Information on the Romanian market

Current as of January 2002

ROMANIA

Part 1 : Regulation and legislation on insurance intermediaries

1. Structure of regulation on insurance distribution

Insurance industry is regulated in Romania by the Law No.136/1995 regarding insurance and reinsurance industry and by the Law No.32/2000 regarding the insurers and insurance supervision.
All types of insurance distribution channels are subject to regulation.

Insurance Broker
The Law no.32/2000 defines the insurance broker as "the Romanian or foreign legal person, licensed by the present law, who negotiate or conclude insurance contracts for his clients and render other services regarding risks protection or damage settlement"

Insurance Agent
The same law defines the insurance agent as "physical or legal person who can, by virtue of an insurer's licence, to negotiate or conclude insurance contracts for third parties, on behalf and account of the insurer, according to the terms of mandate/agent contract, and without being insurer or insurance broker."

The official body in charge of the insurance distribution regulation is the Insurance Supervision Commission. In July 2001, the Romanian Parliament appointed the Insurance Supervision Commission according to the Law No.32/2000.
Insurance Supervision Commission:
- autonomous administrative authority in the insurance industry;
- legal person;
- headquartered in Bucharest (with any others agency all over the country, if necessary)

2. Brokers: Registration / Licence

The insurance brokers need a licence issued by the Insurance Supervision Commission, and after that they have to register on the Register of Trade of the Territorial Chamber of Commerce and Industry.
This licence is not issued by business category (Life, Non-Life, etc).
The Insurance Supervision Commission is holding the register.
The licence can be withdrawn by the Insurance Supervision Commission if the legal provisions are breached/violated.
Legal entities can qualify for registration. Only the managers have to fulfil the training and experience requirements. They have to have practical experience in the insurance industry of minimum 3 years, and also no criminal record.

Professional Indemnity

The professional indemnity insurance is compulsory for brokers by Law No. 32/2000. ( minimum amount EUR 100,000.00)

Financial requirements
 - Financial guarantees are not compulsory by law. But, on specific requirements of the client, they can be obliged to provide with financial guarantees.
- A minimum capital of LEI 150,000,000.00 (equivalent of USD 5,000) is necessary
- Brokers have to keep insurance money accounts

3. Agents: Registration/ Licence

Only insurance agents -legal persons- have to register on the Register of Trade of Territorial Chamber of Commerce and Industry. Insurance agents are authorised by insurers accordingly to the terms of mandate/agent contract.
The licence is not issued by business category (Life, Non-Life, etc Insurers by virtue of mandate/agent contract are holding the register. The registration's limits are stipulated by the terms and conditions of the mandate/agent contract.
Only legal entities can qualify for registration.

Foreign agents can register. A physical or legal person can be an insurance agent if it's in possession of a valid written licence issued by an insurer, and named by low agent/mandate contract. Agents - physical persons - have to live in Romania.

There are no education, training, experience requirements for agents.

The professional indemnity insurance is not compulsory for agents.
Financial guarantees are not compulsory for insurance agents.
For limited company, the capital requirement must be at a minimum of LEI 2,000,00.00: For joint-stock company, LEI 25,000,000.00.
Insurance agents have to keep insurance money accounts.

Main legal, regulatory differences between agents and brokers

Insurance broker represents the interests of his client.
Insurance agent works in the name of one insurer in virtue of the agent contract.

4. Code of conduct

There is a code of conduct in our market. This code of conduct is issued by UNSICAR and it is applicable only for the members of UNSICAR.

5. Methods of dealing with customer complaints?

Customer complaints are solved friendly between parties, if not, in court.

6. Compensation system for insurance intermediaries

Agents are compensated by commission.
Brokers are compensated by commission and in certain cases by fees.

Personal lines: Agents: Mainly
Commercial lines: Agents:Mainly / Brokers:Few


Brokers/ agents in our market are permitted to place business with foreign insurers without any limitations.

Part 2: Figures

The Insurance Supervision Commission (ISC) is in the process of licensing the Romanian brokers. We also can let you know that till now, ISC has licensed 86 brokers. Before that process there were around 800 brokers on the Romanian insurance market.

Foreseeable future

- The market share of brokers will grow, especially in non-life.
- The market share of agents will also grow.



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