RCA insurers will additionally pay a special contribution from June 1 to the Insurers’ Guarantee Fund (FGA), whose financial resources are estimated to be insufficient to manage payments of hundreds of millions of euros following two major bankruptcies in 2 years: City Insurance and Euroins. with millions of RCA customers, according to the Financial Conduct Authority (ASF) project.

New special contribution: 3% of total insurance income

The Financial Conduct Authority (ASF) has published a draft rule for public consultation on the rates of contributions that insurers pay to the Policyholders’ Guarantee Fund (FGA), after Parliament recently passed legislation to raise new funds from the industry to deal with insurance bankruptcies.

The project establishes the maintenance of the current interest rates of the fixed contributions stipulated by the FGA and, according to the new law 112/2023 published on May 9 in the Official Gazette, it also establishes the interest rate linked to the special contributions for general insurance.

• “The corresponding percentage share special contribution provided by Art. 6 para. (5) – (8) from Law No. 213/2015, the indebtedness to the Policyholder Guarantee Fund by insurers, provided for in Art. 3 of the same law, for general insurance is 3%.” this is shown in the ASF project.

Regular contributions that insurers pay FGA at the same level as before:

• a) 4% for general insurance;
• b) 0.4% for life insurance.

The quotas established for the permanent contribution and the special contribution shall be applied to the volume of gross premiums collected from direct insurance activities related to general insurance and/or, as the case may be, life insurance, starting from the date of entry into force of this rule.

In other words, all insurers selling general insurance will pay the FGA a fixed contribution of 4%, to which will be added another special contribution of 3% of gross premiums collected from direct insurance activities in the general insurance segment ( RKA, CASCO , housing and communal services, etc.).

RCA insurers will temporarily pay a special contribution which the FGA will reimburse when it has money again

One of the main changes of the new law 112/2023 is that the RCA insurers contribute even more to the Guarantee Fund of the Insured through a special contribution in the form of a loan, which they will repay in full when the FGA has the money.

• “Special contributions due and transferred to the Fund’s account shall be returned to policyholders when the Fund’s available funds are sufficient to cover the amounts owed to insurance creditors, and within the limits of providing the Fund with financial resources provided for by this law;
• The Fund does not owe interest on collected special contributions.”, this is stated in the law.

First payments in Euroins bankruptcy: more than 650,000 lei in the accounts of some customers who terminated their contracts

The Insurance Guarantee Fund (FGA) announced on May 17 that it had approved the first tranche of more than 1,000 payment requests aimed at refunding premiums for some policyholders who terminated their insurance contracts with the former RCA chief executive.

The first payments amount to 658,562 lei.

Insurance indemnity payments will continue as the FGA will analyze and approve the payment claims of Euroins SA’s insurance creditors registered with the Fund, in parallel with the approval/payment activities of the payment claims registered for other insolvent insurers.

FGA analyzes payment requests in the following categories:

• payment claims based on material damage claim files opened by FGA or Euroins SA;
• prize refund requests;
• claims for payment made for personal injury or death;
• payment claims made on the basis of final court decisions.

Over 71,000 payment requests, of which only 38,000 are officially registered

By 16 May 2023, the FGA had received 71,774 payment requests for Euroins SA. Of them, the Fund registered: 38,492.

Compensation is paid within 500,000 lei for each insurance claim payable under an insurance contract concluded with an insolvent insurer, in accordance with the upper limit of the guarantee regulated by Law no. 213/2015 updated.

According to Article 13(4) of Law 213/2015: “Approving or, depending on the circumstances, rejecting the amounts claimed by the applicants is the competence of the Special Commission of the FGA.”

Any person who asserts the right to an insurance claim against an insolvent insurer may submit a reasoned claim for payment to the Fund, but no later than 90 days from the date of entry into force of the decision to open bankruptcy proceedings or from the date of birth of the insurer. the right to claim when it was born later, on pain of losing the right.

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