​”When your income is 3,000 lei or 4,000 lei, paying 1,000 lei for RCA is more of an effort than in any other situation,” says Sorin Mititelu, the new vice president of ASF, in an interview with HotNews.ro, motivating thus a proposal to introduce a monthly payment of mandatory auto insurance. Mititelu compares insurers’ fear of possible abusive behavior to the fear of a “grain of salt” in Ion Krynge’s story Human Folly.

What is ASF’s RCA monthly payment offer?

One of the amendments proposed by the ASF to the RCA law is the introduction of the payment of the insurance premium in monthly installments in order to reduce the financial burden of the obligation to conclude RCA contracts:

• “Under RCA contracts, which are offered for conclusion for a period of 12 months, the insurance premium is paid in full or in monthly, quarterly or semi-annual installments, depending on the choice of the insured or potential insured;
• the RCA contract also comes into force if the rate of insurance premium has not been paid within the period agreed between the policyholder/contractor/user and the RCA insurer, unless the RCA insurer has exercised its right to terminate the RCA contract;
• An RCA is an executive instrument for payments due and unpaid,” ASF proposes as an amendment to the RCA Act.

Insurers complained that they would encourage the occurrence of tragic events similar to May 2

Insurers welcomed the ASF’s proposal with caveats, complaining that “in addition to the operational complexity required to manage such a system, the fact that an insurer can only terminate an RCA policy after a certain period of non-payment may encourage customers who repeat or without sufficient financial credit to stop paying , especially recent installments, and driving without insurance, potentially leading to accidents.”

• “The consequence of this will be increased pressure on the FNP – the National Protection Fund, a fund fed by contributions paid by honest RCA policyholders, which also pays for losses caused by the uninsured, such as in the case of the tragic accident on May 2 last August , publicity,” the insurers warned.

The vice-president of ASF in an interview with HotNews.ro: The argument is completely exaggerated

When asked if these fears are justified, ASF Vice President Sorin Mititelu said in an interview with HotNews.ro that this argument is completely exaggerated, given that even today, in some cases, for certain segments and for certain products, insurers accept payment in installments.

• “That’s not the problem with paying in installments. Because there is no room for fraud here, because if the insurance is not paid after 30 days, the insurer has the right to terminate the contract.
• Yes, there will be a small additional cost in the administrative part of the whole system, in connection with this activity of collecting premiums which are paid in installments, but at the same time we have a very large mass of policyholders who must make a financial effort disproportionate to their income to pay RCA insurance in one payment
• When your income is 3,000 lei or 4,000 lei, paying 1,000 lei is a bigger effort than in any other situation where you pay a mobile phone or an electricity bill.”

Mititelu: Their story is similar to the folkloric story about salt fractions

After the interview, HotNews.ro insisted on the insurers’ fears related to the legal impossibility of terminating the RCA contract after only 30 days of non-payment and the possibility of abuse, but Sorin Mititelu stood by his point of view.

• “In short, their story is similar to folklore about a salt shaker.
• We have 7 million insured cars on the market, owned by almost 6 million people, not 100 or 1,000 people who probably feel they should get something by not paying the last installment, or who think (obviously wrongly) that for non-payment of 2-3 monthly installments will have no consequences.
• So what do we want? Is it better to serve 6 million customers or to avoid internal, manageable and insignificant risk from potential violators?
• As for the complexity of the activity, it is worth noting that in other markets, in ours, smaller companies with much smaller resources have the ability to collect receivables in parts. In fact, most of our insurers approve the method of paying the insurance premium in installments, but at their own discretion,” ASF Vice President told HotNews.ro.

The bill to amend the RCA law is currently in the Senate for decision, and ASF predicts that the law will be approved and come into force by the end of September this year.

Other information from the HotNews.ro interview:

• VIDEO How the price of RCA will decrease if the policyholder assumes part of the risk. ASF Manager: Discounts can be from 5 to 10% depending on the franchise
• ASF’s new chairman admits Romanians are right to be nervous about RCA price: “Public accusations against ASF are 100% justified” / INTERVIEW with Sorin Mititelu, Vice President of ASF
• INTERVIEW Careful drivers suffer injustice over RCA price, ASF confirms: ‘Current system makes no meaningful difference between those with or without damage’