After Astra was placed under special administration and announced a substantial capital increase, Omniasig was last week charged by prosecutors with selling false policies, while Carpatica Asig was required to come up with a financial turnaround plan.
“I cannot say whether other companies will follow. The market is now undergoing surgery. What’s important is for this detoxification to be fully carried out,” said Valentin Tuca, manager of insurance broker AON Asigurari.
The Financial Supervision Authority (ASF) on Friday suspended the license of Carpatica Invest and asked the company to mend its financial situation. Carpatica Asig will have to come up with a financial recovery plan in 20 days at the latest.
The second largest player on the market, Omniasig, part of Vienna Insurance Group, is targeted by the Prosecutor’s Office in a criminal file under charges of abuse of office and intellectual forgery. According to prosecutors’ charges, Omniasig reportedly sold false policies, but the situation is not clear as, on the other hand, ASF head Misu Negritoiu said the policies are “valid”.
According to AON Romania manager, the basic problem is that these situations are dealing a serious blow to the insurance market, a segment that is not mature enough, yet, and where buyers are not yet ready to invest.
Criminal group at Carpatica
Carpatica Asig and Carpatica Invest are part of financial group Carpatica, controlled by businessman Ilie Carabulea, detained under charges of corruption.
According to prosecutors, in 2012 Carpatica Asig, a company whose portfolio is dominated by mandatory car insurance (RCA) policies, struggled financially and needed a capital increase of around EUR11 million. Starting May 2013, an organized criminal group was constituted at the company to the end of committing crimes aimed at protecting the financial interests of Carpatica Asig, according to prosecutors.
Forged policies at Omniasig
“The problems of Omniasig are not the problems of the market. The uncovered irregularities are due to some system flaws,” said Tuca.
According to investigators, Omniasig supposedly sealed optional insurance policies and antedated them to create the false impression they were signed at a time payments to PAID (Insurance Pool Against Disasters) were not compulsory for the company.
Omniasig stated the respective contracts will be honored irrespective of the investigation outcome.
Astra needs to raise its capital
Astra Asigurari, the biggest player on Romania’s insurance market, is currently under the administration of KPMG Advisory in a wake of an ASF decision and announced a capital increase by RON70 million in a first phase. KPMG announced the company would need to lift its share capital by RON460 million in order to meet solvability and liquidity parameters.
(English version by Catalina Apostoiu)