The Romanian insurance market has been shaken in recent years by a number of high-profile bankruptcies – ASTRA Asigurari, CARPATICA Asig, CITY Insurance and now EUROINS Romania.
As regards EUROINS, the Financial Supervisory Authority has issued Decision no. 262/2023 on the withdrawal of the company’s operating licence, the declaration of insolvency and the promotion of the application for the opening of bankruptcy proceedings against it. The decision has already been published in the Official Gazette of Romania no. 223 of 17 March 2023.
At this moment the company is not in bankruptcy, but it is only a matter of time until the court proceedings will be initiated.
In the Romanian insurance market there is FGA – Insurance Guarantee Fund, which acts as a safety net in such cases. It has intervened in all bankruptcies in the insurance market so far and will do so if and as many times as necessary. The objective of the institution is to protect insurance creditors from the consequences of the insolvency of a Romanian legal entity insurer. The main purpose of the sums at the disposal of the FGA is the payment of compensation resulting from optional and compulsory insurance contracts concluded in accordance with the law and the premiums due by the insurer for the period in which the risk was not covered by the insurer, following the termination of the insurance contracts.
Within 60 days from the date of publication in the Official Gazette of Romania of the ASF Decision withdrawing the operating license and finding the existence of indications of insolvency of the insurance company, FGA may start making payments from its available funds. According to the guarantee ceiling established by law, FGA can ensure payments in the maximum amount of 500,000 lei (approximately 100,000 euro) for each insurance claim (regardless of how many insurance claims an insurance creditor has). These payments are made after the insurance creditor has gone through the administrative payment procedure, as provided for by the legislation in force.
It is very important to know that within 90 days after the final declaration of bankruptcy the period in which claims for compensation can be filed expires, and also that the FGA will register claims for payment and will consider them in the order of receipt and registration.
The payment procedure implemented by the FGA is an administrative one, which does not require the intervention of the courts in order to obtain the amounts due as compensation/premium refunds from the FGA’s assets.
Creditors must submit a request for payment to the Insurance Guarantee Fund together with the documents required by law.
The FGA receives the payment requests, checks the damage files and insurance claims, draws up lists of insurance creditors whose certain, liquid and due claims are to be paid from its available funds and publishes the list on its official website. After approval of these lists by the special committee, it shall make the payments of indemnities/compensations to the insurance creditors.
If you have an insurance contract with Euroins or have a claim file opened prior to the ASF decision and your name does not appear on the list of potential insurance creditors, you will have to apply to the FGA, submitting documents proving your status as an insurance creditor.
Whether or not you appear on the list of potential insurance creditors published on the FGA’s website, in order to receive compensation from the FGA or sums representing refunds of insurance premiums, you must apply to the FGA, formulating and registering a request for payment.
All these steps may seem discouraging either because of the novelty and formality of the procedure, or for fear of exceeding the legal deadlines or the risk of sending an incomplete/incorrect file to the Fund.
The good news is that all the steps can also be taken through a trustee. We remain at your disposal with friendship and professionalism for any requests related to this subject.