Finance Minister Marcel Bolosh warned on Thursday of the dangers that would exist in road traffic if the government did not decide to extend the RCA price cap for 3 months, until December 31, 2023. “In a context where hundreds of thousands of drivers will have their policies expire at the end of the year, it was vital to protect consumers and keep auto insurance affordable,” he said.

At a meeting on Thursday, October 5, 2023, the government adopted a regulation on the extension for 3 months, until December 31, 2023, of the period of application of the maximum RCA insurance premiums practiced by insurers on February 28, 2023.

• “With hundreds of thousands of motorists left without policies at the end of the year, it was vital to protect consumers and make car insurance affordable.
• RCA rates can vary greatly from one insurance company to another, and sometimes these rates can become prohibitive for drivers with lower incomes. Fare caps ensure that the RCA remains affordable for all drivers, which is important for road safety.
• Consider that as of December 8, there are about 800,000 cars in need of new insurance. What would happen if this decision was not made to apply the maximum RCA premium rates practiced by insurers on 28 February 2023?
• This is all the more so in the context of the fact that we are the country that ranks first in the negative list of European Union countries with the highest number of road accidents and deaths per capita.” Minister Marcel Bolosh explained.

Background of RCA price cuts

As a result of the withdrawal from the RCA insurance market over the past two years of the insurers with the largest market share, the insurers in whose portfolios the majority of RCA insureds were, an imbalance between demand and supply was formed, a fact that led to an upward evolution of the premiums charged by RCA insurers.

Under these conditions, on April 5, 2023, the Government of Romania issued Decision No. 298/2023 on the establishment of maximum rates of insurance premiums and other applicable measures by insurance companies practicing compulsory civil liability insurance of vehicle owners for damages caused to third parties by vehicles and trams accidents

By this regulatory act, the rates of insurance premiums for RCA insurances are set at the level of their own premium rates charged by each RCA insurer on February 28, 2023, they will be valid for 6 months until October 10. , 2023.

About 15% of the entire national fleet has RCA insurance in Euroins

After the opening of the bankruptcy procedure of the RCA insurer with the largest RCA insurance portfolio in Romania, GEO 71/2023 was adopted, according to which the legal conditions for the termination of the contracts concluded with the insurance company, in respect of which the decision to open the bankruptcy procedure was issued, was extended for 90 days, until December 7 2023 for general insurance, according to February 5, 2024 – for warranty insurance.

After the expiration of these terms, the issued policies cease to exist, so it is necessary to issue new policies.

The Ministry of Finance notes that the number of compulsory RCA insurance contracts concluded by it, which are still valid, is about 1.5 million contracts, which is approximately 15% of the entire national car fleet.

Given that the extension of the RCA contracts coincides with the termination of GD No. 298/2023, it is estimated that by the end of 2023 there will be a large number of RCA insured persons requesting new contracts, in which case this will prove to be a continuation of the situation of imbalance between demand and a market-level offer, which could lead to either downward pressure on free market RCA insurance premiums or a reduction in the inclusion of national fleet insurance in the RCA.

Thus, by applying this measure, the potential negative impact of price increases is eliminated.

Refund of premium difference

The Ministry of Finance reminds that policyholders who have paid the insurance premium in full or in parts can terminate the insurance contract. Thus, they can recover it from the premium paid in proportion to the uncompleted period of the RCA contract, if compensation has not been paid or compensation is not payable for events occurring during the period of insurance.

The amount to be paid is a premium that the debtor insurer is obliged to pay for the period during which the risk was not covered by it as a result of the termination of the insurance contracts.