The Romanian Financial Supervisory Authority (the "FSA") recently enacted a new norm on the Insurance Guarantee Fund (the "Fund"). The norm was issued in an effort to further clarify concerns about the mechanisms by which the Fund operates in the wake of ASTRA SA’s recent insolvency. (Please see our recent Law Now article for further details.)
The new norm supplements the existing legal framework by detailing practical and operational rules governing the source of the Fund’s financial resources, the use of such resources, the way requests for receivables recovery must be made, the required documentation to be provided in support of a claim and how the Fund reviews such requests.
The norm also regulates the insolvent insurer’s obligations towards the Fund, such as, reporting and making available relevant documentation to allow the Fund to determine the value of potential payments and preparing a list of insurance creditors eligible for compensation.
Additionally, the new norm provides procedural rules governing the conduct of bankruptcy proceedings in courts by regulating how judicial liquidators prepare the creditors’ table and the liquidator’s relationship with the Fund. The norm also clarifies the options available to an insurance creditor to apply before the Fund and the bankruptcy court and how the two proceedings inter-relate.
Lastly, the norm provides standard templates, such as a standard application form, affidavits, payment applications etc., which applicants should use in dealing with the Fund.
The Fund (which is primarily regulated by Law no. 213/2015) acts as a ‘safety net’ in the event of an insurer’s bankruptcy by guaranteeing insurance creditors at least a partial recovery of their claims. Payments from the Fund may be made up to a maximum threshold of RON 450,000 (approximately EUR 100,000) per insurance creditor.