​President Klaus Iohannis announced a law on Wednesday, which provides for a 30 lei/year increase in the price of compulsory insurance for type A houses, the most stable, especially in cities. Therefore, the price of this insurance will increase to 130 lei per year, compared to 100 lei per year now, and the maximum compensation you can receive remains the same at 100,000 lei.

The plenary session of the Chamber of Deputies, the decision-making body, adopted last month with 169 votes “for”, 62 “against” and 12 abstentions, amendments to the Law on Compulsory Housing Insurance (PAD) in case of natural disasters: earthquake, landslides. and floods.

SEE THE LAW DIRECTED FOR THE SURVEY HERE

One of the main changes is aimed at increasing the cost of compulsory insurance for type A buildings, the most durable, from 100 lei/year at the moment to 130 lei/year. For adobe houses, the price of compulsory insurance remains unchanged – 50 lei per year.

The maximum amount of compensation you can receive in the event of damage has remained unchanged: 100,000 lei for insurance, which will cost 130 lei per year, and 50,000 lei for insurance, which will cost 50 lei per year.

Owners who alter the accommodation without permission and affect the supporting structure will not receive compensation

Another change concerns those who change their homes without permission and risk being left without compensation in the event of a natural disaster. In addition, PAID will be able to sue them in order to recover the compensation paid from the guilty parties.

In this sense, the current Article 11 of Law 260/2008 is amended as follows:

• “Art. 11. – (1) Insureds who, after the entry into force of this law, continue to modify housing without a construction permit issued in accordance with the law, or with non-observance of the corresponding permit, which affects the resistance of the housing structure and contributes to the impact of one of the Compulsorily insured risks are not is compensated for part of the damage that was caused or contributed to as a result of the performed works. 6
• (2) PAID has the right to recover from the guilty parties the amount of compensation paid for those losses that were caused by unauthorized construction works or for which the necessary permits were not obtained or the building regulations were not observed in accordance with the current legislation.

The law will enter into force 6 months after its publication in the Official Gazette.

The price increase will affect Romanians who have credit and live in cities

There are currently more than 1.98 million PAD-insured homes against the three natural disaster risks, three-quarters of which are in urban environments. 96% of all compulsorily insured buildings belong to type A.

• Housing type A is a structure with a strong structure of reinforced concrete, metal or wood or with external walls of stone, burnt brick, wood or any other materials obtained as a result of heat treatment and/or chemicals.
• Currently, it costs €20/year to insure such a home, and the maximum compensation you can receive in the event of a disaster is €20,000.

Insurers cannot take out optional home insurance without first taking out compulsory insurance, so everyone with bank mortgage loans will have to pay a higher total amount of home insurance after this bill is passed.

Who and why proposed changes in the parliament at the last moment

An amendment was recently proposed by the Pool of Insurance Against Natural Disasters (PAID), the insurance company that manages the compulsory home insurance system, to the 2020 bill, which was debated on Tuesday in the Economic Policy Committee of the Chamber of Deputies.

PAID representatives claim that 130 lei remains a modest premium.

The amendment passed by the Financial Supervisory Authority (ASF) was accepted and today the bill was included in the agenda of the plenary session of the Chamber of Deputies, the decision-making body. If passed, the bill will be sent to the president for promulgation.

What motivated the increase in the cost of insurance

The authors of the amendment motivated the increase in the price of mandatory home insurance as follows:

• the increase in reinsurance costs against the background of the growth of global demand for reinsurance in the current conditions of the production of natural disasters at the international level:
• inflationary pressure on the cost of construction materials, which are taken into account when evaluating compensations provided under the PAD
• the fact that since the law was issued (2008) and until now, premiums have not been updated, and the company has absorbed inflation of more than 55%

Why the risk of the storm has decreased: “Slight”

Note that the draft law adopted by the Senate provided that mandatory home insurance should also cover the risk of storms, in addition to earthquakes, landslides and floods.

Yesterday, in the Economic Policy Committee of the Chamber of Deputies, this provision was canceled on the grounds that this risk would not be significant.

Here is the rationale:

• “It is proposed to eliminate the risk of storms, given the fact that this risk is not significant for the entire surface of Romania, and there are no studies on the probability of their occurrence.
• It should also be taken into account that the insurance of this risk and the payment of an additional premium by the owners cannot be imposed, if not all residential structures are exposed to this risk.
• Severity at the level of secondary legislation would only be necessary in the event of a storm risk. By removing this risk from the offer, we believe that the current operation of the PAID compensation process provides greater benefit to the consumer,” the report said.

Only one in five houses is insured against earthquakes: how many Romanians insure their houses voluntarily, and how many are forced by bank loans

Thanks to a mandatory law that is not even enforced by the state, Romanians have insured only 1 in 5 houses nationally against earthquakes, floods and landslides, and official figures obtained by HotNews.ro show that things would be worse if some were not forced to take out this insurance when they bought a house with a bank loan.

Homeowners in Romania are required by law to insure their homes against the three risks of natural disasters – earthquakes, floods and landslides (not PAD insurance), but only 1.85 million homes were insured at the end of last month, equivalent to only 20% of residential foundation in Romania.

Not only the population and companies are required by law to insure their homes against earthquakes, floods and landslides, but also municipalities that own social or service housing, and official data presented to HotNews.ro show that the state does not do this. as required by law.

This is not surprising, given that fines should be imposed by mayors, but in 13 years no local elected official has imposed any fines on citizens in order not to upset the electorate.

Only 70% of DPA insurances are issued voluntarily. The rest are related to bank loans

By law, insurance companies cannot voluntarily insure a home that does not have mandatory PAD insurance.

Also, when you decide to buy a house with a mortgage, the bank requires you to insure the property up to its market value, so you pay the mandatory PAD insurance (which covers losses of up to €20,000 caused by three perils). natural disasters) and in addition you will take out an additional home insurance policy (which will also cover other risks such as fire or flooding from neighbors).

Read more:

• ‘Your plaster fell off, but not from the earthquake’: payouts against claims denied for homes damaged by last year’s earthquakes
• “Traps” in mandatory home insurance: why some are denied compensation
• The state that does not do what the state says: even city halls do not insure their houses against earthquakes, floods and landslides
• Romanians would be even less likely to insure their homes if they did not have loans. Some consider it a disguised tax – What does the ASF correspond to?