Government of is defined freeze RCA prices for the next 6 months at the level of their own premium rates charged by each RCA insurer on February 28, 2023, which may be adjusted by a maximum of 6.8%, representing the projected annual inflation rate at the end of Q2 2024 BNR edition .

SEE DRAFT HG AND KEYNOTE

How does the Government justify the decision to freeze prices

The Government recalls that on 5 April (not on the basis of the bankruptcy of Euroins) it was decided to cap RCA prices at the level of own premiums applied by each RCA insurer on 28 February 2023.

The measure, originally for 6 months, until October 10, was later extended until December 31, 2023, but the imbalance in the RCA market is estimated to continue into the first months of 2024.

• “As close to 900,000 RCA contracts were legally terminated in December 2023, putting pressure on the RCA insurance market, the supply and demand mechanism has been affected and it is estimated that this crisis situation, supply-demand imbalance and market dysfunction will persist and manifest inertial after January 1, 2024, given that only 6 companies authorized in Romania and two branches created on the basis of the right of incorporation are currently carrying out RCA insurance activities, and the data shows that in the first 6 months of 2024 alone, around 50% (approximately 3.5 million) of current RCA contracts.
• This situation is caused by the fact that RCA insurers had to insure a larger number of policyholders during this period than would normally be the case in a normal year in which the previously described situation does not occur, so it is estimated that there will be a further imbalance between supply and demand at the market level. (…)
• Such a situation may cause negative consequences in the form of additional pressure on prices after January 1, 2024.” shown in the justification of the project of the GD.

Applying this measure, it fights against excessive price growth that can suddenly arise against the background of the above-described imbalances, and gradually stabilizes the RCA insurance market in order to avoid the spread of negative effects to other sectors of the national economy.

According to the cited source, a transparent mechanism has been established to determine the compensation that is provided to cover the costs of temporarily replacing a damaged vehicle with a vehicle of the same class or a lower class in the event that the damaged vehicle is no longer technically usable.

In this case, the Government can intervene for a limited period of time by establishing a method for determining the premiums charged by RCA insurers to overcome the circumstances leading to the crisis.

The maximum premium rates adopted by this decision will be applied by insurance companies carrying out RCA insurance for a period of six months for RCA contracts concluded after the date of its entry into force.