Alllianz-Tiriac has a 30% share of the auto liability insurance market and its new CEO says it will be hard to explain to shareholders why the company should keep operating on this segment if the maximum reference price to be set by the government via an emergency ordinance is not high enough.
“If the reference price is not high enough, any scenario is possible. And I mean it. It’s not just an empty warning. We will have serious trouble explaining to shareholders why we should stay. It does not mean we’ll exit. It’s not a discussion whose ending we know. Yet any scenario becomes possible and open for discussion,” Virgil Soncutean said during an economic conference in Predeal and his first meeting with the media in his position as CEO.
The auto liability scandal is a setback for the insurance industry, as the government, the Financial Supervisory Authority and the trucking companies demand reference rates and a price freeze. Such steps have not been taken for two decades and Romania undertook to no longer revert to such practices after joining the EU.
Soncutean says the maximum reference price will not address the root of the problem but only prolong the crisis, as everyone will use the maximum price.
“We are now in a vicious circle where everybody is losing. Unfortunately, there is not enough talk about causes and solutions, but about effects and who is to blame. The reality we need to start from has to be based on figures, not opinions, impressions or noise. The starting point is the frequency and severity of the damages.”
The Competition Council chairman Bogdan Chiritoiu said the capping of the auto liability insurance by the government would open ‘Pandora’s box’ due to the risk of other groups in other sectors demanding the same thing. The Competition Council through Bogdan Chiritoiu, agreed to a temporary reference price, but warned that prices should not be excessively regulated on medium term.
(English version by Loredana Fratila-Cristescu)