Romania: mutual insurers one step closer to become reality

On 28 June the Romanian Government has approved the draft Law on Mutual Insurance Companies, which will be shortly sent to the Parliament for debates and approval.

"By mutual assurance, participants will gain confidence in the benefits of the concept of securing risks that no one could bear if they would face the loss alone. The system of mutual societies should put insurance at the fingertips of Romanians and Romanian companies, corresponding to their salaries and needs. The insurance companies return to the Romanians, but the citizens will also look at the insurance. People can become their own insurers in the mutual societies, "says Cornel Coca Constantinescu, the initiator of the draft law and the vice-president of the ASF insurance sector.

According to the Draft Law, "Mutual Companies aim to cover, through insurance contracts, the risks of their members and the payment of indemnities and insurance indemnities to them, to the beneficiaries of the contracts and / or third parties who are harmed in the event of the insured risks, and which are financed, mainly through members' contributions. "

The main provisions of the draft law are:
  • Mutual companies only carry out insurance and operations directly related to this activity for their members, based on the principle of mutuality, having both the quality of insured and, collectively, the insurer.
  • The number of the founding members of the mutual societies, at their establishment, is of at least 5, they are not conditioned by the acquisition of the quality of the insured at the moment of establishment; they conclude the insurance contract after obtaining the operating authorization, the project says.
  • The financial resources of the mutual societies consist of: the initial fund, the balancing fund for unfavorable situations, fixed and / or variable contributions, additional contributions, other resources provided in the constitutive act. All members' contributions are paid exclusively in cash, with no contributions being made in nature.
  • Mutual companies organize their management in a similar way to the joint-stock companies provided by Law no. 237/2015. A.S.F. authorizes the operation of mutual societies. The term of office of the first directors, the first members of the supervisory board and the first members of the board of directors is 4 years.
  • Mutual companies can act anywhere in Europe, including for doing business on the basis of the right of establishment or the freedom to provide services. If at one point it wants to become a joint stock company, the mutual society can turn into an insurance company.
  • Mutual companies are subjected to the supervisory actions of the Romanian Financial Supervisory Authority.
The law shall enter into force three days after its publication in the Official Gazette of Romania, Part I, except for Art. 29 - Sanctions and sanctioning measures, which will enter into force 30 days after publication.

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