The minimum share capital requirement for insurance companies in Romania will increase by between 5 and 7 times from its current level, according to a draft regulation of the Insurance Supervision Commission.
Only 10 of the 42 insurers in the industry have a share capital that meets the industry requirements for 2006. The first minimum share capital increase will take place on 30 June 2005, followed by two subsequent increases in December 2005 and June 2006.
The share capital for general insurance companies not involved in car insurance will become 40bn ROL as of 30 June 2005, compared with the current 15bn ROL; it will then increase to 65bn ROL for a period before settling at 100bn ROL on 30 June 2006, less than two years from now.
Life insurance companies and general insurance companies that also sell car insurance policies will require share capital of 150bn ROL by this same date in 2006.
“This is an European Union requirement. Depending on their line of business (general insurance, life insurance, car insurance), companies must have a liquidity safety fund of 2 to 3 million euros,” CSA sources explained.
The measure will have a great impact on the insurance market, particularly since insurers will have to separate their life and non-life insurance businesses as of 1 January 2006, something which will affect many companies on the market.
This regulation may be voted on by the CSA by the end of the year.
sorin.pislaru@zf.ro