In the Official Gazette of Romania, Part I, no. 813 dated November 2, 2015 it was published Law no. 246/2015 on recovery and resolution of insurers.
The new law establishes the rules and procedures for the recovery and resolution of insurers acting as Romanian legal persons .
According to the law every insurer shall establish and maintain a recovery plan which provides the measures that need to be taken by it in order to restore the financial situation in case of significant deterioration of the financial indicators.
The management body of the insurer assesses and approves the recovery plan prior to its submission to the Financial Supervisory Authority, as competent authority.
The insurers who hold a significant share in the national insurance system develop their own recovery plans and are subject to individual resolution plans.
It is considered that an insurer has a significant share in the national insurance system if it meets any of the following conditions:
– the gross technical reserves value of the insurer exceeds 5% of total gross technical reserves at the market lever;
– it holds a market share of at least 5%.
The Financial Supervisory Authority, as competent authority may ask the insurer to take the following measures:
– reduce the risk profile of the insurer, including reducing the risk of solvency and/or liquidity;
– implement measures for recapitalization;
– review the insurer’s strategy and operational structure;
– change the structure of the insurer’s management and leadership;
– check that the technical provisions and assets covering them are permitted.
Moreover, the Financial Supervisory Authority, as the resolution authority, develops a resolution plan for insurers acting as Romanian legal persons.
The resolution is defined as a legal system which consists of a set of instruments at the disposal of the Financial Supervisory Authority, necessary to promptly intervene in an early stage, in the activity of an insurer that is unviable or on the verge of getting into trouble, so to ensure a continuity of critical financial and economic functions thereof, while reducing to a minimum the impact of the difficult situation of the insurer on the economy and financial system.
The resolution plan includes the resolution measures that the Financial Supervisory Authority, as the resolution authority, can perform when the insurer fulfills the conditions to trigger the resolution procedure.
:: The Source: JURIDICE.ro
