​The insurance industry has reacted with deep concern to the government’s desire to extend the period of limitation of RCA premiums for the third time by another 3 months, until June 30, 2024, without even taking into account the effects of inflation. on Wednesday UNSAR – Union of Insurers and Reinsurers from Romania.

• “We remind you that from April 2023, restrictions on RCA tariffs have been established. Initially, the measure was adopted for 6 months, extended for another 3 months, and then, at the end of last year, the Government extended it once again with an adjustment of 6.8%, which did not even cover the inflation of 2023. (10.4% compared to INSSE).
• Most importantly, average RCA claims increased in the third quarter of last year by even more than inflation, by around 12%, as claims were also not capped,” the UNSAR member insurers said.

“RCA prices are affected by the high number of accidents, claims paid and rising costs”

The union claims that “RCA’s premium cap is a gross breach of European Union rules” and glosses over the fact that the price of RCA policies is affected by the high number of accidents, claims paid out and rising costs.

• “For example, insurers pay increased taxes and contributions for RCAs from 6.6% in 2021 to around 13% in 2023. Insurers who failed to take these fundamental economic principles into account are also the ones who have gone bankrupt in the past.
• However, paradoxically, the freezing of premiums was almost always based on the exceptional situation of previous bankruptcies and the need for other prudential insurance companies to take on a significant portfolio of clients. Thanks to serious financial efforts, they managed to soften this shock.
• Now the permanent limitation of “reluctance of RCA insurers to take risks for certain categories of insured” is justified.
• Thus, the principles of the insurance industry are again being ignored, on the basis of which each insurer should have the right to independently decide the risk profile of its clients, accordingly adjust its commercial policy according to the frequency and seriousness of claims, as well as to the appropriate mutualization of risks,” UNSAR says.

UNSAR: 19 out of 100 trucks over 16 tons caused accidents with property damage or injury and death

The Union notes that the frequency of accidents in vehicles used for transportation is 3 times higher than the average for all types of vehicles (19% versus 6.6%).

• “Thus, on average, out of every 100 vehicles with a maximum permissible weight of more than 16 tons, at least 19 cause traffic accidents with property damage or bodily injury and death. These road accidents, as a rule, are much more serious than in the case of other categories of motor vehicles,” UNSAR notes.

Insurers also say that the measure to expand the ceiling coincides with discussions on amending Law 132/2017 on RCA, which did not take into account the insurance industry’s proposals to ensure the sustainability of the profile market, despite the fact that they are also wanted by Romanian drivers.

• “As I said during the first extension of the RCA discount rate freeze in March last year, as well as during other extensions, these ‘temporary’ measures, apart from being contrary to EU law, are far from ‘miracle cures’.
• On the contrary, it could once again lead to the results we saw after the cap in 2016. We don’t know what other industry is in a similar situation,” UNSAR notes.

The government wants to extend the RCA price cap until June 30, 2024

The reaction from insurers came after the Ministry of Finance on Tuesday night put out a draft regulation for consultation, which proposes to extend the RCA price cap for another 3 months until June 30, 2024.

RCA prices are currently capped at rates applied by insurers on 28 February 2023, indexed to a maximum rate of 6.8%, a situation which will end at the end of March.

The measure, proposed by Finance, is motivated by the need to “combat excessive price increases that may occur suddenly amid imbalances” in the market.

Among the problems that still remain in the RCA market, the Ministry of Finance mentions that only 7 out of 10 cars are insured by RCA, a large number of high-risk policyholders assigned to insurers, and a high degree of market concentration. .

In addition, the Ministry notes that they are also taking into account the fact that a number of changes to the national legislation on RCA insurance are currently in the legislative process, which propose to correct the existing imbalances.

It is likely that the GD project will be on the agenda of the Government meeting on Thursday, March 28.