CONSTANTIN BUZOIANU, THE PRESIDENT OF THE INSURANCE OVERSIGHT COMMISSION: "We will begin suspending the activity of insurers"

The Insurance Oversight Commission (CSA) may start levying far harsher sanctions against insurance companies, such as suspending their activities, considering the increasing number of complaints submitted by policy holders with the Commission, Constantin Buzoianu, the president of the Insurance Oversight Commission said yesterday, at the conference of Romanian Insurance Companies.

He said: "We are seeing an increase in the number of complaints submitted with us concerning the inadequate manner in which some insurers assess the damages, as well as the refusal of some insurers to compensate the insurance policy holders. For some companies, the number of complaints submitted with the Insurance Oversight Commission has increased significantly, in the first five months of this year, compared to the similar period of 2011. Moreover, some of the take too long to reply to the inquiries of the CSA, which caused its board to sanction the managers of five insurers".

Last week, the CSA levied fines amounting to 80,000 lei against seven managers of insurance companies, which, in the first five months of the year, saw an increase in the number of complaints from their customers".

The chairman of the CSA also said that in order to check the manner in which the damage claim cases are processed, the Board of the CSA has decided to launch investigations of the insurance companies which have seen an increase in the number of complaints against them.

Constantin Buzoianu explained: "The results of these investigations will be reviewed by the CSA and steps will be taken to change the situations encountered. We hope that things will move in the direction we all want, or else we will move on to implementing sanctions which may go as far as suspending the operations of insurers which only care about their commercial interest to the detriment of their policy holders".

According to Constantin Buzoianu, the norms for the authorization, subscription and assignment for reinsurance of the risks of natural disasters will be published soon: "These new regulations concerning the reinsurance of the risks of natural disaster also represent an instrument to support the CSA in its process for the consolidation of the financial stability of the overall insurance market, and of insurers as well, by reducing their vulnerability towards the effects of the occurrence of such risks".

Also under review, is the project to review the norms concerning the authorization and functioning of brokers. The main goal of these two projects is to simplify procedures and reduce bureaucracy, thus making it easier for the insurers as well as for the Commission to conduct their operations.

• CSA: The general insurance policies are causing insurers to lose money

The companies which conclude general insurance policies have acquisition and overhead expenses, compounded by the damages paid and the reserves set up above the levels of subscriptions for the concluded policies, Constantin Buzoianu said.

He explained: "At the end of Q1 2012, the segment of general insurance policies had a damages rate of 74.74%, and the combined damages rate was 113.03%. That last number means that the volume of acquisition and overhead expenses plus the damages paid and the reserves set up exceed the level of bonuses obtained".

The CSA is unable to intervene in the business policies of insurers, but this situation requires a "much closer" monitoring of the ratios which the insurers report to the Commission and the manner in which this lack of profitability affects the relationship with the insurance policy holders.

"To cut a long story short, I would say that insurers need to realize that more and bigger risks also means higher equity, as well as adequate reinsurance programs, which you need to have available to honor your obligations", the president of the CSA said.

The market of general and life insurance policies increased 0.35% in the first quarter of 2012, compared to the similar period of 2011, according to Constantin Buzoianu. He said that in the reports for the month of April, sent to the CSA by the companies which offer general insurance policies, show that this market has seen a rising trend, in the first quarter. Still, the head of the CSA stressed that the evolution in the first three months of the year does not represent a relevant indicator on how the market be like in the next three quarters.