We would like to inform you of a recent and important change in Romanian insurance legislation. By Order no.16 of 24 August 2012, the Insurance Supervisory Commission has enforced new “Norms regarding the authorisation and functioning of insurers”. These Norms apply from 3 September 2012, and replace previous insurance regulatory norms established by Order no. 4/2009 in the matter of acquisitions of shares in Romanian insurers and Order no. 16/2009 in the matters of incorporation, licensing, business activity of such insurers and authorisation of their significant persons.
The legislative changes include:
- The establishment of a clearly defined two tier regulatory authorisation process for acquisitions of significant participation (i.e. 10% or more of issued share capital or another form of significant control) in Romanian insurers. In the first stage the ISC analyses and decides upon the approval of the applicant’s acquisition project and its intention to become a significant shareholder in the insurer. In the second stage, after the approved acquisition has been finalised, a new regulatory procedure is necessary for the approval of the acquirer as a new significant shareholder in the company. Within the previous regulations, the second stage of this process was a question of practice seen as a formality, based on a vague provision in the insurance Law according to which the Insurance Supervisory Commission has the power to approve significant shareholders. In contrast with this, according to express new norms, the approval of the acquisition project granted in the first stage “does not guarantee” the approval of the acquirer as a significant shareholder during the second stage. The acquisition process cannot be effectively closed from a regulatory perspective until the second stage is completed. As such, the acquirer will not be legally able to vote, as the seller will be held accountable for its regulatory obligations before the Insurance Supervisory Commission until the second stage approval is issued.
- Regarding the documentation required for the insurer’s initial regulatory authorisation and for obtaining approval for acquisitions in insurers, the new regulations simplify the efforts of the applicants by providing sole declaration templates which combine all necessary declaration wordings that were previously required and provided by way of separate documents. A similar template is provided for applications regarding changes of significant persons within the insurer’s boards and relevant management staff.
- The Norms also establish a compulsory professional training obligation for a significant range of managers and non-executive employees working for insurers in certain departments, both at the headquarters and within the territory. The training process will be run at the Insurance Management Institute in Romania, and must be taken within 12 months of the relevant person being contracted/hired. Persons already hired must take the training process within 8 months from the date the Norms come into force. Within 15 days from 3 September 2012 (i.e. before or on 18 September 2012), all Romanian insurers must send to the Authorisations Department of the Insurance Supervisory Commission their updated organizational charts and present a break-down of the number of persons that are subject to this training obligation, by location of activity (headquarters/ territory) and also by type of position (executive/non-executive).