Romania: another insolvent insurer
Romania’s Financial Supervisory Authority (ASF) wants to revoke the operating licence of insurance company Euroins România due to insolvency. With 2.5 million customers, Euroins was one of the country’s market leaders in vehicle liability insurance. The company’s liquidity problems had been known to the financial watchdog for some time. Since this is not the first case of this kind, the national press complains about flaws in the system.
Making a quick buck is all that counts
The bankruptcies of the market leaders seem to always follow the same pattern, business blog profit.ro comments:
“Insurers have always used the same formula: by offering the lowest prices they quickly gained a large market share. In the beginning, liability insurances are a cash cow, they just collect money. But when the time comes to start paying out for claims, they put this off for as long as possible, contest the cases, hope that penalties of the financial authorities won’t come until later and try to conceal the reinsurance and liquidity situation as best they can. Eventually the bubble bursts. ... Then it’s time for a new star to be born on the market, offering the cheapest policies. And the whole process starts all over again.”
Watchdog just looks on idly
The financial regulator is notorious for failing to do its homework, Ziarul Financiar complains:
“In the last eight years, four major insurers have messed up: Astra Asigurari (2015), Carpatica (2016), City Insurance (2021) and now Euroins. The Financial Supervisory Authority ASF is good at detecting bankruptcies but its real task is to prevent them. ... When the bosses of this authority finally wake up, they discover that yet another company has ripped off policy holders. It doesn’t matter that the managers there earn over 10,000 euros a month. What matters is that their function has changed: instead of taking preventive action all they do is make statements.”