The bankruptcy of Euroins and City Insurance in Romania: a cautionary tale for choosing the right insurance company
The case of Euroins and City Insurance
Euroins and City Insurance were present in Romania, particularly in the market for traffic liability insurance. Excessively cheap insurance premiums, which, as long as the inadequate cover was not examined in detail, represented a tempting offer, contributed to the financial problems that ultimately led to insolvency.
Euroins, the largest of the two insurers, has repeatedly struggled with financial difficulties in recent years. In 2023, it became known that the company was suffering from a massive liquidity shortage and could no longer meet its obligations to policyholders. City Insurance, the second-largest provider of transport liability insurance, was also affected by a similar situation. Both companies were faced with the challenge that they had not built up enough reserves to be able to make sufficient payments in the event of claims. This ultimately led to insolvency, which ended in disaster for many (supposedly) insured carriers.
The impact on policyholders
The bankruptcy of Euroins and City Insurance has put many Romanian carriers in a difficult situation. There were also numerous cases in which justified claims for damages were not paid out because the insurers were insolvent.
For many, this was a nightmare: not only did they suddenly no longer have valid insurance, but they also had to arrange a new policy, which could be expensive and time-consuming. Confidence in the Romanian insurance market declined significantly as a result. There was growing public concern about how well the financial stability of insurance companies is actually checked and whether it is enough to rely solely on the price of an insurance policy.
Why choosing the right insurance is so important
The insolvency of Euroins and City Insurance dramatically illustrates why it is essential to look carefully when choosing an insurance company. The price of insurance should never be the only deciding factor. While a low premium may seem tempting, in many cases it can be an expensive illusion if the insurer is unable to pay out on a claim - or even if the cover is so patchy that there are legal grounds for a surprise non-payment.
The impact on other companies in the transport chain
Of course, it was not only the policyholders themselves who were affected, but also the clients of these companies who lost out on legitimate claims. Often such a client is a carrier, e.g. from Poland, who is then confronted with justified claims of an enormous amount without being able to charge them accordingly, for example because the sub-carrier itself has become insolvent due to the failure of its insurance.
This is precisely where the protection of subsidiary insurance comes in: If, as in the cases described, the insurance cover of the sub-carrier has been checked correctly and ultimately no money can be obtained, the commissioning carrier can use this instrument to protect itself. Carriers (from all possible countries) who had taken out subsidiary insurance with an established specialist broker with long-standing, proven insurance partners were therefore on the safe side.
The role of insurance brokers
Given the risks associated with choosing a rogue or unstable insurer, the advice of an experienced insurance broker can be invaluable. A broker who has long-standing partnerships with reputable and stable insurance companies will reduce the risk of falling victim to an insurer with inadequate reserves to near zero.
Reputable brokers work with a variety of insurance companies and can offer a wider range of policies. Not only are they able to find the best price, but they can also carry out a comprehensive risk assessment to ensure that the insurer is actually able to pay out in the event of a claim. Brokers who only work with recognized partners who have been stable for many years offer their customers an additional level of security.
An experienced insurance broker knows the market conditions, understands the different insurance products and can make an objective comparison or, in the case of specialized brokers, also create individual, perfectly fitting insurance concepts.
The bankruptcy of Euroins and City Insurance in Romania shows how quickly it can become an existential threat for policyholders if they are not careful enough when choosing their insurer. A reputable, experienced and specialized specialist broker, such as LUTZ ASSEKURANZ, is therefore always the first choice.