insurance
    market several years ago. (tr. A.M.
    Popescu)

  • Measures to restart the economy

    Measures to restart the economy

    Romanias economy will emerge from this crisis with a different structure, but more efficient and more competitive, the finance minister Florin Cîţu believes. According to him, measures to support production capacities have been taken from the very beginning.



    For SMEs, heavily affected by the corona crisis, a programme called IMM Invest has been initiated, designed to provide funding for current operations or for investments by means of state guaranteed loans.



    Originally launched on April 17, the platform crashed immediately as hundreds of thousands of users tried to access it per minute. On April 28, the IMM Invest platform, now operated by the Special Telecommunications Service, was once again operational. And nearly 20,000 entrepreneurs applied online from the first hour of operation.



    But funding will not be granted on the first come, first served algorithm, as the honorary president of the National SME Council, Ovidiu Nicolescu, explains:



    Ovidiu Nicolescu: “An applicant has to prove its capacity to use this money in a productive, profitable manner, and that it will be able to repay the loan. Amounts will not be broken down by economic sector, there would be no point in doing so.



    The president of the National Guarantee Fund for SMEs, Dumitru Nancu, also warns that it will be up to banks to decide which applications will be approved:



    Dumitru Nancu: “A total of 22 banks are taking part in this 15-billion lei fund. The bank will be the one that will analyse whether the entrepreneur—the small or medium enterprise—is creditworthy, according to the banks own rules. Once a loan is approved, the request is forwarded to the Guarantee Fund, which covers 90% of the loan guarantee.



    The government covers 100% of the financing costs, and the amounts that can be applied for are substantial. Entrepreneurs may apply until the end of the year and until the earmarked budget of around 3 billion euros is used up.



    The programme is backed by all political parties, and the emergency order regulating the operation of IMM Invest was passed by Senate on Tuesday without major changes.



    Meanwhile, the Ministry of Economy, Energy and the Business Environment approved a 3-month extension of the application period in a programme called Start-Up Nation, to September 28, 2020 at the latest.



    The ministry explained that the decision is aimed at mitigating the economic impact of the restrictions introduced during the state of emergency on the SMEs accepted into the Start-Up Nation programme. Currently in its 3rd year of implementation, Start-Up Nation is an initiative under which the government supports newly-established businesses.


    (translated by: Ana-Maria Popescu)