The management of the Financial Supervision Authority (ASF) is expected, today, in the Parliament, to give explanations after requesting the bankruptcy of Euroins, the leader on the RCA insurance market. It would be the fourth identical bankruptcy case in just eight years, after the City Insurance, Astra and Carpatica bankruptcies.
Nicu Marcu, the president of the Financial Supervisory Authority, claims that City Insurance and Euroins owned 80% of RCA policies, and the multiple irregularities made by the two companies made it very difficult to check them and, therefore, measures could not be taken sooner.
“When I came to ASF, City and Euroins owned almost 80% of the RCA market. There is no such thing in any state. The two companies practiced very low unsustainable rates, and the serious companies withdrew. At Euroins, extremely many deficiencies were found which led us to impose measures for them to fulfill. Controls were ordered almost monthly, some unannounced and permanent controls, as a result of which natural and legal persons were fined and the management of the Euroins company was dismissed. The management of Euroins was sanctioned and dismissed two or three months after I arrived. We gave substantial fines, they took fines of 16 million lei cumulatively, in a year and a half. So the surveillance activity of the ASF was extremely incisive, only that the ASF was struck by the company’s refusal to provide documents or to provide documents inconsistent with reality. These insurance companies are governed by the Solvency 2 European directive which allows them to issue insurance only and only with reinsurance. That is, their risks can be transferred on reinsurance to a reinsurer, which can also be in the Cayman Islands. Knowing what we had found at City Insurance, ASF required Euroins to bring back its insurer so that we could check it, given that the reinsurer was in the Cayman Islands. Thus, the company made its reinsurer in Germany, making the verification possible”, said Nicu Marcu, at the hearing in the Senate committees
He added that the bankruptcies of the two companies were requested by the ASF, but the two companies were given the opportunity to enter legality. “At both companies, the idea is circulating that there are two bankruptcies in our mandate. There are two bankruptcies requested by us, because I know very well that when we came, none of the companies was Snow White. Both companies were the Muma Padurii/The Wicked Witches for the population. Both companies were given the opportunity to go legal. Both companies had low prices, late payments and often unrecorded files. We also imposed a liquidity indicator to make sure that they also come with liquid money, apart from this reinsurance, which both companies preferred to take their risks to the extent of 90% to City Insurance and to Euroins – 60 or so percent . This is the stage and progress of the actions we have taken in the supervision and control of these companies. Each time, all the elements found that gave suspicion of illegalities were sent to the Prosecutor’s Office. We were hesitant to make reports public, because each of us has criminal complaints, three colleagues have, one of the complaints was made to me by City Insurance. It was not easy, they were given time to make their solvency legal, they did not accept. This was the final solution – requesting insolvency”, said Marcu.
The debate started at the economic committee in the Senate at 12.00, during which relevant aspects will be discussed regarding the reference rates for RCA policies, published by ASF on March 7, 2023, the impact on the insurance market and on consumers, the state of controls and the measures taken by the ASF in relation to the legal regulations in force in the insurance market, especially the actions taken in relation to the company Euroins Romania Asigurare-Reasigurare SA and the situation of indemnities/compensation payments made by the Insurance Guarantee Fund as a result of the bankruptcies of some insurers such as Astra S.A., Carpatica Asig S.A. and City Insurance SA. According to the announcement, the leadership of the Financial Supervision Authority is invited to the meeting.
The Financial Supervisory Authority (ASF) announced that it will submit, on Monday, to the Ministry of Public Finance a proposal regarding the establishment of tariffs for RCA policies at the level of those of March last year, but also another proposal aimed at waiving the fee of one to percent applied to insurance companies.
“The insurance companies will use the rates from a year ago. We had discussions with the main insurance companies so that for the next period they should refer to the rates actually applied a year ago. Moreover, in order to support citizens who want to take out a RCA policy, the Authority will waive the 1% fee that it applies to insurers. These are the main proposals that we will submit to the Ministry of Finance on Monday. We want to have stability on the RCA market, we don’t want to increase the rates on the market“, said Valentin Ionescu, general director, within the ASF.
Before the session in Parliament, the AUR MPs protested with banners reading “ASF = Corruption”, “ASF = Thief”, “Attention! Useless institution!”, “Protect the Romanians, not your mandates”, “12,000 euros, salary per month, for WHAT?”.