2023-10-05 17:21:07
The Minister of Finance, Marcel Boloș, warned on Thursday regarding the danger that would have existed in traffic if the Government had not decided to extend the RCA price cap, by 3 months, until December 31, 2023. “In the context in which hundreds of thousands of drivers run out of policies at the end of the year, it was vital to protect consumers and keep car insurance affordable,” he said.
Traffic, carsPhoto: Inquam Photos / Alex Nicodim
The Government adopted in the meeting of Thursday, October 5, 2023, the normative act necessary to extend by 3 months, until December 31, 2023, the period of application of the maximum RCA insurance premium rates practiced by insurers on February 28, 2023.
- “With hundreds of thousands of drivers left without policies at the end of the year, it was vital to protect consumers and keep car insurance affordable.
- RCA rates can vary significantly from one insurance company to another, and sometimes these rates can become prohibitively high for drivers with lower incomes. Capping fares ensures that the RCA remains affordable for all drivers, which is essential to ensuring road safety.
- Consider that there are regarding 800,000 cars that need new insurance as of December 8th. What would have happened if this decision was not taken, to apply the maximum RCA insurance premium rates practiced by insurers on February 28, 2023?
- This is all the more so in the context in which we are the country that is in first place in the negative list of countries in the European Union with the most accidents and the most deaths on the roads, per capita”, Minister Marcel Boloș explained.
The background to de-risking RCA prices
As a result of the exit from the RCA insurance market in the last two years of the insurers with the largest market share, insurers in the portfolio of which most of the RCA insured were, an imbalance between demand and supply was generated, a fact that led to an upward evolution of premium rates charged by RCA insurers.
Under these conditions, on April 5, 2023, the Government of Romania issued Decision No. 298/2023 regarding the establishment of maximum premium rates and other applicable measures by insurance companies that practice compulsory motor liability insurance for damages caused to third parties through vehicle and tram accidents.
By this normative act, the premium rates charged for RCA insurances were established at the level of their own premium rates that were charged by each RCA insurer on February 28, 2023, these will be valid for a period of 6 months, until on October 10, 2023.
About 15% of the entire national car fleet has RCA insurance at Euroins
After the opening of the bankruptcy procedure for the RCA insurer with the largest RCA insurance portfolio in Romania, GEO 71/2023 was adopted, whereby the legal termination terms of the contracts concluded with the insurance company for which the decision to open the procedure was issued of bankruptcy were extended by 90 days, until December 7, 2023 for general insurance, respectively February 5, 2024 – for guarantee insurance.
After the completion of these terms, the issued policies cease to exist and, therefore, it is necessary to take out new policies.
The Ministry of Finance points out that the number of compulsory RCA insurance contracts concluded by it, which are still in force, is approximately 1.5 million contracts, which represents approximately 15% of the entire national car fleet.
Given that the extension of the validity of RCA contracts overlaps with the termination of the effects of GD no. 298/2023, it is estimated that by the end of 2023 there will be a large number of RCA insured persons who will request the conclusion of new contracts, in which case it will manifest itself the continuation of the situation of imbalance between demand and supply at the market level, which might lead either to a pressure on the RCA insurance premiums practiced in the free market or to a decrease in the degree of inclusion in the RCA insurance of the national car fleet.
Thus, by applying this measure, the potential negative impact of price increases is eliminated.
Recovery of the premium difference
The Ministry of Finance reminds that policyholders who have paid the insurance premium in full or in installments can cancel the insurance contract. Thus, they can recover it from the premium paid in proportion to the unexpired period of the RCA contract, if no compensation has been paid or no compensation is due for events occurring during the period of validity of the insurance.
The amount due represents the premium owed by the debtor insurer, for the period in which the risk was not covered by it as a result of the termination of the insurance contracts.
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