According to insurers, the only ones to blame for the latest price growth are the garages, who keep charging the insurance companies much more than “ordinary clients”. “Lately the laws seem to be interpreted in such a manner that the only ones getting richer are the motor vehicle services”, a press release from the National Association of Insurance and Reinsurance Companies in Romania (UNSAR) indicates.
Raising bills
“Thus, the repair costs are over-evaluated, the receipts issued by some of the garages are two to five more costly than those issued by the dealer-authorized services. In our opinion, the artificial swelling of repair costs brings no gain to the Romanian consumer”, the press release indicates.
Not only insurance firms complain about “the overcharging bills”. According to Viorel Vasile, CEO, Safety Broker, “for the so-called ordinary customer, the average labour costs per hour is, let’s say, 50 lei, while for the brokers and insurance companies, the costs can amount 200 lei, with the firm having no other option but to pay the bill”. Sorin Greceanu, General Manager, Street Victims Protection Fund, confirms that “there are more and more cases when the labour costs per hour charged by garages are five times higher when the payer is an insurer than when the bill is acquitted by an individual”.
What FSA has to say
As expected, the motor services expose a totally different point of view. “In truth, these are very isolated situations, relevant for 20-25 garages out of several thousands”, says Cristian Muntean, CEO, The Independent Motor Services Association (ASSAI). In his opinion, the RCA policy prices went up after the Financial Supervisory Authority (FSA) imposed insurers more rigid solvability and liquidity ratios (“a very fine decision”). Forced to raise more cash in order to meet the new criteria, the insurers had to raise the policy prices.
Brokers and their commissions
According to Muntean, there is one more phenomenon affecting the large commissions charged by the brokers. “There is this insurance company I know that pays the broker a 35% commission if the latter asks for a licit process, and only 23% if the broker accepts an off the books payment.”
Furthermore, Cristian Mutean says, the mandatory car insurance market is also flawed by delayed pays. ”It’s fair to say that in 95% of all cases, the insurer will only partially clear his bill. In order to get the entire sum, the garage will have to sue the company within 30 days from the incident. In case the deadline is crossed, there is no other way to recover the respective amounts.”
More cars, raising sales
These are good days for the RCA sellers, since the car market as a whole is on an upward trend line. According to FSA, for the first half of 2014, the RCA market reached 1.33 billion lei, up 8.69% from the same period last year. The average annual premium was 488 lei (110 euros), up 0.8% (4 lei) from last year.
There were 8,485 cars sold in Romania in August only, up 8.5% from the same month last year, while for the eight months to August there was a 25% growth, up to 36,003 units sold, according to the Directorate for Driving Licenses and Vehicle Registration.
Even more encouraging, the Automotive Manufacturers and Importers Association notes that, with the 7,455 new cars sold in August, up 17% from last year, there are a record 14 successive months of continuous sales growth.
