The insurance market in Romania has been influenced recently by several new updates and significant changes. These changes have impacted both consumers and insurance companies.
Some of the most important updates include:
- The increase in RCA insurance costs in Bucharest.
- Legislative changes related to the PAD insurance policy.
- Recent changes to the Road Code, targeting aggressive drivers.
Additionally, global economic and political crises have influenced costs and how companies approach risks.
Increase in RCA costs in Bucharest
One of the most discussed topics in the insurance field in recent months has been the increase in RCA insurance costs in Bucharest. This rise in premiums is due to the high frequency of car accidents in the capital.
The government will extend the price cap for RCA policies until March 31, 2025, according to a draft decision initiated by the Ministry of Finance. While insurers are solvent, the RCA market still shows significant imbalances, which will be addressed through legislative changes in Parliament.
What the Financial Supervisory Authority says
According to a recent statement by Sorin Mititelu, Vice President of the Financial Supervisory Authority (ASF), Bucharest has an auto damage frequency rate of 6.2%, comparable only to cities such as Belgrade. In this context, drivers in Bucharest and Ilfov pay higher reference rates than those in other parts of the country. The high rates are a direct result of the higher risks associated with accidents in the area. Thus, insurance companies have been forced to raise premiums to cover these increased risks.
Moreover, factors contributing to the increase in RCA rates include the fact that many insurance companies were losing money due to too-low premiums. As a result, drivers in Bucharest have faced higher insurance premiums, adding financial strain, especially in a period of rising living costs.
In addition to this cause, the rise in RCA costs has also been influenced by the large number of reported claims. Most of the claims resulted from unforeseen events that are not limited to just traffic accidents. The new reference rates for RCA for 2025 were set at the end of December, but the prices for mandatory car insurance will remain capped until March 2025, according to current regulations.
PAD Policy – legislative updates
The Natural Disaster Insurance Policy (PAD) is a mandatory insurance for all homeowners in Romania. It was introduced to protect against major natural risks such as earthquakes, floods, and landslides. According to the current legislation, PAD is regulated by the ASF and PAID. This insurance is an essential measure for protecting homes from unpredictable events.
Despite being mandatory, many homeowners choose not to take out this insurance. This situation puts their financial security at risk in the event of a natural disaster.
The increase in PAD premiums in 2023 was a factor influencing some people’s reluctance to purchase this insurance. However, it is important to note that the higher price reflects the greater risks faced by homes in various parts of the country.
The PAD insurance premium increased from 100 to 130 lei per year for type A apartments or houses. The maximum compensation remained unchanged. For type B homes, both the premiums and compensation remained the same. The premium for type B homes is 50 lei.
More details on the legislative changes regarding mandatory home insurance can be found here.
Road code updates – sanctioning aggressive drivers
Another current topic in the insurance field is the modification of the Road Code. It aims to impose harsher penalties on aggressive drivers. Recently, Romanian authorities have introduced stricter measures for drivers who violate traffic rules, especially those involved in aggressive behaviors on the road.
According to the new regulations, drivers who exhibit dangerous behaviors, such as illegal overtaking, sudden acceleration, or risky maneuvers, can be penalized much more severely.
Furthermore, the Ministry of Internal Affairs (MAI) has implemented an online platform through which citizens can report the traffic violations of other road participants. This allows for easier identification of aggressive drivers, and authorities can take swift action. All these measures are aimed at improving road safety. They are designed to reduce the number of accidents and protect the lives of drivers and pedestrians.
The impact of these measures is also relevant for insurance companies. They will have to reassess the risks associated with drivers who display aggressive behavior on the road.
Impact of global crises on the insurance market
Recently, global economic and political crises have had a significant impact on the insurance market in Romania.
Changes in the global economy, such as rising raw material prices, inflation, and political instability, have led to an increase in risks on the insurance market. These crises have caused insurance premiums to rise. Insurance companies have had to adopt even more cautious strategies regarding policy issuance and risk assessment.
Additionally, global economic uncertainties have impacted the demand for certain types of insurance. Consumers have been more reluctant to take out new policies due to economic instability.
This has led to stagnation in the insurance market, as well as a reevaluation of existing products. Insurance companies have been forced to adapt their business models to respond to new economic challenges and remain competitive in an unstable global context.
How consumers and insurance companies are affected by these updates
Recent changes in the insurance field have had a significant impact on both consumers and insurance companies.
The increase in RCA insurance costs in Bucharest has been a challenge for drivers in the capital, who have had to pay higher premiums to benefit from coverage.
Over 24% of homes in Romania are now insured against natural disasters. This is an important step in protecting homeowners nationally, despite the rise in premiums for type A homes.
These changes have directly affected insurance companies’ business strategies, requiring them to modify their products and adopt new measures. In response to the rising risks, insurers have had to make necessary adjustments to stay competitive.
Global economic crises have contributed to rising operational costs and increased market volatility, prompting insurance companies to adopt more conservative strategies.
In conclusion, these important developments in the insurance field will continue to influence the Romanian market, and both consumers and companies need to stay informed and quickly adapt to new economic conditions and regulations.