Automatic renewal of RCA contracts challenged

The European Integration Ministry (MIE) intends to request that the Insurance Supervision Commission drop the order of automatic renewal of auto liability insurance contracts (RCA), because this provision is likely to prevent different insurance companies from entering the market.

“We will most likely request the Insurance Supervision Commission to find a solution to remove this barrier, because the automatic renewal of the RCA contracts turns people into semi-captive customers,” stated Adrian Ciocanea, state secretary within the MIE attending the “Auto insurance market under the pressure of the EU accession:” seminar organised by ZIARUL FINANCIAR yesterday.

The order on the automatic extension of the auto liability insurance contracts came into force at the end of March. Therefore RCA contracts are automatically renewed with the company they were signed with, only if the insured client does not denounce the contract one month before it expires.

Ciocanea says the automatic extension of the RCA contracts is a barrier against entry on a free market after EU accession. The state secretary says insurance companies from abroad that will operate on the Romanian market after accession will have trouble finding clients on the RCA insurance segment because the transfer of clients from one insurance company to another will be made difficult by the renewal of the RCA contracts.

“The mandatory renewal of a contract may not even be brought up on a free market,” the state secretary says.

Nicolae Crisan, the chairman of the Insurance Supervision Commission (CSA), says the CSA will analyse the possibility to modify this provision. “We will analyse if we should maintain (the provision of) denouncing the contracts one month before (they expire) and if contracts should be signed for an unlimited period of time,” the CSA chairman says.

Insurance companies say this provision should be eliminated, because it is only hindering their business. angela.placinta@zf.ro