​CEC Bank’s plans to open an insurance company and the Chuke government’s expectation to have a state-owned player in the RCA market at the height of the Euroins bankruptcy crisis failed last year. ASF’s new vice president, Sorin Mititelu, says in an interview with HotNews.ro that the bank has not sent any requests for permission in this regard and that prices will not fall significantly even if the state becomes a player in the RCA market.

Last spring, in the midst of the crisis caused by the Euroins bankruptcy and then RCA’s price cap, former Liberal Prime Minister Nicolae Chuke said he “supports the creation of a state-owned insurance company, but which will also sell RCA, having discussions on this and with ASF and CEC Bank”.

Without confirming plans to sell RCA, CEC Bank officials told HotNews.ro that they have begun procedures to establish the insurance company, which is expected to be operational by the end of 2023.

“Regarding the discussion with the CEC, I had meetings with bank representatives, I told them what documents to bring. We are at the stage where representatives of the CEC are sending documents to the authorities, we are in touch with them and we hope that as soon as possible we will also see a state company that will sell RCA,” said Valentin Ionescu, General Director of Insurance, in April 2023 from ASF.

CEC Bank has not yet sent ASF a formal authorization request

It’s 2023, RCA prices are still capped, but CEC Bank hasn’t become an insurance company, much less one that sells RCA.

Sorin Mititelu, the new vice president of the Financial Supervision Authority (ASF) for insurance, says in an interview with HotNews.ro that the authorities have not received any request from CEC Bank to enter the insurance sector.

• “We have no information and nothing to comment on because we have not received any official request in this sense for permission. There is currently nothing that can be officially allowed. Maybe there were some preliminary steps,” says the vice-president of the ASF.

RCA does not offer high returns. It can be with a discount of up to 10% regardless of the owner of the insurance company

An ASF representative emphasized that “70-75% of the price paid for RCA is sooner or later returned in damages,” something that any company looking to operate in the sector, regardless of stock, should consider.

• “The more companies there are, the more capital there is in the market, which provides the necessary basis for the development of the market not only in insurance.
• Regarding the state-owned company and the expectation that the state-owned company will solve the problem of carriers, specifically those who expect low or even very low rates, my comment will be related to what I said before: rates are objective and they should be fair.
• They are mainly related to claims costs, that is 70-75%, in fact 75%, as we saw in the statistics for the end of 2023, goes to claims costs.
• So it doesn’t matter what company you are, what shareholding you have, 70%-75% tariff, whoever practices it, whoever is in the market, has to have it to cover the cost of the claim.
• Therefore, it is possible, let’s say, that the participation of some companies, even state ones, will not affect the market in the sense of a price drop.”

What can change, he says, is 25-30% of the price paid for RCA when a company, whether public or private, makes its costs more efficient.

• This product (not the RCA) is not a high margin product, and for that matter, it really hasn’t been in recent years.
• So the 25-30% part, if there is an improvement in the situation, it will only lead to an improvement or a reduction of the tariff by 5%, maximum 10%, regardless of who owns the company,” said Sorin Mititelu.

Easy Asigurări can enter the RCA market anytime before the end of November

When asked about the possibility of other players entering the RCA market, the ASF vice-president pointed to Easy Asigurări, a company controlled by Superbet founder Saša Dragić, which received approval to sell RCA last September.

• “This is a company that has received permission. It is about Easy Asigurări and we are waiting for it to enter the market by offering the RCA product. He is awaiting a decision from the Bureau of Automobile Insurers of Romania (BAAR) on the mechanism for the allocation of high-risk policyholders.
• Depending on what they decide there, sooner or later we will have them on the market.
• The term they have is determined by the term of the license, which expires from November this year. Until then, they have the opportunity to enter the market at any time.”

How stable is the situation with active RCA players? Is there a risk of a new bankruptcy?

• “Since we have all the statistics, the situation is better than it has been in the last 10 or 15 years. So, if we talk purely about solvency indicators, as I mentioned in other cases, and liquidity, then the situation at the system level is very good.
• Also, and if we look strictly at this segment, RCA class 10 insurance, the situation is good, so for example the total loss rate at the end of 2023 at the system level is somewhere between 94-95%, so it’s a very good situation.”

The number of damage claims and complaints is decreasing

ASF’s vice president says the number of RCA claim files is also down slightly, which is related to the frequency of claims.

• “So we’ve seen that we’ve gone from 7%, 6%, we’re moving to a 5% frequency, and that’s because of the lower load year over year.
• But the number of petitions and complaints decreased the most. If in 2021 we had a peak – 41 thousand complaints per year, then last year – only 6.1 thousand complaints.
• So it’s a big difference between the previous period and the current period, and if I were to exclude, I would exclude the number of complaints coming from the services, complaints to the insurers, practically the number of complaints falls below 5,000 a year.” , according to the ASF representative.

Other information from the HotNews.ro interview:

• VIDEO Vice President of ASF on paying out RCA in monthly installments: Insurers’ fear is similar to folklore about salt shakers
• 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’