RCA’s 6-month price ceiling is on the Government’s table for the third time on Wednesday, and the new GD draft is virtually identical to the one that failed last week. Insurers will be required to sell RCAs at rate levels from 28 February 2023, motivating the ASF that these prices will on average be lower than base RCA rates for most drivers. However, for some, the restriction will mean higher prices.

On the agenda of the government meeting on Wednesday is the third version of the GD project, aimed at capping RCA prices for 6 months.

• SEE THE HG DRAFT AND MAIN RECORD HERE

RCA prices will be frozen at B0 from February 28, 2023, until which the bonus-malus system applies.

The new draft is almost identical to last week’s version, which was not adopted, although the entire leadership of the ASF was present at Victoria Palace and was due to appear with explanations to the media at the end of the Cabinet meeting.

RCA rates will be virtually capped at their own premium rates applied by each RCA insurer on 28 February 2023 for Class B0 (Base), ASF’s reasoning is that on average these rates will be lower than RCA’s published base rates on 7 March 2023 for most categories of vehicles.

• NOTE: We remind you that the RCA reference rates are not actual sales prices, but are only indicative for consumers, as they refer to the B0 (basic) bonus-malus class.
• These reference rates are based on historical data for the past 5 years and are calculated every 6 months by an auditing firm selected through the ASF tender.
• The results of the calculations were subsequently published on the ASF website: February 2022; August 2022 and the latest for February 2023, which were published by the ASF on March 7.

Starting from the maximum premium rates applied by each RCA insurer on February 28, 2023, depending on each policyholder’s loss history, the insurers apply discounts or price increases related to the bonus/malus class to which the policyholder belongs.

Effects for policyholders: some will pay a cheaper RCA, others more expensive

The ASF says most drivers will pay lower prices in the next 6 months as the level of final prices set by insurers in February 2023 was on average lower than the reference rates published on 7 March.

What the ASF did not say, but presented to HotNews.ro based on several comparative offers from insurance brokers, is that the price blocking on February 28, 2023 will mean an increase in RCA prices for some drivers, both companies and individuals.

We analyzed 8 price offers made in the period from February 27 to 28, 2023 for various insured persons, individuals and legal entities, who have class B0 (which is the easiest to compare with basic rates), as well as from the best bonus classes from several settlements of . the country.

The data shows that in many cases the capped prices for February 28, 2023 are higher than the base rates for March 2023, especially for Bucharest, where insurers practice higher prices due to a higher frequency of claims.

It would be beneficial to them capping RCA prices at RCA reference rates, as in the past, a measure that subsequently led Romania to initiate infringement proceedings by the European Commission.

The only change in the GR project that the carriers are asking for, which actually does not change anything

The only change in the new draft GD is in part (2) of Article 2, which specifies how the bonus-malus system is applied:

• “Art. 2. – (1) The maximum premium rates are set for the bonus/malus class B0.
• (2) Depending on the policyholder’s loss history, RCA insurers apply the bonus/malus class to which it falls, in accordance with the provisions of Law no. 132/2017 on compulsory auto civil liability insurance for damage caused to third parties as a result of road accidents of vehicles and trams, with subsequent amendments and additions and rules issued for its application; the effect of bonus/malus class on the insurance premium is also applied by BAAR in the allocation procedure of high-risk policyholders.’

Only the following provision differs from the previous edition: “the influence of the bonus/malus class on the insurance premium is also applied by BAAR in the procedure of allocation of high-risk policyholders.”

• “This provision with BAAR was proposed by us (at COTAR) in a meeting with the Prime Minister (on Wednesday, March 29), although it is also in law 132/2017, but the principles of bonus-malus are not followed by anyone. , regardless of whether it is an individual or a legal entity.
• Today we have over 70,000 of our cars insured at high risk, although 98% are B2-B6 insured. If the estimated rate today is 8,800 lei for B0, how will we end up paying 14,000-15,000 lei for B2-B4?”, HotNews.ro said this on Tuesday evening, Vasile StefanescuPresident of the Confederation of Authorized Operators and Transporters from Romania (COTAR).

In other words, because of RCA’s high prices, many trucking companies are now considered high-risk policyholders, and many are required to apply to the Bureau of Motor Insurance (BAAR), of which all RCA insurers are members.

The same happens with many drivers from Bucharest who pay higher RCA prices year after year, even though they are accident free and promoted in the bonus class. The reason is that insurers are free to set their own RCA prices based on various factors such as age, location, relocation, claim history, etc. This is the case everywhere in the European Union.

Insurers charge higher RCA prices for drivers from Bucharest because their loss history is on average higher than other drivers from other cities.

The president of COTAR, the confederation that represents motor carriers as well as garages, is very angry about the high prices at RCA and delays in paying for repairs by some insurers.

• “We supported the repair of the car with our own funds, bought the parts, the paint shop, did the mechanics, paid the workers, VAT, income tax and when it came time to get paid, City Insurance and Euroins didn’t pay.
• ASF sent us to court. I spent 3 years in court, and when I won, they filed for bankruptcy.
• Soon we will enter, but we are not lucky enough to have someone pay us bank loans.” the president of COTAR also clarified.

Q: Will it change if the draft GD mentions that BAAR will also apply a bonus-malus system in the allocation procedure for high-risk policyholders?

Answer: no. Nothing at all. It is the same today.

• “This is a redundant provision that doesn’t change anything, it just reiterates what has already been clearly established in the current allocation procedure for high-risk policyholders.” This was reported by an insurance expert to HotNews.rowho wished to remain anonymous.

And BAAR now applies a bonus-malus system in setting the premium for a high-risk policyholder, as we will explain below.

Those with high prices in RCA can go to BAAR. Here is the procedure

In all the above cases, transporters or drivers from Bucharest, we were talking about high-risk insured persons, all of which are managed by the Bureau of Auto Insurers (BAAR).

What does insured high risk mean?

• A high-risk policyholder is a driver who, after renewing an RCA policy (without direct settlement and without other clauses and additional coverages), receives at least 3 offers in a 12-month period from different RCA insurers, the total value of which is (net insurance premium) + broker distribution commission or insurer) is 36% higher than the current base rate applicable to the risk segment of which each is a part.

BAAR explains on its website the entire procedure by which each of us can know whether we are high risk insured and in that case we can approach BAAR for a cheaper RCA.

The premium for high risk is calculated according to the formula:

• Base factor for the vehicle X factor N (36%) X factor for the bonus-malus class you are placed in

Calculation example:

• Vehicle for which insurance is required: car; working volume of the cylinder: 1461 cm³
• Owner: natural person; 45 years old
• The bonus-malus class you belong to: B4, for which the adjustment factor applied to the premium is 80%
• Received insurance offers representing the total insurance premium (without direct calculation rate and without premium for additional conditions and coverage): 1550 lei, 1480 lei and 1400 lei
• The estimated RCA rate shown by the ASF on March 7, 2023 for people aged 41 to 50 who drive cars with a cylinder volume of 1401-1600 cc is 1265 lei.

Premium for high risk = 1265 lei (base rate) X 1.36 (Factor N) X 80% = 1376 lei.

• It follows that the high risk premium is lower than the general insurance premiums from the quotes received, so the request falls under the high risk insurance category and the owner can apply to BAAR to appoint an RCA underwriter to underwrite the contract. RCA insurance contract.

In a situation where you are classified as a high risk insured, BAAR will additionally calculate the RCA price it recommends and inform the RCA insurer who will be assigned as a high risk insured.

Industry sources say that this BAAR recommended price is being followed, even though it is not mandatory, and an insurer that offers or is randomly selected by BAAR to provide such a recommended price will do so at the level set by BAAR.

• But be careful! You need to make these calculations and make decisions beforehand. There are several documents that must be provided and the transfer to the insurer is made within 20 days of the request, if complete documentation is attached.

Read more also:

• The government postpones the price cap for the second time RCA / Ciucă: It is difficult to understand how two companies went bankrupt in such a short period of time
• How much will we pay in RCA in the next 6 months: 8 cases about the “poisoned apple” of the price freeze February 28, 2023