Mandatory home insurance, left for the last minute

• 5.54% of households have mandatory insurance policies concluded

Up until recently, home insurance wasn"t exactly a hit with Romanians. This is proven by the fact that 6 out of the 8.3 million homes were not insured over the last 20 years, according to Marius Bulugea, the managing director of "Pool for Insurance Against Natural Calamities"(PAID).

The state is now trying to change this statistic, by making home insurance mandatory by law.

However, not too many people rushed to comply with the law, by the initial deadline submitted by the authorities, (January 15th, 2011). It is true however, that true to habits, Romanians rushed at the last minute to conclude mandatory insurance policies, in the months of November and December 2010.

Nevertheless, until now, only 5.54% of homes (460 thousand) have concluded their mandatory insurance policy. The remaining ones have until July 15th, 2011.

"The population construed the amendment of the deadline to mean that the law was no longer mandatory", said Marius Bulugea. He hopes that by July, the ratio would reach 10%.

• 25% of the total number of mandatory insurance policies were concluded in Bucharest

Even though Bucharest is home to 9.17% of the country"s population, (according to data of July 1st, 2008 of the National Statistics Institute, it accounts for 25% of the total number of insurance policies concluded so far. The city of Iaşi, which is the second largest city in the country in terms of the number of inhabitants, only accounts for 0.3% of the number of subscribed premiums, even though it is home to 1.49% of Romania"s population.

The figures provided by the head of PAID show that 77.7% of the insured live in cities. Most of the policies concluded (84.2%) were for A-type homes, while the difference is made up of policies for B type homes.

The ranking of counties with the largest number of subscribed premiums includes: Constanţa (6.61%), Prahova (4.37%), Timiş (4.33%) and Braşov (3.96%). At the opposite end of the spectrum we have Sălaj (0.41%) and Bistriţa-Năsăud (0.56%).

It is visible that counties with the longest natural disaster track record don"t necessarily have a large number of insurance subscribers: Botoşani (0.9%), Focşani (1.5%), Suceava (1.5%).

Still, in order to make the numbers of subscriptions per county more meaningful, they would have to be correlated with the number of households in each region, data which Mr. Bulugea says he has already requested with the National Statistics Institute.

The managing director of PAID said he would send to mayors, by the beginning of summer, the list of homeowners which concluded mandatory insurance contracts, and the mayoralties would make sure that citizens are informed.

Even though the state has the obligation of paying out insurance premiums for poor households, the manager of PAID said that only 40 mayoralties did so, and just a few thousand policies were concluded. "We have been informed that there are 400,000 people that are welfare cases, but the exact number of homes for which the mayoralties would pay premiums is not known. Even though the law was drafted in 2008, for the year 2010 the mayoralties did not have the time to budget funding for these insurance policies. I don"t know if there are any mayoralties that allocated any part of their budget for 2011 for this purpose", he concluded.

Marius Bulugea says that mayoralties should consider this obligation resulting from the law, because if the event which is the object of the insurance policy happens, the premiums paid for the welfare cases would be far lower than the cost of paying for the damage. He added that it was possible and even advisable that people receiving welfare address local authorities and exercise their right to benefit from a mandatory home insurance policy.

The head of PAID opined that the existence of a protection for homeowners is more important than the type of poly, be it mandatory or optional.

According to the amendments made to the law, the people that have already concluded an optional insurance policy that covers the risks specified by the mandatory insurance policy (land slide, fire, earthquakes) are not required to conclude a mandatory insurance policy.

Another amendment to the law concerns the homes located in buildings rated as Class 1 seismic risk. The law 260/2008, republished in the beginning of 2011 stipulates that these homes will not be ensured until the consolidation works for the buildings in question are completed.