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ASF takes measures to maintain the equilibrium on RCA Market

Bucharest, 24 February 2015 – The Financial Supervisory Authority (ASF) has carried out in the last 3 months a series of actions to rebalance RCA premiums, primarily for the youth, on three major lines of action – regulation, supervision and consumer protection.

Regulatory measures

Given the market realities, ASF intervened in January 2015 by amending several provisions of Rule 23/2014 on the compulsory insurance against civil liability for prejudices caused by accidents of motor vehicles to make the regulatory framework more flexible, thus leaving the insurance undertakings the freedom to optimize their portfolios in order to reduce the differences among premium rates on various age categories. Thus, Paragraph 1 of Article 21, which was invoked most frequently by insurers as an incentive source to increase the price of RCA policies, was repealed. It provided the insurers’ obligation to set RCA premium rates so as to cover all commitments arising from the conclusion of insurance contracts on this segment.

These changes are added to a previous series of measures relating to secondary legislation, which aimed at limiting management and intermediation expenses of insurance undertakings in favour of compensation expenses, such as:

-     the obligation to perform, on a quarterly basis, analyses regarding the purchase costs by insurers and also ASF’s possibility to intervene by limiting intermediation commissions if the same are not justified;

-     the negative endorsement of the bill for the establishment, organisation and operation of the Body of Automotive Technical Experts and Evaluators of Romania, precisely because of the impact of this law on the increase of insurance policies’ costs.

Moreover, European insurance legislation (Directive 73/239/EEC) limits the role of the regulatory authorities, stipulating that the amount of insurance premiums, the method of calculation thereof, or the forms and other documents that an insurer intends to use in its relationship with policyholders are not subject to prior approval or systematic information.

Also, according to national legislation (Law 32/2000), ASF may only request information and documents, including statistical, relating to the insurance business, the management of this activity and the executive management of the undertaking, including information on the technical bases used for calculating insurance premiums and technical reserves. For these reasons, insurance undertakings set their own premium rates, without being subject to the approval of the Financial Supervisory Authority.

Supervisory Measures

ASF established, in the last half of the year, a systematic dialogue on market issues with insurance undertakings, brokers and professional associations (UNSAR, UNSICAR, etc.). Between December 2014 and February 2015, these meetings focused mainly on discussing developments in the RCA segment, in an attempt to identify solutions to reduce premiums for young people and/or to diminish the differences among the value of the premium rates on various age categories (persons younger than 25 years old vs. other categories).

The Financial Supervisory Authority initiated its collaboration also with other institutions to develop the fundamentals of a new approach in this respect:

-     through a first draft developed under an agreement recently concluded with the Romanian Actuarial Association (RAA). Its purpose is to analyse the loss history recorded on the sector of insurance against civil liability in respect of motor vehicles (RCA). The research will use consolidated data throughout the insurance market for a period of 3 years. ASF expresses its hope that the results of such draft will constitute welcomed benchmarks for the insurance market and that the transparency exercise will help policyholders to understand the process of establishing the RCA tariffs;

-     through the implementation of a protocol with the Driving License and Registration of Motor Vehicle Directorate (DLRMVD). This agreement aims at increasing the insurance coverage of the car fleet in Romania. This project will be beneficial to the development of the insurance market as a whole, but it will also have an impact on the level of the compulsory insurance premiums – by reducing compensation costs incurred by Street Victim Protection Fund, established by insurers from the insurance premiums collected.

The Financial Supervisory Authority has also extended, until the end of February 2015, the time limit by which insurance undertakings may revise and resubmit the notifications concerning the RCA premium rates. Five undertakings out of the ten undertakings authorised to practice RCA insurance a number, i.e. CITY INSURANCE, EUROINS, ASTRA, GENERALI and ALLIANZ, with a market share of 52.6%, have already sent such notifications to the Authority. The modifications referred mostly to reducing burdens on the youth in order to achieve a level similar to the European practice, showing the use of insurance premiums for young people up to 2.2 times higher than the majority category, as compared to a level 5 times higher as previously established.

In Romania, 47,987 policies out of a total of 3,111,451 RCA policies for natural persons, in force on 31 December 2014, are associated with young people under the age of 25 (1.54%).

An RCA tariff stabilisation must, however, be correlated with solving the imbalances existing in the insurance market, primarily in the RCA market.

The first three undertakings out of the eleven undertakings authorised at the level of 2014 have a combined market share of over 50%, and two undertakings with serious financial problems, under supervision, hold 32% of the market.

The loss history combined rating in the last 5 years was over 100% in the RCA market:








Combined rating






The compensation paid for personal injuries and death represent 25% of the total compensation paid and approximately 42% of the total value of the outstanding claims reserves – reported.

Consumer protection measures

With effect from 1 January 2015, the Consumer Protection Directorate was created within ASF. The Consumer Protection Directorate ensures the protection and defence of the rights and interests of consumers against unfair, abusive and fraudulent practices. Its tasks are as follows:

-       monitoring and financial education (recent projects include the preparation of RCA Guidelines);

-     petitions’ management (almost 9,000 RCA/Green Card petitions processed in 2014 – amounting to 70% of the total petitions – of which almost 75% resolved favourably);

-   public relations activity (over 25,000 calls handled annually).

Following the execution of a protocol with the National Authority for Consumer Protection (ANPC), ASF shares with such body the protection duties of consumers of non-banking financial services. Such collaboration establishes the joint intervention framework through investigations and surveys to verify the legality of insurance contracts, financial intermediation contracts, investment consultancy contracts, acts to join pension funds, as well as the marketing activity related to financial instruments, or the manner in which they are marketed.

The Permanent Working Group has been recently established in the field of non-banking financial services, modelled on the European initiatives of this kind, with the involvement of 25 representatives of consumer protection associations, associations of consumers of financial services and of professional associations of participants in the financial markets of Romania.

Other projects

ASF will continue to identify approaches that may contribute, together with the persuasion measures , to the normalisation of the situation in the RCA policies segment and development of the insurance market in general. For this purpose, the Authority shall evaluate the appropriateness of the structural change of the compulsory insurance system in Romania, through the adoption of measures to increase the quality of services in the RCA market and implicitly the respect due to the policyholder.

ASF believes that these actions were felt in the insurance market and that they will lead to lower premium rates for the youth category. The complaints concerning abusive situations with regard to the establishment of premiums shall continue to be monitored through the Consumer Protection Directorate. All cases reported will be treated individually, differently, and may be submitted to ASF by TELVERDE service 0800.825.627, email This email address is being protected from spambots. You need JavaScript enabled to view it. or online at http://asfromania.ro/em/fr.


About ASF

The Financial Supervisory Authority (ASF) is the institution that authorises, regulates, supervises and controls the entities operating on the non-banking financial market in Romania.

Established in 2013 through assuming and reorganising all powers and prerogatives of the National Securities Commission (CNVM), Insurance Supervisory Commission (CSA) and Private Pension System Supervisory Commission (CSSPP), ASF contributes to strengthening an integrated operational and supervisory frame on three markets amounting to more than 10 million participants.