Even insurers, brokers and underwriters are currently at a loss as to how the RCA maximum rates devised by the ASF, which they accuse of “bribery” and “incompetence” in the context of the Euroins bankruptcy, will be applied. Insurers say they have been offered final rates from March 2022, far from the lowest price compared to March 2023, creating a nightmare for law enforcement.

The maximum rates in RCA will be for 6 months: what gives the project created by ASF after the bankruptcy of Euroins

The maximum RCA prices will be set by each insurer at the level of its own premium rates applicable on March 1, 2022, and in a situation where those rates are higher than those applicable on March 1, 2023, RCA insurers will apply the lowest premium rate between them, the draft says GD drafted by the Office of Financial Supervisory Authority (ASF) and released on Wednesday for public comment by the Ministry of Finance.

• HERE IS HG’S DRAFT ON RCA MAXIMUM BETTING

The GD project, exclusively presented to HotNews.ro on Thursday evening, is difficult to understand not only for ordinary people, but also for insurance specialists, whom HotNews.ro contacted on Wednesday, and the Financial Supervisory Authority (ASF) did not manage to clarify anything. clarify on this topic.

What will actually change for millions of Romanians with RCA policies?

Let’s take a hypothetical example: an RCA policy for a driver with a malus bonus class B0.

Simply put, if on March 1, 2022 the RCA insurer applied an RCA rate of 1,400 lei, and on March 1, 2023, it increased the RCA price to 1,500 lei for the same category of insured, according to the GD project, in the next 6 months after the entry into force of this act the insurer will have to sell this type of policy at the price for March 1, 2022.

However, if the RCA price was higher on March 1, 2022 than that practiced by the same insurer from March 1, 2023, the draft GD provides that the RCA insurer will be obliged to sell at the lowest price among the 2 options, respectively, for the next 6 months at the rate from 01.03.2023

In principle, that would be an idea. However, in reality, it is much more difficult to calculate everything, because insurers take into account a lot of indicators in their calculations when calculating prices – such as age, cylinder volume, location, bonus-malus class, etc.

It is worse to compare apples with pears. At the time of March 2022, the RCA tariff structure was completely different, prices were based on the RCA gross premium, and in September 2022 the insurance legislation changed to introduce a net premium from the allocation of RCA policies, so the data from March 2023 is radically different from March 2022 .

• HotNews.ro has sent a question to the ASF and the insurance industry for someone to come out and explain all these changes to ordinary people who are required to take out RCA insurance.

While there are no official answers, HotNews.ro presents some of the reactions of insurers, brokers and deputies who, under the protection of anonymity, expressed their complete surprise at the new regulations prepared by the government.

Director of insurance: This is a nightmare! I don’t think anyone understands what it means to use two rates at the same time

Among insurance companies, the ASF project is perceived as a nightmare.

• “The whole market is bound to lose, especially in high-risk areas, and operationally it’s a nightmare to implement, especially because you have to compare the net premium to the gross premium, the IT program changes that have been made (and paid for in the past year) in order to meet the new requirements, especially in terms of requests from the European Commission.
• I don’t think anyone really understands what it means to use two tariffs at the same time, I don’t think there is any country in the world with this approach.” said an insurance company executive on condition of anonymity.

Insurance broker: Instead of honorable resignations at ASF, we have more chaos created by this incompetent government

Not everything is clearer even among insurance brokers who accuse ASF of ignorance.

• “Brokers have no way of knowing how insurers will calculate RCA rates. I don’t understand how ASF will be able to track rates – there are tens of thousands of combinations that result in rates, just comparing rates from March 2022 to March 2023. Whoever made this suggestion is ill informed.
• For an ordinary person, everything is extremely difficult, and the question arises, why not go for the statutory base rate. Why are we choosing March 2022 and not January or April 2022? Can the ASF be trusted to allow two insurers to operate for many years without complying with liquidity rules?
• Typically, after Wirecard’s bankruptcy, Bafin’s representative in Germany (similar to ASF) resigned. Instead of honorable resignations in the ASF, we have even more chaos created by this incompetent government.” another insurance broker said on condition of anonymity.

Limiting tariffs at a price unknown to the public is just a cheap exercise to wash the image of ASF

According to him, limiting RCA tariffs to prices unknown to the public is just an exercise to wash the image of ASF.

• “Limiting tariffs by a price unknown to the public (this is not a reference tariff) is just a cheap exercise to wash the image of the current leadership of the ASF, heavily bruised after 2 bankruptcies of market leaders in 2 years.
• Does Niko Marku somehow still want to extend his mandate or with the whole team because he “saved” the Romanian insurance market?”, The quoted source also said.

Deputy: This is a joke! You limit prices and cost of sales, and services continue to steal!

The provisions of the draft ASF also surprised some MPs, who expected that the draft GD would also provide for the establishment of base rates for car repairs on the model of RCA base rates, which was also supported by the Competition Council, which sent proposals for the development of this draft decision to the Government.

• “This is a joke. You cap the prices and cost of sale and the services continue to be stolen. I wish the big insurer would keep their word and get out of the RCA market!
• You can’t limit everything and let services continue to do what they want! You don’t want to know what the bills are!
• Since last night and until now, they have removed this provision. We will not have a normal RCA market until the bill of lading theft stops. Repairs should be transparent, there should be a grant for repairs. That way we will have a fair price, both for RCA and for the work of the car repairers.” This was reported to HotNews.ro by a deputy who wished to remain anonymous.

Another insurance specialist, who wished to remain anonymous, also supports the need to regulate prices for services.

• “The problem is that if the imposed “sale” prices are low, most insurers will not sell, or will give a commission of 0 to 1%, or close distribution through brokers. The problem is that the insurers will lose money, and they don’t want to lose any more. A restriction is not a solution if it does not extend to the chain of market participants.
• When the work hour is as much as the RCA policy for the year, it is wrong. Everyone knows that the services also have problems and that their cost has increased, but at least there should be a balance.” – said the insurance specialist.

Broker: Initially, RCAs were limited earlier and then the prices went up

• “RCA premiums were previously capped at 6 months (this is the maximum period with extensions in exceptional cases) and then insurers raised rates to catch up. On the other hand, if tariffs are limited, then the difference usually needs to be compensated, as with gas and electricity!”, another insurance broker said on condition of anonymity.

The head of the Competition Council claims that there should be benchmarks for car repair as well

Bohdan Chiritsoyu, the president of the Competition Council, warned a day ago that RCA prices should cover the real cost of covering the damage, ie stick to current repair prices.

• “You can’t just look at the bottom line, the price of the RCA policy, unless you also look at the components, the costs that those RCA policies are supposed to cover. If compensation costs continue to rise, you have no way of keeping the bottom line, the RCA policy price, if the components continue to rise.
• What we’ve been saying for a while is, well, we have a reference to the RCA policy price, we should have the same, similar reference to the components. It also means the cost of the repairs, the commissions, the cost of the rental car you get while your car is being repaired, all those elements that drive the RCA price up should also have some reference.” said Bohdan Chiritsa, quoted by Europa FM.

Chuke: I will not agree to create a public insurance company without taking over RCA. I have discussed this with CEC and ASF

Meanwhile, the Chuke government is ready to approve new maximum rates in the RCA, but the prime minister says “this will be done over a period of time and will be discussed with insurers so that they are not exposed to risk”.

In parallel, the state is preparing the creation of a state insurance company, which will also enter the RCA market.

Prime Minister Nicolae Chuke said on Wednesday before a cabinet meeting that he supports the creation of a state-owned insurance company, but which will also sell RCA, having discussions on this with ASF and CEC Bank.

2 solutions for the creation of a state insurer

“Establishing a state insurance company is a very good thing. I support and discussed with the CEC. There’s no way it won’t go to RCA. There are 2 options: to create a new company or to withdraw an existing company from the market,” the Prime Minister said on Wednesday.

When asked by HotNews.ro whether it makes sense for this new company not to sell RCA insurance, but given the crisis in this market in the context of the Euroins bankruptcy, the Prime Minister ruled out this option.

“I, for one, will not agree to start this company without accepting RCA as well. If it comes to market, so be it… It takes about 3 months, as I discussed ASF, because there are stages to go through. The earliest this can be established is in 3 months,” said the prime minister.