RCA fees raised?

Insurers working in the car field have problems greater and greater. Insurance premium which the drivers already consider too high, is at a level that no longer covers the costs necessary for damages.

In the first semester of this year, the damages in the car sector reached the value of 164 million Euros. Where does this high increase of damages come from? The point is that in the Romanian auto market more expensive cars showed up in the past few years. Old Dacia cars were replaced mostly with newer and more expensive ones. Thus, the value of repairs in service increased considerably. Additionally, the higher number of cars also led to a higher number of accidents. Compared to 2003, in year 2004 the damage cases increased by 20%. To all these, there is added the more or less inspired way the insurers managed the increase or the decrease of the fees allowed by law. Until 2004, CSA announces the RCA fees. In the transition period to 2007, when the CSA will no longer interfere at all, things are as follows: the Commission for Surveillance of Insurances (CSA) announced a series of reference fees valid for 2005 and 2006, remaining that companies decide on their cheapening or increasing by 10% the highest for this year and 20 or the next year. Since the obligation of signing insurance policies for a calendar year no longer exists, those who wished to, could get insurance, for example, from September 2005 to 2006, with the fees already announced by the insurance companies. The trouble is that in order to get more clients, several insurers decreased the fees. Moreover, since they were forced to abandon the fees for 2006, these also are fixed now. Underway, they noticed that they cover the damages harder and harder, and the calculations show that this tendency for increase of damages will continue, but the law does not permit the modification of the level of the fees. For companies getting by mostly from car insurance, all these modifications represent a tough issue. Insurance companies such as Ardaf or ABC Asigurari, operated with a low level of fees, while the others, such as Asirom or Astra, were more moderated in the cheapening in 2005 and announced increased fees for 2006. A solution that might elegantly solve the issue would be the intervention of the CSA with regard to the reference fees, which would allow the insurers to ask for higher amounts for the mandatory insurance. Thus insurance companies would have a serious excuse for a significant raise of the fees. What the CSA would say in a few months is hard to anticipate, but it is clear that the situation will radically change after 2007, when the insurers will call the tone, depending on the market. Almost certainly, RCA fees will increase a lot, even by over 50 percent. (F.M.)