According to ApPA (Association for the Promotion of Insurance), the proposed Government Decision's provisions may contribute to the further destabilization of the MTPL insurance providers' situation, already heavily impacted by the bankruptcy of CITY Insurance. According to the latest official data provided by ASF - the Financial Supervisory Authority, the MTPL combined ratio reached over 130%, reflecting an already significant imbalance between the premiums income and the claims and operational expenses for this line of business.
"The 6 months of capped tariffs do not solve the core problem of the MTPL market. Some drivers could enjoy some form of savings when paying premiums in the next period. However, this would be followed by a return to real tariffs, which are based on clear calculation formulas, which take into account the high frequency of road accidents in our country, repair tariffs and other important parameters. In addition, these 6 months risk affecting the stability of insurance companies, this ultimately affecting MTPL policyholders as well ", the ApPA representatives transmitted.
A similar measure taken in 2016 proved ineffective, with the effect of triggering an infringement procedure by the European Commission for non-compliance with relevant European legislation. The savings brought to the insured at that time were insignificant, while the insurance companies were negatively affected by those measures.
In the other hand, capping intermediation commissions to 5% will strongly impact on the insurance intermediaries, putting at risk about 20.000 jobs in insurance intermediation market, right at a time when about 1 million MTPL insurance policies issued by CITY Insurance are about to expire and have to be renewed. Even after this period, a weaker distribution force may limit the development capacity of the insurance market itself, as insurance brokers are the main distribution channel, controlling the distribution of about 90% of the MTPL GWP.
The Competition Council also disapproved of the adoption of such measures, as affecting the market stability and being against the best interest of the insurance consumers. MTPL tariffs need to be adopted according to sane actuarial criteria, the Competition Council said, the Romanian state authorities not having the competence to intervene in the pricing policy of any supervised entity in the field of insurance as they would violate the provisions of Directive 2009/138 / EEC of the European Parliament and of the Council on access to business and insurance and reinsurance (Solvency II).