Insurance players slam draft on RCA capping

The National Union of Insurance and Reinsurance Companies from Romania, the Bureau of Motor Vehicle Insurers from Romania and the Insurance Industry  Employers’ Union from Romania have reacted to the draft Government Decision regarding the 6-month capping of RCA insurance premium rates.

The industry cannot agree with the Draft gov’t resolution, which, they say, clearly violates European legislation, lacks economic foundation and is ambiguous on certain aspects, risking to further destabilize the RCA insurance market. “The legislation needs to be changed, but it requires a wider package of measures to be discussed together with all parties directly involved.”

They also proposed some essential solutions for a functional and attractive consumer market:

“Correcting the specific articles of Law no. 132/2017 that do not allow the insurer to control costs, thus leading to important imbalances in the normal functioning of the insurance market based on competitiveness, profitability and prudence. The launch of a national project aimed at reducing the frequency and severity of road accidents and the adoption of urgent measures to increase the degree of coverage in insurance and to effectively combat fraud, which will immediately and effectively support the efforts already in place in this area. Practically, for every 100 cars registered in our country, at least 6 cause traffic accidents resulting in material damage or bodily injury and death, compared to 4.08% – the frequency recorded in Bulgaria, 3.2% in Poland, 2, 7% in the Czech Republic, 2.3% in Hungary and 1.65% in Croatia. UNSAR, BAAR and PIAR have engaged in such an endeavor, and declare themselves open to collaborating with other organizations and public institutions in this regard.”

The insurance industry representatives remind that a similar solution was used in 2016, also through a GD, when RCA premium rates were capped. “The reality showed that it was not a beneficial solution neither for the insurance market in Romania nor for the insured and injured persons alike, the competitive environment was seriously affected, and Romania faced in 2021 and 2023 a bankruptcy and an insolvency of a magnitude much larger than previous bankruptcies in the insurance industry. In addition, it should be recalled that the infringement procedure was launched against Romania, which ended only after the state’s intervention in the pricing policy of insurance companies was abandoned,” they argued.