Nine Romanian MTPL insurers fined for violation of the competition regulations; legal action against the sanction will follow

Nine Romanian MTPL insurers and UNSAR, the insurers' association, were fined by the national Competition Council with total fines of approx. EUR 53 million for violation of the national and European competition regulations by coordinating market behavior to increase compulsory MTPL insurance charges.

Following the investigation, the competition authority found that ALLIANZ-TIRIAC Asigurari, ASIROM Vienna Insurance Group, ASTRA Asigurari, CARPATICA Asig, EUROINS Romania, GENERALI Romania, GROUPAMA Asigurari, OMNIASIG Vienna Insurance Group and UNIQA Asigurari took part in an exchange of information commercially sensitive about the intentions of these companies to increase RCA charges. This concerted practice, facilitated by UNSAR, would have harmed the competition on the MTPL insurance market between October 2012 and November 2016, as instead of establishing their tariffs independently, the said insurers have acted concertedly on the market, following discussions to increase tariffs within the association.

Most of the companies that were fined said they would appeal the Council's decision in court, after receiving the official argumentation of the sanction from the Competition Council. The Financial Supervisory Authority has taken the fines under advisement and has given assurances it will continue to improve the current legislative framework.

We are quoting the point of view expressed by VIENNA Insurance Group, owner of some of the most relevant Romanian insurance companies, which summarizes fairly accurate the position taken by most of the MTPL market players with regard to this issue: "MTPL business has been running at a loss for the last years, especially during the investigated period. In a loss situation it is a logical and mandatory step to adjust tariffs and to calculate cost-covering premiums to be able to get out of the red. As this situation was not only affecting our local companies, but also the whole insurance market, it is to be assumed that also the competitors would have to adjust their premiums to cover cost accordingly based on key factors as claims frequency, claim costs, as well as personal claims development. However, the tariffs were different, considering that there are a wide range of parameters like driver's age, age of vehicle, type of vehicles such as personal cars, trucks, claims history and many other reasons. On the other hand, since all providers operate in the same competitive environment, the premiums would be fairly similar, however, depending on pricing tools and sales strategy which are set always independently."

UNSAR also considers that, through the activity carried out in order to achieve its purpose of serving the industry, it did not participate in an anti-competitive act, thus reserving the right to take legal action against the Competition Council's decision.

MTPL insurance accounted in 2017 for almost 40% of the Romanian insurance market's GWP, a share decreasing from over 44% in 2016. Except for 2017, the consolidated combined ratio for this line of business was almost always of over 100%, reaching in the period targeted by the Competition Council's investigations values in the vicinity of 120 - 125%.

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