The RCA premium rates applied by insurers on March 1, 2022 are not transparent and cannot be verified by consumers to ensure that the limit is effectively respected, the Association of Financial Services Users of Romania (AURSF) warned on Thursday regarding the draft Government Decision initiated by the ASF in the context of bankruptcy Euroins.

Management of ASFPhoto: Inquam Photos / George Călin

The controversial draft government regulation proposed by the ASF to set maximum RCA prices for 6 months has a major flaw – Romanians have no way to check insurers’ rates and know whether they are applying price reductions to the authorities’ proposed car insurance. .

  • Maximum RCA prices will be set by each insurer at their own premium rates applicable on March 1, 2022, and in a situation where these rates are higher than those applicable on March 1, 2023, RCA insurers will apply the highest small premium between them. envisages the project of the State Department.

However, nowhere in the draft GD does it say how Romanians will be able to check and compare these prices of insurance companies so that they can consciously buy RCA.

AURSF supports RCA contract price caps, but not in the way that ASF thinks

In a statement sent on Friday, the association said it supported the principle of price caps on RCA contracts to prevent them exploding to levels that would make them unaffordable for consumers, but not in the form ASF sent to the Ministry of Finance.

“The previous bankruptcy in this market of City Insurance, the market leader at the time, caused a massive increase in RCA contract prices and consumers cannot stomach another similar event this time around.

Although we support the principle of capping the price of RCA contracts, we believe that the mechanism proposed by the GD, submitted for public discussion by the Ministry of Finance, is not an optimal solution to the problem, since the premium rates charged by insurers as of March 1, 2022 are not transparent and cannot be verified consumers to be sure that the restriction is effectively enforced,” says Alin Jakob, president of AURSF.

The association proposes that the price limit should not exceed the reference rates, which any interested person can check at any time. Obviously, at these rates, the existing bonus-malus system should still apply, so that anyone who doesn’t register a claim gets a discount of up to 50% of the base rate.

In addition, AURSF requests that the penalties for failure to comply with the rulemaking proposed during public comment be substantially higher than those proposed to discourage non-enforcement of the price cap on RCA contracts.

RCA insurers also do not know how to apply price cap until March 2022 vs March 2023

On Thursday, insurers sent a position paper to Finance Minister Adrian Cachiu in which they say the GD’s draft RCA cap rates “breach EU law, lack economic basis and are ambiguous, risking further destabilization of insurance”. the RCA insurance market, which was seriously affected by the bankruptcy of Astra Asigurări, Carpatica Asigurări, City Insurance and the insolvency of Euroins”.

Insurers recall that the European Commission also imposed sanctions on Romania with the opening of an infringement procedure in 2018 for limiting RCA prices, and that the Romanian state was later forced to change legislation to remove all restrictions imposed on the RCA pricing method.

The main concern reported by insurers even relates to the method proposed by the ASF to set maximum RCA rates at 1 March 2022 versus 1 March 2023:

“The structure of RCA rates practiced by insurers on March 1, 2023, and the elements that are taken into account when calculating them by each individual insurer, differ compared to March 1, 2022 as a result of changes made to the legislation by Law No. 202/2022. – liberalization of the calculation of the premium rate of insurers and Norm No. ASF No. 18/2022 – the introduction of a net distribution premium for RCA policies, so the two types of tariffs cannot be compared.” RCA insurers warned.

  • Read more: “It’s a nightmare!” Insurance against RCA maximum rates and what they mean for drivers