Mişu Negriţoiu vouches for "Omniasig", a company being investigated for forgery

• Peter Hagen, the CEO of VIG, criticized the PAID one day before the prosecutors investigated "Omniasig" for causing losses to the PAID

• The insurer would backdate the optional insurance policies to avoid the PAID policies, which had been made mandatory starting last summer

• Omniasig: "All the policies issued by the company are safe and valid"

• The Parliament is keeping one executive of the insurance department of the ASF in office, even though he is under indictment in a case

The Financial Oversight Authority (ASF), the institution in charge of overseeing the insurance market, the one which should have prevented the resounding scandals uncovered by the prosecutors, yesterday sent a "reassuring" message to the customers of "Omniasig" - a company accused of forging home insurance policies -, through the voice of its president, Mişu Negriţoiu.

On Wednesday, the prosecutors and policemen searched 49 central offices and branches of Omniasig in Bucharest and in all the counties, in a case where prosecution was begun for abuse in office and forgery.

Without explaining why the ASF was once again incapable of uncovering and sanctioning the irregularities, or in other words, carry out its duties, Mişu Negriţoiu painted a pretty picture of "Omniasig", that would leave the company's PR team jealous: "The ASF has constantly monitored the evolution of «Omniasig» and has made recommendations, and has intervened when it has been necessary. As a result, the company is well capitalized, the shareholders have brought in over 100 million Euros, over the last two years, it meets the legal prudentiality criteria, it has good solvency and liquidity ratios. Based on the information we have, it has sufficient technical reserves. We have met the management of the company and the shareholder and they have once again assured us that they know what they have to do, they are cooperating towards resolving this case, and they will take the necessary measures to prevent any problems to the policy holders".

The president of the ASF said that his intervention is only intended to reassure the public, the consumers of insurance products and the customers of "Omniasig" that the situation is under control: "We have made sure that the none of the owners of these policies will be affected and they will not be. This matter concerns home insurance policies. The number of the policies involved is far lower than the one discussed in the press, as is the number of the people involved".

Mr. Negriţoiu also said: "We are the first who don't want frauds to happen and we watch the market to make sure they don't. We have cooperated and we continue to work with the Prosecutors' Office to deal with this individual situation. The company is doing the same".

Even though he said he would not take questions from the press, the president of the ASF gave some ambiguous answers at the end of his statement yesterday.

He said that he does not know whether there are other companies with situations similar to that of "Omniasig", like market sources, quoted by "BURSA" have said. He avoided the question on whether the ASF found out about the case from the Prosecutors' Office, saying that the Authority is cooperating with the investigation bodies.

When asked when the last audit at "Omniasig" was made, Mişu Negriţoiu replied: "Goodbye!" and left the room.

The directorate of "Omniasig" yesterday reported that all the insurance policies issued by the company are certain and valid and that the company stands by its commitment to fulfill all of its contractual obligations to the customers, regardless of the result of the investigation.

The employees working in the branches of "Omniasig" are conveying the same message. Customers who enquire about the situation by phone get reassured that the policies are safe and that what was discussed in the news was "just an audit at headquarters".

The representatives of "Omniasig" are saying that the company has always honored its liabilities and that it will continue to do so. The investigators don't seem to share that confidence, however, as 20 heads of branches have been indicted yesterday, after the hearings conducted by the prosecutors, and the prosecution was begun against them, and 24 other individuals will be heard as witnesses, according to a TV channel.

• The Prosecutors' Office: "Any optional insurance policy concluded in the absence of a mandatory insurance policy has caused a loss of 20/10 Euros per contract"

The prosecutors' office of the High Court of Cassation and Justice reported yesterday that several employees of an insurance company (ed. note: "Omniasig") have concluded home insurance policies with individual customers, in violation of the law: "Starting with July 27th, 2013, homeowners are required to conclude a mandatory insurance policy (PAD - insurance policy against natural calamities: earthquakes, floods and landslides), in an electronic format, independently from the conclusion of an optional insurance policy that would cover those risks". Starting on that date, individuals and companies were no longer allowed to conclude an optional home insurance policy unless they also concluded a mandatory insurance policy. The prosecutors further said: "Under these circumstances, insurance companies were only allowed to conclude optional insurance policies after checking the terms of the mandatory home insurance policies of their customers, including whether the insured had paid the mandatory insurance policy of 20 Euros for type A homes and 10 Euros for type B homes. Those 20, and respectively 10 Euros for each contract were supposed to be paid to the PAID accounts of the insurer ("PAID - the Pool for Insuring Against Natural Disasters, a company of public interest, which is an essential component of the Romanian program to insure against disasters). By backdating the optional insurance policies, the optional insurance policies were made to look like they had been created prior to the moment when the regulation which stipulated the obligation to conclude a mandatory insurance policy and the obligation to pay the amounts owed to the PAID for those contracts".

Every optional insurance policy concluded without a mandatory insurance policy has caused the PAID a loss of 20/10 Euros, the press release states.

Peter Hagen, the president of the Board of Directors and CEO Vienna Insurance Group (VIG), a group which includes Omniasig, criticized the PAID harshly, on Tuesday, just one day before the searches at the headquarters of the company. He said that the Romanian companies which are part of the VIG group will not become shareholders of the PAID, the company which issues the mandatory insurance of homes, as long as the reinsurance of its portfolio is inadequate. He said: "Politicians need to understand that the effects of a natural disaster can be dealt with if the state or the international insurance market guarantees the payment. The international insurance market has no obligation to accept a price that has been set by politicians and this is something that politicians need to understand. And that means that either the PAID has a deficit, or it is not reinsuring itself correctly. That is why we are not part of the PAID. We don't want to participate in something that can cause losses and we do not want to be the members of an organization that does not reinsure itself adequately".

It's no wonder that the head of VIG does not want to join the PAID, when his employees have found a way to avoid the law.

The PAID was set up in September 2009 and has a share capital of 19.34 million lei. Its biggest shareholders are Astra, Groupama and Gothaer România, each with a 15% stake. Generali România has 11%, and ABC Asigurări, Carpatica Asig, Certasig, City Insurance, Credit Europe Asigurări, Euroins, Grawe România and UNIQA România each hold 5.5% of the shares.

• Corneliu Moldoveanu, under indictment in the "Carpatica" case

The problems in the insurance industry are notorious, and are even mentioned in the reports of the ASF, but the Financial Oversight Authority has been very lenient with its sanctions. 86% of the fines levied by the ASF last year, between its creation and December 31st, were levied against stock market entities. As it stands, the Authority has achieved the "performance" of having an executive in the department in charge of the insurance market who is under prosecution.

Corneliu Moldoveanu, the vice-president of the ASF for the insurance market, has been indicted in March, in the "Carpatica" case, in which the former president of the ASF Dan Radu Ruşanu and non-executive member Marian Mârzac were arrested.

At the end of last week, Mişu Negriţoiu said that the Authority has decided to suspend the employees who are being investigated, but he said that vice-president Corneliu Moldoveanu has been appointed by the Parliament, and therefore any decision concerning him would lie with the Parliament.