“Two years ago I would pay a RON3,000/year in auto liability insurance per 16-ton vehicle, now I’m paying RON22,000. I don’t understand this hike, there’s no justification for it.”
Although carriers pay their auto liability insurance policies on time, insurers are not as quick to settle their claims, he added.
“First they ask me to pay RON22,000 and then the Financial Supervisory Authority (ASF) and the government start talks to cap the auto liability insurance to RON7,500/year per 16-ton truck. Is that not a more than 100% hike, too? That’s the first problem here, incurring some expenses you have no way of budgeting for, from RON3,000 to RON22,000 (…) When we got the insurance quote, the logistics manager called me, he thought they got a digit wrong, added an extra zero the amount.”
The cost of the auto liability insurance is cutting Agil Trans’ profit margin by at least 20%, Andi Iancu said.
“The auto liability insurance is like an albatross around our neck. It cuts the profit margin by at least 20%. I’ll stick to my opinion that this is a difficult industry we’re in, the profit margin is not high and it is difficult to achieve it. The insurance system has been like some sort of Caritas (pyramid scheme in Romania in the early nineties i.e.), we paid the money, they did nothing with it, they did not pay. Still, Caritas used to pay some people to lure them. So where’s this hike coming from?”
Florentina Almajanu, general manager of the National Association of Insurance and Reinsurance Companies in Romania (UNSAR) turned down ZF’s request for comment on the statements of Agil Trans owner Andi Iancu.
The problem comes up when damages covered by the insurance occur, because getting one’s claim settled takes time, despite the mandatory auto liability insurance having been paid for, Andi Iancu says.
Carriers have protested many times against the auto liability insurance price hike, demanding the government to issue an emergency ordinance to cap the price.
The hike of the auto liability insurance price was because of two main factors: the implementation of tighter Solvency II capital requirements, which entails higher costs for companies which are then passed on to clients and the bankruptcy of insurers Astra and Carpatica, believes Viorel Vasile, chief executive officer of Safety Broker.
He says that despite the ASF and the road carrier associations reaching an agreement over the auto liability insurance price in mid-September, so as to have the insurance price capped at RON7,500/year per 16-ton truck, even though insurers said a price freeze was in violation of local and EU regulations, the price will be even higher, RON8,600, adding the commercial margin and the profit rate.
Agil Trans is a road freight carrier that mostly transports home appliances (70% of its business). “Whirlpool Romania is our client, we do the secondary distribution, take products from their warehouse and carry them throughout Romania,” Andi Iancu said.
Its revenue has gone up from EUR700,000 to EUR1,000,000 in the past two years, while the number of trucks increased from 13 to 20, the Agil Trans owner said.
(English version by Loredana Fratila-Cristescu)