The battle for customers between insurance companies that sell civil liability policies (RCAs) will be tighter than ever in 2005 if the draft RCA norm includes the stipulation for an automatic renewal of this type of policy, as planned by the Insurance Surveillance Commission (CSA).
The RCA insurance market is worth some 130 million euros, 16% of the entire insurance industry, and is quite competitive due to being a long awaited source of cash among many companies on the market.
"Car owners are likely to buy not only a RCA policy this year, but also to sign a contract with the insurance company including a clause stipulating the automatic renewal of the policy if the contract is not cancelled by the insured party before it matures," said Mihai Tecau, a general secretary within CSA.
Technically, this means the insured that do not express in writing their wish to cancel the contract are considered to be renewing their relationship with the company in question. The contract will end, however, if the policy for the new period is not paid in time. In other words, the motivation to "go" with the previous insurer will in fact be more psychological: since it is the customer that must contact the company to ask for cancellation of the contract, the customer may be persuaded to stay with the same company.
Why is this measure necessary?
2005 is the first year in the history of RCA insurance in Romania in which policies will no longer to be sold for the calendar year, but for an insurance year. CSA representatives say this will ensure continuity of RCA insurance contracts and insured persons will be better monitored. Some estimates have it that between 20 and 25% of cars to be found in traffic do not have this type of insurance, despite its being compulsory.
"We want to create a legal framework for insurers in which they will have a tighter relationship with the insured," added Tecau. Norms related to the authorisation of companies that are going to sell RCA in 2005 are likely to be published next week.
Until this year, RCA insurance had been sold as part of winter and summer campaigns since policies were sold for the calendar year. Now, however, this procedure has been given up.
This change, together with the establishment of some wider limits for RCA premiums of plus/minus 10%, are part of the push to liberalise the market as required by the European Union.
In fact, a plus/minus 20% margin of the premium is stipulated for next year, allowing companies to sell insurance policies for 2006 as well.
sorin.pislaru@zf.ro
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