The price of compulsory insurance for buildings with a more stable construction, especially in cities, has increased from 100 lei to 130 lei per year, starting from Saturday, November 11, while the maximum compensation in the event of a disaster caused by an earthquake, flood or landslide has remained unchanged – 100,000 lei. Recent changes to the law include 5 measures aimed at forcing homeowners to insure their homes.

Amendments to Law 260/2008 on Compulsory Home Insurance from

Earthquakes, Landslides and Floods came into effect on Saturday 11 November, but the changes don’t just apply to the price of a PAD policy.

• SEE THE NEW LAW ON MANDATORY HOME INSURANCE

Indeed, the price of insurance for type A houses has increased from 100 lei per year to 130 lei per year for the same sum insured of 100,000 lei, while for type B houses the compulsory insurance will also cost 50 lei per year for the insured. the amount of 50,000 lei.

• Type A residential buildings are structures with a supporting structure of reinforced concrete, metal or wood or with external walls of stone, fired brick, wood or any other materials obtained as a result of thermal and/or chemical treatment.
• Residential premises of type B are buildings whose external walls are made of unfired bricks or any other materials not subjected to thermal and/or chemical treatment (for example, adobe).

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

At the end of October 2023, more than 1.98 million homes have PAD insurance against the three natural disaster risks, three-quarters of which are in urban environments. 95.9% of all compulsorily insured buildings belong to type A, of which more than 1.2 million are apartments.

Insurers cannot take out optional home insurance without first taking out compulsory insurance, so all those who have real estate loans from banks will have to pay a higher total amount of insurance for the home they own.

5 changes that could force homeowners to insure their homes

Since people do not take out mandatory home insurance and mayors have never imposed fines, the authorities have made some changes to the new law to force owners to take out these PAD policies.

Cosmin Tudor, the development director of PAID (compulsory home insurance company), clarified for HotNews.ro which 5 legislative changes that came into force on Saturday are aimed at increasing the degree of coverage of housing insurance.

1. Any registration or change in the Land Register – only in the presence of PAD insurance

ANKPI will first check the PAD policy regarding registrations and changes to the land register.

• “In order to register or change the registration of a house in the land register, its owner is obliged to present a contract of compulsory insurance of the house.
• Registration or making changes to the registration of housing in the land register is conditioned by the existence of a mandatory housing insurance contract valid on the date of the application,” the law states.

Read also: Only 20% of Romanians have mandatory home insurance. What solution did the state find to force them to issue policies

2. The fines that the mayors have to charge for the lack of a PAD policy are fully covered by the local budget

In theory, the fine prescribed by law for not having PAD insurance is between 100 and 500 lei. However, in practice, no fine has been imposed so far. Applying the sanction is up to mayors, who, however, need people’s votes and avoid being negative characters.

If the fine had been calculated until now, 60% of its amount would have gone to the central budget, and 40% would have remained in the local budget.

Thanks to the changes made to the law, the fines will now go entirely to local budgets.

3. h3: Calendar to notify owners without insurance

The law introduced a strict calendar for the first time, which municipalities must adhere to when notifying owners of the lack of PAD insurance – every six months, starting on January 15, 2024.

• “Professional departments of city halls once every six months, starting from January 15, 2024, send notification letters with confirmation of receipt to persons who have not concluded PDP contracts for their housing,” the law states.

4. h3: PAD policies will also be able to be sold by City Hall employees. What kind of money can I get?

Another change is that employees of city halls and subordinate institutions will be able to distribute the PAD policy.

• “They can engage in distribution business according to current legislation, becoming either assistants of a broker in the market, or agents of an insurance company, or employees of such structures.
• Therefore, remuneration for the distribution of PAD insurance will also be discussed with these specified entities.
• PAID currently offers a 10% commission to intermediary insurers and will offer the same commission to contracted brokers.
• Current laws require insurance distributors to take specialized courses, pass exams and obtain an ASF authorization in the form of an RAF code.” said director of PLATA HotNews.ro.

5. h3: Brokers will be able to sell PAD without the intermediary of an insurer

Last but not least, another change aimed at increasing sales of PAD insurance is aimed at insurance brokers who will be able to distribute PAD without the intermediary of another insurance company under a direct contract with PAID.

Until now, only insurers contracted with PAID to distribute PAD policies, and they also sold through brokers.

Alternatively, PAD policies can be purchased directly online on the PAID website or through Ghiseul.ro.

“Through all these measures, PAID aims to increase the number of insured homes by 10% and reach 2.2 million active PAD policies by the end of 2024,” Cosmin Tudor, PAID’s development director, also told HotNews.ro.