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The rate cap on Civil Auto Liability (RCA) policies after the exit of Euroins from the market was a good thing, precisely to keep things calmer, to overcome the panic of both consumers and insurers, and we must use this period to prepare more legislation good, which will solve the problems, the most important being the lack of control over costs that inevitably induces a price increase at RCA, is the opinion of the president of the Competition Council, Bogdan Chiritoiu, according to agerpres.ro.
"Tariffs were capped by the Government in order to absorb the shock of the exit of a very large company, Euroins, from the market, which comes shortly after another large company, City, exited the market. The idea is to use this six-month period, of which two have already passed, in order to calm the market, that's what I understand, and to prepare a better legislation, which will ensure that in the future there will be no more problems on the RCA market. So , I expect with confidence that by the end of the six months there will be a normative act, what type it will be we will see, but there should be a normative act that will solve the problems on the market. The most important thing that we see is the lack of cost control, which induces or is inevitable to induce an increase in the price of RCA policies," said Chiritoiu, after a conference on the pharma market, organized by the Competition Council, in Sinaia.
In his opinion, the fact that certain insurers want to set the policy rate according to certain criteria, such as car mileage, etc., is not a problem, but the fact that there is no mechanism to control how much they spend on car repairs.
"This doesn't seem problematic to me. If a company has certain criteria and comes with a price that, I don't know, is considered inappropriate by customers, customers can go to another company that has other criteria. So that's not where I see the problem. The problem is if, I repeat, if there is no mechanism to control how much these RCA companies spend, they will be forced to put these increased costs on car repairs, because that is what it is about in the first place, the car repair costs will force all companies to raise prices, yes, so not just one. The criteria, such as they are, are for each company, but these costs in the market fall on everyone and then all prices will rise," he explained.
Chiritoiu emphasized that capping tariffs at RCA was a good idea, in order not to increase tariffs in the panic created by the exit of Euroins from the market.
"One: the RCA market had problems for a longer time and there were companies that tried to avoid a large exposure on the RCA market. Two: we saw when it left the City market, that there were companies that in the panic that arose at that moment increased rates very high, probably in an effort to not have new customers until the market situation is clarified. That's why I think it was a good idea, that this time the rates were capped. So, after the exit of Euroins, they came up with this ceilings that did not come up with after the exit of City. I think it's a good thing now, just to keep things calmer, to overcome so much panic of consumers, but also of RCA companies," added the head of the competition authority.
