Marsh Sees ‘Demand Surge’ in Romania’s Compulsory D&O Law

“Changes to Romanian corporate law, making it compulsory for companies to purchase directors’ & officers’ liability insurance (D&O), are creating a surge in demand for cover,” according to a bulletin from Marsh’s London office. Romania is the first country in the European Union to make the purchase of D&O compulsory.

The law, introduced in December 2006, makes the purchase of D&O compulsory for all directors of joint stock companies in Romania. “This includes public and private companies with Romanian registered shareholders, or subsidiaries that are incorporated in Romania whose shares are either completely or partially owned by a non-Romanian parent company,” the bulletin explained

Commenting on the legislation, Eduard Simionescu, Financial and Professional Services (FINPRO) Practice leader for Marsh in Romania stated: “Marsh has responded to the new regulatory requirement with D&O policies available for both domestic and foreign owned companies. We expect a rush of companies that previously did not have D&O coverage to purchase policies in order to meet the new requirements. While insurance can be purchased either from a local insurance company or from an international insurer, at present only a few insurers are writing D&O policies in Romania.

“We expect the insurance market to grow both as a direct consequence of this new law and also of the new regulatory environment that has resulted from Romania’s accession to the European Union.”

Around 11,500 joint stock companies are registered and operational in Romania, out of which 58 listed on Bucharest Stock Exchange and around 1,000 on RASDAQ Electronic Exchange.

Global D&O policies, which specifically include Romanian subsidiaries, may meet the requirements of the new law. Since Romania’s accession to the European Union, EU-based insurers offering D&O insurance for Romanian companies need to be registered with the Romanian Insurance Supervisory Commission.

Topics Legislation Europe