PAID will operate as a share company, and an association of insu-
rance companies administering funds collected from mandatory home insurance. The draft legislation is to be sent to the government this week or next at the latest, and is likely to be passed as an emergency or government ordinance, according to the draft’s initiator, Ministry of Interior and Administra-
tive Reform (MIRA) adviser Radu Mircea Popescu.
The decision to enforce mandatory home insurance was made by the government following disastrous floods in the past two years, which destroyed thousands of houses and resulted in dozens of victims. This mandatory insurance will cover three major disaster risks: floods, earthquakes and landslides. In spite of recent
severe flooding and the relatively high seismic risk for several areas of the country, only some 8-9 percent of the 8.5 million homes
owned by individuals in Romania are currently covered by insurance.
According to the draft law, owners will pay annual €10-20 premiums for their homes, depending on the type of building, and the value of insurance will amount to €10,000-20,000.
The legislation stipulates that the state may lend funds to the insurance pool for capitalization, but PAID will have to reimburse the money from its own sources. ‘‘Companies will not make much money from this insurance, but they will manage to increase their business in the area of optional insurance of goods and properties, by way of marketing policies,’‘ Popescu told Business Standard.
