On 16 January 2024, the Law No. 17/2024 amending and supplementing Law No. 237/2015 on the authorisation and supervision of insurance and reinsurance activities, as well as amending and supplementing certain regulatory acts was published in Official Gazette Of Romania No. 36., aiming to strengthen the protection of both policyholders and beneficiaries by ensuring the stability of the insurance market and a greater degree of predictability in the development of each individual company and the insurance market as a whole.
In line with the provisions of the new regulations, the Romanian Financial Supervisory Authority ("FSA") will have at its disposal new procedures in case of financial recovery or bankruptcy of insurance companies, with updates on all levels of intervention of the FSA, including remedial planning, prevention and remediation of impairment of the financial situation and governance system, financial recovery, supervision exercised by the FSA on companies after the withdrawal of their operating licenses and their obligations.
More specifically, the rules lay down provisions on: (i) the special financial recovery procedure applicable to companies and the measures that the FSA may order within this procedure, (ii) the legal regime of companies whose operating authorisation is withdrawn and (iii) the supervision exercised by the FSA over them provisions on the winding-up and liquidation of companies, with the exception of reinsurers.
The insurance companies concerned are required to submit to the FSA the updated procedures within 90 days from the date of entry into force of the law, namely 19 January 2024.
On another note, this new piece of legislation impacts Law No. 85/2014 on insolvency prevention and insolvency proceedings, by way of amendments regarding the situations in which an insurance/reinsurance company is insolvent, and also repeals Law No. 503/2004 on financial recovery, bankruptcy, dissolution and voluntary liquidation in the insurance business, following the introduction of the special financial recovery procedure.
By Robert Urmosi, Managing Associate, and Alina Valentina Colibaba, Junior Lawyer, Musat & Asociatii
