Turbulences on the Romanian car insurance market
The Policyholder Guarantee Fund (FGA) has the necessary resources to cover all damages incurred by Euroins car insurance policies, the Romanian financial regulator said.
Corina Cristea, 21.03.2023, 14:00
The heads of the Romanian Financial Supervisory Authority (ASF) were summoned on Monday in Parliament to give explanations regarding the price of mandatory car insurance policies (RCA) and the situation generated by the suspension of the Euroins activity in Romania. ASF has withdrawn the operating license of Euroins and filed a request for starting bankruptcy proceedings just as it did in the case City Insurance. Fraud, very small tariffs, damage files missing from accountancy records and delayed payments are among the causes of the two resounding bankruptcies on the Romanian car insurance market in less than two years. This is what the financial regulator ASF explained to Parliament. ASF leader, Nicu Marcu, also said that the current Board was the only one brave enough to take measures against such companies.
Neither Euroins, nor City Insurance have been Snow White, but rather the Evil Queen, Marcu explained. Two and a half years ago, City Insurance and Euroins alone were holding around 80% of the Romanian RCA market, a situation unheard of anywhere else in the world, Nicu Marcu explained. In his opinion, this was due to the company’s unsustainable car insurance prices, which prompted serious companies to withdraw from the market. Nicu Marcu said that ASF had conducted numerous checks at the two companies and that the decision to request the start of bankruptcy proceedings was taken only after these companies had failed to restore the solvency capital requirement. According to ASF, the Euroins bankruptcy could generate 140,000 damage files and payments worth 250 million euros.
The ASF solutions to keep RCA tariffs in check is a Government order that brings their level at the one in March 2022, for a period of six months. This would mean an average smaller price per insurance policy of around 30%. However, a number of MPs have voiced doubt at the effectiveness of such decision. They say the ASF explanations are unconvincing and that they will request the revocation of the ASF Board, which lacks moral and professional authority.
At the same time, the ruling coalition says thorough legislative changes are need to prevent such situations in the future. In the meantime, Euroins representatives have announced they will appeal in Court the ASF decision to ask for its insolvency.
Bulgarian group Eurohold, which operates the Euroins insurance group, has said the ASF leadership was mislead and the crisis on the car insurance market was created artificially. A certain ASF team drew up an unfavourable report, which has triggered the revocation of the licence to operate on the Romanian market, Euroins representatives have said. (EE)
