Romania’s parliament endorses car insurance law which frees insurers to hike premiums

Romania’s parliament endorses car insurance law which frees insurers to hike premiums
Car insurance premium rises are likely to be seen following the endorsement of a new law on third party insurance
By By Dimitar Koychev May 17, 2017

Romania's parliament endorsed the law on third-party car insurance (Raspundere Civila Auto or RCA) on May 16, two days before the deadline. A transitory six-month period in which car insurance fees were frozen expires on May 18, liberalising the fees charged by the insurance firms. However, the new law needs secondary regulations to be endorsed before it can become functional.

The bill will regulate a RON4bn market (€900mn) that, beside the voluntary car insurance market (CASCO), accounts for the largest share of the local insurance market. The financial problems of several insurance firms pushed up the RCA fees last year, prompting protests from hauliers. Eventually, the government stepped in and froze the fees at compulsory benchmark levels. However, the EC expressed its disapproval of the decision to cap premiums saying it wasn't in line with EU law and it would put pressure on insurers' capacity to generate profit.

The head of ASF, Misu Negritoiu, who initiated the freeze and didn't think it was necessary to raise fees, was dismissed on May 11 in relation to the car insurance crisis, just days before the deadline. 

After May 18, the benchmark levels will not be binding and transporters can expect further price hikes which could lead to more protests. 

The financial markets regulator ASF has to announce benchmark fees for each category of vehicle and driver as of May 19. The benchmark fees will be revised on a six month basis. The bill also aims to bring in procedures to assess customers' risk to identify those drivers classified as risky (by at least three insurers). But these rights largely depend on the secondary regulations.

Related Articles

RBI doubles net profit y/y in Q1 as Russian business recovers

Raiffeisen Bank International (RBI), the second largest bank operating across Central and Eastern Europe by assets, reported that net profit almost doubled year-on-year to €220mn in the first ... more

Shares of Digi Communications drop as CEO of Romanian subsidiary is investigated for corruption

Shares in Digi Communications closed the day 4.1% down at RON39.5 (€0.86) per share on the Bucharest Stock Exchange on May 17, the day after they were floated. The company was hit by a ... more

Businesses in Romania to benefit from better access to finance due to new EIB agreements

The European Investment Bank (EIB) and three Romanian banks (Raiffeisen Bank, Banca Comerciala Romana (BCR) and ProCredit Bank) signed agreements which should generate financing of €246mn to ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss