Romanian Life Insurers Required To Evaluate Clients’ Finances Before Signing Contract, As Of 2011

The evaluation will be made through a „client need analysis form,” presented from the first meetings with the potential client, drawn up in two copies and signed by both parties. The form will comprise the client’s personal information, financial status and long-term financial goals. If the client does not wish to provide certain information, he/she is required to state this under signature, says CSA Order 11/2010, which amends the norms concerning the information insurers and insurance intermediaries must provide to their clients.

If the insurance policy is unit-linked (containing an investment component) or index-linked (guaranteeing the return of invested capital plus a minimum guaranteed yield), the evaluation form will include an extra section on the client’s risk profile. Based on this section, the insurer will recommend a certain kind of insurance contract and an investment fund (including data on the fund, such as assets, reference index/benchmark, performance) matching the risk profile. The firm will also inform the client about the minimum recommended investment period, the quantum and structure of taxes, as well as the insurer’s guarantees.

CSA’s order also says the insurer will be required to draw up a projection of the contract’s evolution, in duplicate, to be authorized by both parties, before a life insurance contract is signed.

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According to the order, the insurance contract will comprise details on the subject, policy, the evolution of the insured amount, premiums, account value (for unit-linked policies) or profit participation (for traditional policies), compensation value and reduced insured amount.

The contract will also contain information on management costs and the concurrent evolution of two performance scenarios (pessimistic and optimistic) of the investment fund yield, as well as an exemption of responsibility as regards the insurance contract’s evolution as per the projection.

„Insurers are required to draw up the documents and supply the above-mentioned information within one year of this order being published in the Official Journal,” says the CSA act.

Late 2009, 24 firms were authorized by CSA to provide life insurance. Underwritten premiums on this sector amounted to 1.63 billion lei (EUR1=RON4.2670) at the time, down 12.8% compared to 2008.