2023-09-01 12:11:00
If you are among the almost 1.7 million drivers with RCA insurance at Euroins, an insurer in bankruptcy, you must have learned that the Government decided on Thursday to extend the validity of these insurances by 3 months until December 8. You won’t have to pay more on a new policy or wait for the money from the FGA, as you would have if you had canceled your current policy, but don’t forget one key thing: on October 10th RCA price caps expire and brokers prices are expected to rise.
Car accident in BucharestPhoto: Inquam Photos / Eduard Vînatoru
- UPDATE (16:22 ) Emergency Ordinance which extends the Euroins policies by 3 months was published in the Official Gazette.
All Euroins insurance, not just RCA, will end on December 8, 2023
Prime Minister Marcel Ciolacu announced on Thursday that the reason for the 3-month extension of the insurance policies issued by Euroins is that 1.8 million RCA policies in force would have expired automatically on September 8. Such a large number of cars without RCA would indeed have been a huge danger on the roads.
On the other hand, the figure announced by Ciolacu, namely 1.8 million RCA policies in force at Euroins, is wrong.
As it is also written in the draft GEO adopted by the Government on Thursday the number of RCA insurances issued by Euroins that are still in force is approximately 1.7 million policies.
But Euroins didn’t just sell RCA. There are also insurances in force for housing, malpractice or guarantee cases. All of these contracts will now expire on December 8, 2023.
The act adopted by the Government on Thursday will enter into force as soon as it is published in the Official Gazette.
Why the extension of Euroins insurance is a back-and-forth: on October 10, the RCA price cap expires
Of course, for all those with RCA insurance at Euroins, the news of the extension of the policies is a good one.
If they had to cancel the policy, they would have had to wait maybe over 2 months for FGA to return the rest of the premium and they would have been forced to take out another RCA insurance that would certainly be more expensive.
However, the insurance brokers consulted by HotNews.ro pay attention to a less mentioned aspect: on October 10, 2023, the 6 months of capped prices will expire and if the Government does not extend this period, it will enter the zone of free prices.
Without capping, RCA prices might rise once more following October 10
Bearing in mind that current prices have been capped at the level of those charged by insurers on February 28, 2023, many brokers expect that following October 10 prices will rise once more.
Insurance brokers and executives explained to HotNews.ro under the protection of anonymity what expectations they have regarding the evolution of prices following the capping period.
- “RCA’s price freeze at the October 28 level has not caught all insurers on the wrong foot. Some of them used lower prices than those notified to the ASF and then they had a margin between 20 lei, 50 lei and even 100 lei for the increase or decrease in prices.
- What will happen following October 10? It is true that the insurers’ contribution rate to the FGA has increased, but they will get that money back. Damage rate has stabilized, damage frequency has decreased.
- Normally there would be little reason for price increases, but history shows that these increases do occur. Let’s not forget that new RCA reference rates will be published. If they are higher, they might be used by insurers as a pretext for increasing the applied RCA rates”, an insurance broker told HotNews.ro.
An insurance executive confirmed to HotNews.ro that following capping RCA prices there was a margin that even allowed tariff increases up to the capped level of February 28, 2023.
- “The RCA market hasn’t stabilized yet, but I don’t think everyone will raise prices. RCA prices are high enough these days.
- It’s true that the coverage offered by an RCA policy 5-6 years ago is totally different from what it is now – now you can trade in your car, liability limits are higher, you can get your car repaired at any service that to apply any rate.
- However, I don’t think they can increase RCA prices more compared to the purchasing power in Romania.”, said an insurance executive who wished to remain anonymous.
What option do RCA policyholders of Euroins have to have capped prices even following October 10
- “The big pain is that on October 10 the 6 months of capping RCA tariffs expires. From there the prices – “God have mercy” and there will be increases.
- On the date of lifting the Euroins operating authorization, we had 771 RCA policies in force, of which 643 would have expired following September 8, 2023. So only 128 policies expired on time. At the moment I have 364 RCA Euroins policies still valid. Including today, I canceled 10 policies.
- Extending RCA policies from Euroins is round trip. I told those who are rejoicing that the shelf life is being extended that it may be bittersweet.
- They’re glad they won’t have to wait to get some pennies, which they’ll eventually get, but instead they might end up paying a lot more for a premium policy following October 10 than what they might do now, money they will never get back.”, he declared for HotNews.ro Florin Taloșagency director (franchise) Safety Broker de Asigurare.
He recalled the fact that ASF recently changed RCA legislation through a rule that stipulates that RCA policies will be able to enter into force a maximum of 60 days following they were purchased, compared to 30 days as was the case previously.
- “If they want to stay on capped rates, Euroins customers might practically take out new insurance policies valid from December 9 before October 10.”, Florin Taloș explained for HotNews.ro.
And drivers who have RCA with other insurers can take out other RCA policies at capped prices before October 10
Such an option is also available to drivers who are RCA insured with other insurers and want the future RCA policy to be at the capped prices now.
Thus, if a driver insured at Grawe, for example, has RCA insurance that expires on October 15, he can take out another RCA policy at capped prices but which will come into force from October 16, 2023, until October 10.
- Careful! No one knows for sure if prices will rise following the RCA price cap period ends, nor if the Government will not extend the cap beyond 10 October 2023.
About the danger of RCA price increases following October 10, 2023 and the risk for Euroins policyholders whose RCA policies are extended, COTAR, the confederation of carriers whose members include insurance brokers, also warned a day ago.
The confederation warned that the extension of the Euroins policies would do more harm and lead to additional compensation of 90 million euros to the Insured Guarantee Fund (FGA), which pays the damages caused in accidents by at-fault parties with RCA insurance at Euroins.
And the Economic and Social Council (CES) warned in the notice given to the OUG that extended the validity of Euroins’ RCA policies that the measure would put major pressure on FGA.
RCA price cap might be extended until January 2024. What are the reasons – sources
On the other hand, there are signs that the authorities are considering extending the RCA price cap beyond October 10, in which case drivers with Euroins car insurance will have even more time to renew their RCA insurance.
Beyond extending the validity of Euroins insurance, the Financial Supervisory Authority (ASF) wants to propose to the Government the extension of the RCA price cap for another 3 months, until January 10, 2024.
The reason cited was that all the RCA policies of Euroins, an insurer in bankruptcy, expired, several governmental and insurance industry sources told HotNews.ro on Tuesday.
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