MTPL fees to rise by at least 30%, due to the exchange rate

“There is a significant impact from depreciation. All tariffs were calculated in 2008 at an exchange rate of RON 3.6/€1, but this has increased to RON 4.2/€1 in less than one month,” said the General Manager of Allianz-Tiriac, Cristian Constantinescu.

According to the official, 25-30 percent of MTPL policies are signed every year in the December-January period. “Even if the market had reacted immediately to the depreciation of the leu at the beginning of this year, for more than one quarter of the portfolio, namely policies signed in December 2008-January 2009, there was nothing left to be done,” Allianz-Tiriac’s General Manager added.

Meanwhile, the price of damages that to be covered by the MTPL insurance policies is set in euro. This is primarily the price of exchange parts, which is in euro, and which reacts to the daily fluctuations of the exchange rate.

“RCA will be a big problem for the whole market. The impact will be even greater because RCA makes up a major part of the portfolios of some companies,” Constantinescu indicated.

The official said that each company will take into account various scenarios, with the most pessimistic RON 4.7-5/€1. “Personally, I do not believe such a level will be reached. Allianz-Tiriac used a RON 4.3/€1 exchange rate for the 2010 budget. I see no reason for another exchange rate level,” the General Manager said. Allianz-Tiriac will raise the price of RCA policies by at least 20 percent, but, depending on certain category criteria used by the company, the increase could exceed 100 percent in some cases.