Recent decisions by the Romanian Financial Supervisory Authority in the mandatory third party liability motor insurance sector


The FSA’s decision comes after a series of dawn raids conducted on this market in the past months (in some cases, audits are still pending). The FSA’s general conclusion was that, although insurance companies generally observe proper actuarial standards and principles, several irregularities were also identified, such as: the use of risk segments for which the insurers failed to provide estimated values of risk incidence or average loss; use of heterogeneous risk segments; issues with the quality and accuracy of data used for premium computation; tariffs which depart substantially from the technical premium resulting from the actuarial computation etc.

The insurers now have 30 days to remedy the deficiencies identified. The FSA has also decided to approach the Working Group on changes to the mandatory third party liability motor insurance legislation with recommendations for reassessment of the manner in which the bonus-malus system (i.e. an adjustment method for determining the level of premiums) is regulated and for introducing express legislative provisions limiting the use of additional adjustment indices. Another set of proposals to the Working Group relates to new requirements for tariff computation which insurers will need to communicate to the FSA.

If you have any questions on these recent decisions by the FSA, please contact: Cristina Popescu or Florentin Giurgea.