Saturday, 13 December 2025
Romania has adopted new legislation amending the functioning of the Insureds Guarantee Fund (FGA) and the country’s insurance insolvency framework, introducing changes aimed at improving compensation mechanisms, strengthening financial resilience and aligning national rules with European Union requirements.
Law No. 202/2025, published in the Official Gazette on 3 December, amends the existing laws governing the FGA and insolvency proceedings. The changes focus in particular on the handling of motor third-party liability (MTPL) claims and the coordination of cross-border insurance guarantee mechanisms within the EU .
Under the new law, the role of the FGA is clarified as a guarantee scheme that protects insurance creditors in the event of insurer bankruptcy or liquidation, without taking over the obligations of the failed insurer. The Fund will continue to make payments through an administrative process rather than stepping into the contractual position of the insolvent insurer.
One of the most significant changes concerns MTPL compensation. The previous compensation cap of RON 500,000 has been removed for injured parties, with payments now linked to the maximum liability limit of the applicable insurance policy or the higher statutory limit in force at the place of the accident. Claims linked to insolvency proceedings initiated before the law entered into force will continue to be handled under the previous legal framework .
The legislation also introduces stricter timelines for claim handling. The FGA must now issue a decision on MTPL claims within three months of receiving a payment request, either approving the claim, making a partial offer or issuing a reasoned rejection. Where compensation is due, payment must be made within three months of approval or acceptance of a partial offer.
In terms of financing, the law broadens the Fund’s revenue sources to include recoveries through subrogation, reimbursements from equivalent schemes in other countries and, in exceptional cases, government loans. The Ministry of Finance may provide loans or guarantees to the Fund if available resources are insufficient to cover claims. Investment rules for the Fund’s assets have also been expanded to allow a wider range of interest-bearing instruments, including those denominated in foreign currencies .
The amendments strengthen cooperation between the FGA and guarantee schemes in other EU member states, particularly in cases involving cross-border MTPL claims. Insurers operating in Romania through branches under EU freedom-of-services rules will be required to contribute to the FGA only for the portion of their activities not covered by their home-state guarantee schemes.
The law also tightens reporting obligations and introduces new sanctions. Insurers, their management and the Fund itself may face financial penalties for failures to provide information, comply with procedural deadlines or meet reimbursement obligations, subject to specified limits.
According to the explanatory material accompanying the legislation, the reforms are intended to improve predictability for claimants, reinforce systemic stability during insurer failures and bring Romania’s insurance guarantee system into closer alignment with EU law. The changes are expected to lead insurers to reassess their financial contributions to the Insureds Guarantee Fund.
Source: CMS
