Romania’s RCA prices may increase on unregulated moral damage level

The price of the mandatory car insurance RCA could go up if lawmakers don’t set up thresholds on compensation claims in the case of injuries and fatalities, warn lawyers.

Marius Diaconesa, an insurance lawyer at Diaconeasa Marica & Asociatii, said that compensations paid for similar cases registered differences up to 333 times, depending on the court.

The fact that Romania doesn’t set up a system for determining moral damages can lead to a possible increase of the RCA price, according to Laura Iarca, senior associate at law firm Zamfirescu Racoti Predoiu.

“In most of the European countries there are criteria and limits for damages,” said Iarca.

“In 2000 there was a provision for a maximum limit of RON 80 million for each person and now there is a maximum limit of EUR 5 million no matters how many persons are injured,” said Iarca.

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Insurers now have to establish the RCA price making sure that they are able to cover expenses for one year, and the unpredictability of the compensation system may lead to higher mandatory insurance premiums for drivers.

The amount of compensations for injuries and fatalities soared by 46 percent to RON 246.6 million (EUR 56.2 million) in the first nine month of 2012, according to the insurance regulator CSA. In the same time, the number of compensation files fell by 6 percent.

The average amount of paid compensation was over EUR 12,000, but there were some cases in which the compensation exceeded EUR 1 million.

Cosmin Vasile, partner at ZRP, stated the increase of the sums for moral damages influence the cost of the RCA.

He explained that the set up of a specialized unit that assesses the compensation file before it gets into court would see more cases closed through mutually beneficial negotiations.

“The increase of the maximum compensation to EUR 5 million lead to an increase of court cases and of lawyers that speculate this cases,” said Vasile. “If there isn’t any legal intervention, it runs the risk of becoming a bomb on wheels for insurers and drivers.”

The ZRP representatives warned the lack of clear criteria for establishing moral damages leads to a predictability deficit, which is crucial for the insurance system.

Ovidiu Posirca