This year's start for mandatory
After the announcement of the Ministry of Administration and
Interior regarding the postponement of the fines application
deadline until July 15th, 2011, mandatory household insurance
underwritings fell sharply, while sales of voluntary policies
Even though companies have used the compulsoriness as a
launching platform for voluntary policies sales, the situation
to that existent before July 2010 - a little over 15% of the
households were insured at national level.
The fines held the front page in mass-media throughout the
Although the purpose of this law is not to apply fines to
the population and authorities kept repeating that they would
not provide compensation for damages caused by natural disasters,
the fines issue still remained the Romanians main concern
rather than rising awareness of the need for household insurance.
So this summer had began with a real "investigation", in which
lawyers, authorities, representatives of the companies have
been cited for elucidating the truth regarding the date when
fines would begin to apply.
All opinions, more or less divergent,
have been silenced on the 15th of July when ISC has announced
a new deadline
for applying fines for owners who have not bought a mandatory
policy or a voluntary insurance that covered the three natural
disasters - August 5th, 2011.
Then, ISC has also said it has initiated several amendments
to modify the Law no. 26/2008, regarding numerous existing
The first year's checkpoint
In late June, at national level, the number of insured households
was 3,377,026, of which 2,793,628 through voluntary insurance
and 583,398 through mandatory insurance, which means a total
degree of insurance coverage of the Romanian housing stock
of 40.3%. With the deadline of application of fines getting
closer, in July the underwritings have increased considerably,
both on mandatory and on voluntary insurance, ISC estimating
at the beginning of August a total degree of insurance coverage
of about 45%.
All this development in 2011 was still dictated
by the competitive rates between mandatory policies issued
by PAID and the voluntary
ones, launched earlier this year by insurers, covering other
risks besides the ones included in the mandatory policy, at
a similar price - around EUR 20.
Therefore, even if the positive effect of the pressure put
upon the voluntary insurance rates was fostering the number
of insured households, the downside is somewhat slippery:
people were given the wrong impression a voluntary household
insurance should cost only EUR 20.