Romania Might Enforce Mandatory Home Insurance Law As Of July 1

Bulugea added the enforcement of the law depends entirely on the stage of talks with reinsurance brokers and the signing of the reinsurance contract with the Insurance Pool against Disasters, or PAID.

According to Bulugea, brokers Willis, AON, Guy Carpenter, RFIB and Stellar Re will soon decide and reveal the estimative price of the reinsurance contract of PAID.

Bulugea stressed that PAID is now focused on the purchase and development of its IT system that will manage the insurance polices sold and also keep constant track of uninsured people.

"The contract regarding the supply of the IT system was concluded with Essential Systems. The IT system will be developed using Microsoft technologies and IBM infrastructure," said Bulugea, declining, however, to say the contract value.

Essential Systems specializes in network consulting, software development, systems integration and training services.

Bulugea also said that nearly 20-25% of homeowners will conclude mandatory home insurance policies until the end of the year.

The law regulating mandatory home insurance, adopted in November 2008, was due to be enforced on January 1, 2010, a date announced in May 2009 by then- Interior Ministry officials. In November 2008, the then-Interior Ministry said mandatory home insurance would become effective on July 1, 2009. However, the delay in the setting up of PAID has caused competent bodies to extend the deadline for the enforcement of the law.

Homeowners will have to get insurance policies and pay premiums ranging from EUR10 to EUR20, insuring homes for EUR10,000 to EUR20,000.

Under the law, mandatory home insurance range from EUR10 to EUR20. The insured value will not exceed EUR20,000, and the minimum level will be set at EUR10,000. Failure to insure homes will be fined 100 to 500 lei (EUR1=RON4.0908).

In September last year, 13 insurers signed the documents establishing PAID, a joint stock insurance-reinsurance company that will manage the risk fund meant for paying damages in case of natural disasters.

Local insurers Astra, Clal Romania and Groupama Asigurari have a 15% stake in PAID, while ABC Asigurari, Ardaf, Carpatica Asig, Certasig, City Insurance, Credit Europe Asigurari, Euroins (former Asitrans), Generali and Grawe Romania have a 5.5% stake each.

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