The Competition Council storming insurance companies

The Competition Council has announced yesterday, that it has begun an investigation concerning the possible violation of national and EU rules by Media Xprimm, UNSAR (the Romanian National Union of Insurance and Reinsurance Companies), the insurers which are UNSAR members, as well as other insurers. The investigation concerns a possible exchange of commercially sensitive information between the competitors on the insurance market and was launched of its own accord.

Bogdan Chiriţoiu, the president of the Competition Council gave BURSA the following statement: "Our suspicion is that through the UNSAR, an exchange of sensitive commercial information was taking place. I am referring to up-to-date commercial data concerning sales, tariffs, products sold, customer portfolios. That type of information, exchanged between competitors, allows estimating a company's strategy and in doing so, companies can coordinate their behavior, thus reducing the competitive pressure to offer products as attractive to their customers and as cheap as possible".

He told us that it will be a lengthy investigation, of approximately one year and a half - two years and should there be sufficient evidence that competition laws have been broken, the sanctions will range from 0.5% to 10% of the premiums collected by each insurance company during the year preceding the sanction.

"Spontaneous inspections were conducted at the headquarters of the main insurance companies, and based on the court warrant, a number of documents were seized", the president of the Competition Council said.

As to what concerns Media Xprimm, Bogdan Chiriţoiu told us that the Competition Council suspects that through the products supplied by this company and sold based on subscriptions, the sensitive information would be distributed, which allowed the coordination of the insurers' market behavior. "There is a mechanism by which some would find out information about their competitors earlier", he said.

The shareholders of Media Xprimm SRL are Adriana Panciu (45%), Laurenţiu Costache (45%) and Alexandru Ciuncan (10%). Adriana Panciu is the wife of the secretary general of the Chamber of Deputies, Adrian Cristian Panciu. Cristian Panciu has included in his wealth statement the salary that his wife gets paid by Media Xprimm SRL.

Concerted practices are a mechanism which harms consumers because products or services in a specific sector aren't created using open competition, at a fair price, but through a strategy coordinated by the companies, sources close to the situation told us, who further said that the investigation concerns all the insurance companies and that the investigation has already got "rock solid document".

The Financial Oversight Authority (ASF) told us that it doesn't want to comment on the situation and that it is not a part of these actions. The ASF officials told us that the activities investigated by the Competition Council are outside the scope of the oversight of insurance companies by the ASF.

The management of the UNSAR sent a press release, in which it states that it is confident that the analysis which will be conducted by the Competition Council will show that the potential concerns which led to the launch of the investigation do not represent a violation of competition rules: "The UNSAR will fully cooperate with the Competition Council, in order to clarify and remove any concerns which have led to the beginning of this procedure. The Competition Council has launched an investigation concerning certain aspects of the Romanian insurance market, which also resulted in an unannounced inspection of the UNSAR headquarters. Launching an investigation is the method which allows the Competition Council to review particular situations which it thinks in-depth explanations are needed for. Also, conducting unannounced inspections is a standard preliminary stage in the action of the Competition Council, which is only intended to collect information quickly".

The management of the UNSAR has insisted that the opening of an investigation does not have any relevance when it comes to the guilt of any party or the final outcome of the investigation procedure. The existence of a violation of the competition rules can only be acknowledged at the end of a lengthy procedure, both before the competition authority, as well as before the competent court, if necessary, according to the quoted source.

Deputy Adrian Gurzău, who is known in the market for his obstination in complaining about the various acts of abuses in the insurance sector, told us that the investigation of the Competition Council is welcome, because "everybody knows that many insurance companies are working together to the detriment of citizens, who are paying increasingly high rates".

The parliamentarian further said: "As long as Mişu Negriţoiu, the president of the ASF, is not truly coordinating and regulating the market, other institutions step in to make the rules. The lack of transparency and the iron hand that this market is being ruled with did nothing but create many ways to defraud the citizens. The UNSAR should be acting with the goal of developing the market and benefiting citizens, but it would seem that its only goal has been to artificially increase the prices and facilitating the exchange of information".

Adrian Gurzău's opinion is that the ASF was "the lapdog" of the UNSAR and that on the insurance market there is a group of interests, which has coordinated all of these activities concerning concerted practices. He is convinced that the inspectors of the Competition Council have a lot more information concerning the unofficial agreements in the market: "The Competition Council has not lost any lawsuits in the investigations it has conducted. It is kind of a National Anti-Corruption Department (DNA) of companies. I think there will be plenty of evidence found and that there will be plenty of people willing to provide information to save their own skin, if it hasn't exactly what happened".

Concerning the impact of the investigation on the insurance market, the MP says that the shareholders of the insurance companies will be extremely sensitive in that regard and that by the end of the year there will be many changes in the top-management of the major insurance companies.