RO market regulator wants all drivers to pay for the EUR 100 mln frauds at City Insurance

The market regular ASF tends to firstly put the EUR 110 mln loss generated by the frauds at City Insurance on the shoulders of all drivers and secondly let the market operate as it operated so far (meaning more or less uncontrolled), Ziarul Financiar daily comments on the latest developments related to the settlement of the bankruptcy.

ASF is preparing to increase the fees paid by all those buying MTLP insurances to the fund used in such cases when an insurer goes bankrupt.

Under these circumstances, Ziarul Financiar daily came up with the idea of halving the wages for ASF employees, which would cover within 33 years the EUR 110 mln claims still outstanding against City Insurance.

The frauds at City Insurance have been covered by ASF, or were not discovered because of ASF’s lack of performance, over the past 5-6 years, the daily argues.

At the same time, on a more realistic note, a group of Romanian lawmakers wants to prevent an uncontrolled increase in motor third-party liability (MTLP) fees by drafting a bill to temporarily enact a sort of cost-plus calculation methodology.

Taking advantage of the situation, the insurers’ association BAAR argues that the MTLP fees have been too low so far, and that’s why City Insurance went bankrupt. Consequently, the MTLP fees soared over the past couple of months, and there’s little logic behind this.

Their narrative about insufficient fees paid in the past by the drivers can not be denied as long as both ASF and prosecutors are able to firmly explain how much of the EUR 500 mln losses at City Insurance was caused by money being siphoned out.

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