Approximately one quarter of the cars in circulation do not have the RCA (the mandatory insurance) valid, because the owners have made the policy for a very short period of time – one month – and then forgot to renew it, according to data provided by the Competition Council at AGERPRES request.
“A problem is the reduction in coverage in the RCA, probably due to the existence of very short term insurance policies. There are quite a lot of cars in circulation (about a quarter), which do not have the RCA valid, because the owners have contracted the policy for a very short period of one month – and then forgot to renew it. As a result, we proposed that RCA policies could be contracted for 6 or 12 months for individuals and for a period of one month to 12 month, multiple for a month, for legal entities,” says the competition authority.
The Competition Council notes that the implementation of the new legislative package in the field of compulsory civil liability insurance has largely eliminated the dysfunctions that have led, in the previous years, to imbalances between demand and supply on the market. From the analysis of the data published by the Financial Supervisory Authority (FSA), the Council argues that a favorable evolution of the RCA sector specific indicators is observed. For example, the value of the combined ratio has declined and, at the same time, the liquidity of the insurance companies has improved, with total assets exceeding the level of short-term liabilities.
The Competition Authority states that it has been involved in the process of assessing the causes that have caused these imbalances and has made a number of recommendations to improve the functioning of the market and which have largely been taken up in primary and secondary legislation such as: the possibility of direct compensation; implementing a scoring system for each type of lesion and suffering caused by a car crash in order to create a benchmark for courts in the case of moral damages for personal injuries and death; taking into account the bonus / malus class of driver history, not just the unique driver-vehicle combination.
The Competition Council also mentions the use of telematics technologies in determining the first RCA; the aggregation of market-based statistical data and its dissemination; providing access to the driver record; interconnecting the CEDAM database with the Vehicle Driving License and Vehicle Registration Regime (DRPCIV) with a view to increasing the coverage of the RCA by cross-checks; the declaration of all usual vehicle drivers (for more accurate risk assessment) when issuing the policy.
Following the introduction of this provision, the evolution of premiums will be different from case to case. In some cases, where the risks increase, the premiums will be higher, and in the cases where the risks diminish the premiums will be lower.
Last but not least, the refining of the risk criteria used in calculating the premium rate is mentioned.
“However, some of these recommendations, although taken over in the legislation, are not yet in place. For example, the scoring system for injuries has not yet been developed, there are still no RCA insurance products based on telematics technologies (there is only one a pilot product launched by Groupama for CASCO), the interoperability of the two databases, CEDAM and DRPCIV, is not ensured. Although there have been no companies leaving the market lately, new actors have entered, the specific indicators show a market We will continue to monitor the motor insurance market, but careful supervision by the ASF is necessary to take corrective measures in the event of some malfunctions,” says the Competition Council.
At the same time, the institution states that the price of RCA policies is freely established on the market by each insurer on an actuarial basis and taking into account the ability to undertake risks. ASF, as a supervisory and regulatory authority in the insurance field, can verify to what extent a possible increase in the RCA premiums is justified by increases in cost components.
According to the Competition Council, RCA rules must strike a balance between premiums and compensation so that neither party will suffer: the insured person must not be subject to excessive pressure on the level of the premium, the victim must not be in the situation in which it can not be paid a fair and timely compensation, and the insurer must not be in a position to fail to honor his obligations.
“The fact that progress has been made in the functioning of the insurance market does not mean that some adjustments are no longer needed. These issues were also raised by the European Commission, which sent Romania a” letter of delay “(a precursor to the trigger the “infringement” procedure), requesting explanations regarding certain provisions of the RCA legislation. As a result, we are working with the ASF to identify the necessary measures to harmonize the RCA legislation with European regulations, namely to strengthen the market and to increase the degree of protection of policyholders, including within the working group created for the elaboration of Romania’s response documents to the letter of a welcome to avoid starting infringement proceedings,” the representatives of the Competition Council said.
They argue that there are still some issues that raise concerns, but they hope to succeed by eliminating them by taking over the legislation and other recommendations of the institution, along with alignment with EU provisions. One of these is the one mentioned above, namely that about a quarter of the cars in circulation do not have the RCA valid because the owners have concluded the policy for a very short period – a month – and then forgets to renew it.
“Also, the increase of the expenses for damages paid for material damages can also be caused by the lack of insurers’ control over the tariffs applied by the repair units. In view of the tense relationship between the insurers and the new service companies we proposed the introduction of a provision regarding the elaboration by the ASF, together with insurance companies and representative repairers, or their professional organizations, of a code of conduct applicable in the relationship between insurance companies and car repair companies in order to avoid damage to consumers,” it is also said in the document.
At the same time, the competition authority reminds that it has an investigation into a possible violation of the national and Community competition rules by the National Union of Insurance Companies of Romania (UNSAR), Media Xprimm SRL, UNSAR member insurance companies as well and other insurance companies.