Romania Might Enforce Mandatory Home Insurance Law As Of End-March ‘10

„PAID cannot issue mandatory home insurance policies without having concluded a reinsurance contract. This week, PAID will summon reinsurance brokers for talks,” said Bulugea, adding that „if negotiations go well, the reinsurance contract might be signed until the end of the first quarter, allowing PAID to start issuing insurance policies.”

The law regarding mandatory home insurance, adopted in November 2008, was due to be enforced on January 1, 2010, a date announced in May 2009 by former secretary of state with the Ministry of Interior Radu Stancu. In November 2008, the Interior Ministry said mandatory home insurance would become effective on July 1, 2009. However, the delay in the setting up of the Insurance Pool against Disasters, or 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=RON4.2265).

Mandatory home insurance policies will be issued by PAID, a joint stock insurance-reinsurance company that will manage the risk fund meant for paying the damages in case of natural disasters.

In September 2009, 13 insurers signed the documents establishing PAID and their contribution to the PAID’s share capital was of EUR4.545 million.

Insurers Astra, Clal Romania and Groupama Asigurari have a 15% stake, 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.