Law no.260 / 2008 on the compulsory insurance of dwellings against earthquake,
landslide and flood republished in 2013
The Parliament of Romania passes the following law
CHAPTER I
General provisions
Art. 1 – This law regulates:
a) The terms and conditions of the compulsory insurance for dwellings owned by individuals
or legal entities
b) The relations between the insured and the insurer, as well as the rights and obligations of
each party to the compulsory house insurance contracts;
c) The setting up, responsibilities, organization and operations of the Natural Disaster
Insurance Pool.
Art. 2 – For the purposes of this law, the terms and phrases below have the following
meaning:
a) Dwelling, social housing, ‘intervention’ housing, emergency housing, official (‘protocol’)
housing, holiday homes – have the meanings set by art. 2 of Law 114/1996 on housing, as
subsequently amended and completed; for condominiums, the term dwelling covers both
exclusively owned areas and the share of the overall property and common buildings;
b) Natural disaster – earthquakes, landslides or floods occurring as natural phenomena;
c) Types of dwellings
- Type A – buildings with reinforced concrete, metal, or wood frames, with outside walls
made of stone, burnt brick, wood, or any other materials resulting from heat and/or
chemical treatment;
- Type B – buildings with outside walls made of un-burnt bricks or any other materials not
resulting from heat and/or chemical treatment
d) Insurance policy against natural disasters – hereinafter called PAD, a written proof of a
compulsory insurance contract for a dwelling, under which the insurer undertakes to pay the
insured the full or partial claim for the damages to the dwelling as a result of the insured
loss event, within the limits established by this law and other terms of the insurance policy
or contract, as the case may be; PAD is a separate policy from the facultative policy.
e) Natural Disaster Insurance Pool – hereinafter called PAID, an insurance/reinsurance
company set up by an association of insurance companies authorized to issue compulsory
insurance contracts for dwellings according to the provisions of this law, of Law 32/2000 on
insurance activities and supervision, as subsequently amended and completed, of Law
31/1990 on companies, republished, as subsequently amended and completed, as well as
the norms approved for the enforcement of these laws;
f) Mandatory insurance premium – the amount of money paid by the owner of a dwelling, in
their capacity as the insured, or any agent, contractor or legal representative thereof, in
order to deal a house insurance by this law;
g) Compulsory sum insured – the maximum payable under a claim for the damage to a
dwelling as a result of an insured loss event, as provided for in this law, and depending on
the type of property.
h) First-loss insurance – for any damage incurred during the life of an insurance contract,
the amount payable for any claim shall be the lesser of the actual damage cost and the sum
insured
j) Insurance certificate – a document that certifies the existence of a PAD compulsory
insurance policy for that dwelling, issued together with the PAD insurance policy.
Art.3. (1) 90 days after the date of the decision of the Insurance Supervision Commission
adopting the norms issued to apply this Law, all individuals and legal entities must contract
insurance against natural disasters for all their dwellings, under the provision of this Law,
whether in rural or urban areas, owned and recorded as such with the tax administration.
(2) Entities or institutions legally managing dwellings owned by state or local government
units shall conclude compulsory insurance contracts for such properties.
(3) If a dwelling is the subject to a lease, the lesser is responsible for the insurance contract
against natural disasters.
(4) For individuals on social benefits, the insurance premium against natural disasters shall
be paid by local budgets, from the shared amounts from state budget revenues.
(5) If a building is jointly owned by more than one entity, there shall be one insurance
contract concluded for each dwelling, in which case, one insurance premium shall be paid
for each dwelling.
(6) The dwellings situated in buildings technically expertise under the terms of the law by
attested technical experts and classified by the technical expertise in seismic hazard Class I
will not be insured for the risks provided by this law, until the date of the final reception of
the consolidation-works of that building.
(7) The scope of this law does not extend to annexes, outbuildings which are not part of the
building, or to house contents.
(8) The evidence of existence of the compulsory insurance PAD, for control purposes, made
by authorized authorities, is the insurance policy PAD, as well as the certificate of insurance.
Art. 4 – The contractual terms and conditions included in the insurance policy, as well as the
authorization criteria for insurers are those provided by art.7 para.(1), art. 25 para. (1), of
this law, as well as the norms issued by order of the chairman of ASF.
CHAPTER II
Insurance policy against natural disasters
Section I
Compulsory sum insured and the conditions for the compulsory insurance of dwellings
Art.5- (1) The sum insured payable under this law, hereinafter called the compulsory sum
insured, shall be the RON equivalent, at the National Bank of Romania exchange rate when
a natural disaster occurs, of:
a) 20,000 Euro for each Type A dwelling
b) 10,000 Euro for each Type B dwelling;
(2) The premiums for the sums insured provided by para. (1), hereinafter called compulsory
premiums, are the RON equivalent, at the National Bank of Romania exchange rate when
the payment is made, of:
a) 20 Euro for the amount at para (1) letter a);
b) 10 Euro for the amount at para (1) letter b);
(3) The compulsory sum insured and the related compulsory premium may be amended by
an order of the President of ASF.
(4) The criteria which shall be used for adjustment are to be set in the implementation
norms for this law and shall refer, inter alia, to the size of the dwelling, replacement costs
and inflation rate.
(5) The classification of dwellings containing building elements of both Type A and Type B
housing shall be done according to a set of norms issued by the ASF and based on the ratio
of each construction material.
Art. 6 – The compulsory PAD covers losses, arising from damage to dwellings following
natural disasters: as a direct or indirect effect produced by natural disaster.
Art. 7 – (1) The compulsory insurance contract for dwellings shall be made in writing,
between PAID and the owner of the dwelling, through the Insurance companies -
shareholdersrisks of PAID, notwithstanding the provisions of Law 32/2000, with subsequent
amendments and shall at least meet the following conditions:
a) the sum insured shall be equal to the compulsory sum insured, as provided by art. 5
para. (1) let. a) or let. b), as the case may be;
b) the risks insured by the contract shall include the risks listed in art. 6
(2) the terms, clauses and conditions of the insurance contract for dwellings relating to the
compulsory sum insured, compulsory premium and the risks listed in art. 6, hereinafter
called compulsory clauses, are generally applicable and compulsory and shall be established
by the implementation norms for this law, as approved by order of the ASF chairman.
(3) The PAD shall include at least:
a) the name and headquarters/residence of the contracting parties;
b) the name of the insurance beneficiary
c) the type of dwelling and address;
d) the compulsory sum insured;
e) the compulsory premium and payment deadlines;
f) the period of validity of the insurance contract;
g) the number and title of the law of under which the PAD was issued, as well as the date
and issue of the Official Gazette of Romania in which the law was published.
(4) PAD is to be printed by PAID or issued electronically by the insurance companies
authorized to practice catastrophic risks or by PAID, in compliance with the regulations on
personal data processing in the competitive market, express regulation being made by the
norms issued by ASF.
Art. 8 – The compulsory insurance cover for dwellings comes into force, according to this
law, when all the following requirements are met:
a) PAD covers the building intended to be a dwelling for the mandatory sum insured.
b) PAD covers the risks listed in art. 6;
c) The insured has paid the compulsory premium.
Section 2
Term of validity of PAD
Art. 9. (1) PAD is valid for a period of 12 months with effect from 00.00 hours on the
following day after the payment of the compulsory premium.
(2) In the case of a change in the ownership of a compulsorily insured dwelling for which
the compulsory premium has been paid, PAD remains valid until the date specified in the
contract.
(3) Before the expiry date specified in PAD, the insurer shall conclude mandatory insurance
with the new owner, in continuation of the expired one, after which he shall notify the
changes to the database managed by PAID.
Art.10 Any person who, after the deadline provided by art. 3, para. (1), becomes the owner
of a dwelling which is not insured for the risks provided by art. 6 must contract a PAD for
that dwelling within 5 working days from the date of becoming the owner.
Art.11 (1) A PAD shall cease to be valid if the insured building is no longer used for housing
purposes or the building no longer exists for other reasons than losses under the
compulsory insurance. In these cases the insurer issuing the PAD is not required to return
the compulsory premium.
(2) A beneficiary of PAD or an insured who, after the entry into force of this law, has built,
expanded or changed their dwellings without a building permit issued by law or without
observing the provisions of that permit and by doing this affected the structural strength of
the building and enhanced the exposure to one of the compulsory insured risks, shall not
have the right to receive any indemnification, should the insured edevent occur.
Section 3
Insurance premium
Art. 12 – (1) The payment of premium for PAD shall be made in full and in advance of the
PAD maturity date.
(2) For social housing or for individuals on social benefits for various reasons, the premium
for the compulsory insurance shall be the responsibility of the authority having the records
of such individuals and shall be paid directly to PAID; which in its turn shall issue policies for
these individuals.
(3) Payment of partially or fully subsidized premiums shall be made to the PAID account by
the local authorities, from the amounts transferred from the state budget and allocated
specifically for this purpose.
Art. 13 – (1) From the compulsory insurance premiums collected by insurers a share is to
be retained as commission.
(2) The commission charged by authorized insurers for the PAD compulsory insurance for
dwellings shall be determined by order of the president of ASF.
Section 4
Rights and obligations of the insured and the insurer
Art.14 - By signing the compulsory insurance for dwellings, the insured, their agents or the
party contracting the insurance undertake to pay the compulsory premium to PAID, which in
its turn, undertakes to pay to the insured the damages resulting from the compulsory
insurance for dwellings concluded according to this law and the norms issued by the ASF for
the implementation of this law.
Art. 15 According to PAD, the insured has the following rights and obligations
1. Obligations:
a) To pay the compulsory premium, according to the provisions of this law;
b) To meet all other obligations and conditions provided by this law.
2. Rights:
- To be compensated for damage resulting from the compulsory insurance for dwellings, in
the event of an insured event having occurred;
Art. 16 - According to PAD, the insurance companies which issue mandatory insurance for
dwellings have the following rights and obligations:
1. Obligations:
a) To establish and assess the cost of damage, assess the amount of the claim that is due,
and conclude the claim file within the terms and conditions provided by the ISC (ASF)
norms issued for the implementation of this law;
b) To meet all other obligations and conditions provided by this law;
c) To issue the policy together with the insurance certificate,
2. Rights:
- To retain the commission due from the paid compulsory insurance premium, at the level
set through ASF President Order.
Section 5
Obligations of the local government authorities
Art. 17 – (1) Mayors, through their specialized departments, shall provide to PAID a list of
all dwellings in their local government unit, including social dwellings, specifying the name
and surname or corporate name of the owner, and as applicable the fiscal address and
identification number, the number from the single register and the farm register. The
updating of these data shall take place within 72 hours from the change of ownership or
change in the owner’s identity data.
(2) PAID shall send to mayors a monthly list of the owners who have not concluded
compulsory insurance policies and the amount of the premiums owed by each of them.
(3) Mayors, through their specialized departments, shall send registered letters of
notification to the owners within 3 days of receiving the list.
(4) For housing property owners who provide an e-mail address, PAID may use this method
of communication, with the owners’ agreement, to send warnings about the expiry date or
failure to conclude a PAD. The electronic message shall contain the amount of premium due.
This electronic message shall also be sent to the specialized city hall department in the local
government unit of jurisdiction, provided there are technical means to do so.
(5) The list of owners who have not contracted a PAD and individuals for whom the
premium is fully or partially subsidized shall be made available to the accredited insurers by
PAID, in accordance with the rules on processing the personal data in the competitive
market, express regulation is made by rules issued by the ASF.
Section 6
Claims settlement
Art. 18 – (1) If one of the insured events takes place, claims can only be submitted by PAD
beneficiaries, and shall be submitted to the insurer who issued the policy.
(2) The following categories of persons may be PAD beneficiaries:
1. For individuals:
a) The owners of dwellings insured according to this law;
b) Other individuals named by the owners under line (a), as beneficiaries in a PAD.
c) The heirs and successors of the individuals under line (a) if the latter are deceased,
according to the succession legislation, if no other beneficiaries exist designed according
with lin. (b);
2. For legal entities:
a) The owners of dwellings insured according to this law;
b) For the dwellings provided in art. 3, para. (2), the individuals or authorities required by
law to manage them;
c) Other persons indicated by the insured as beneficiaries in PAD.
(3) In cases when the beneficiaries mentioned in para. (2) point 1 line a) are underage, the
compensation claims are made on their behalf by the legal representatives, appointed under
the law.
Art. 19 (1) The establishment and assessment of damages, as well as establishment of the
amount of each claim shall be undertaken by the specialized staff of the insurer issuing PAD,
according to the norms issued by the ASF for the enforcement of this law.
(2) For owners with subsidized insurance premiums, claims shall be submitted directly to
PAID and, by derogation from the provisions of para. (1), the establishment and assessment
of damages, as well as establishment of the amount of each claim may be conducted by a
specially appointed company according to rules issued by the ASF.
(3) The establishment and assessment of damages, as well as establishment of the
indemnity shall be done according to the terms and conditions set by the ASF in the norms
for the implementation of this law.
(4) The payment of claims shall be made by PAID based on a list provided by the insurer
who assessed the damages.
(5) In case a person has both a mandatory insurance and a facultative insurance, the claim
payment will be made first based on the mandatory insurance, following the rest of the
claim payment to be made based on the facultative insurance. The insured value taken into
consideration in determining the rate of facultative insurance is the difference between the
total value of the dwelling insured and the insured value taken into consideration in
determining the rate of the compulsory insurance.
(6) Penalties shall be calculated for failure to pay damages on time, to be paid to the
insured within the conditions and amounts set by the ASF.
(7) The amounts due as claims may be paid to bank accounts opened by insurance
beneficiaries, or in cash.
(8) The claims paid by PAID for damages shall not exceed the compulsory sum insured.
(9) PAID shall settle with authorized insurers only such expenses as are incurred by the
latter in establishing the damage resulting from compulsory insured risks and compensation
paid as a result thereof. The allocation of expenses which will be reimbursed and
determination of the upper limit for compulsory insurance is regulated by ASF rules.
Art.20 PAID shall pay to the insured only the amount covering repairs/replacement for the
damage resulting from the compulsory insured risks, within the limits of the total sum
insured of the PAD.
Art. 21 For the risks referred to in art. 6, the payment made by PAID to the insured is made
on the first-loss basis.
Art. 22
(1) Individuals or legal entities who do not insure their dwellings under this law, shall not
benefit, when any of the natural disasters defined by this law have occurred, from any
payments being made from the state budget or local budget for damaged dwellings.
(2) Individuals who receive claims according to this law after a natural disaster shall will not
benefit from the provisions of Law nr. 114/1996, republished, with subsequent
amendments, relating to social housing.
Section 7
Condominium dwellings
Art. 23 - (1) For condominiums with at least 4 flats, where the building elements, utilities
and annexes are used jointly, there shall be established one insurance contract for each
dwelling. In this case the insurance premium will be paid for each individual dwelling.
(2) In case whereby para. (1) applies, the compulsory sum insured and premium value shall
be calculated by adding the total amounts owed for each dwelling, and the percentage
owned by each co-insured person shall be set in relation to the number of dwellings they
own and the share of the jointly-owned building. The distribution of payments to the insured
if the insured losses occur shall be set by a framework regulation issued by the ISC ASF.
CHAPTER III
The establishment, responsibilities, organization and operations of PAID
Art. 24 – (1) In order to manage the compulsory insurance of dwellings against natural
disasters will be set up an insurance/reinsurance company called PAID according to the
provisions of Law 32/2000 on insurance activities and supervision, as subsequently
amended and completed.
(2) PAID has the following responsibilities:
a) Print the insurance policy against natural disasters –PAD,
b) Contract the reinsurance
c) Manage the database of dwellings which must be insured by law, and that of insured
dwellings;
d) After a natural disaster act as a coordination center for loss assessment activities carried
out by accredited insurance companies
(3) As an insurance-reinsurance company PAID activity is subject to regulation and
supervision ASF, under this law.
(4) In order to fulfill the responsibilities provided by para. (2), PAID shall issue, upon the
endorsement of the ASF, regulations for the organization and operations of the company,
including the relationship between the accredited insurance companies and PAID, the cash
flows and information flows and any other aspects considered necessary for the company
operations, according to this law.
(5) The responsibilities of statutory bodies and the of PAID Board of Directors, shall be set
according to law 31/1990, republished, as subsequently amended and completed, Law
32/2000 as subsequently amended and completed and by the norms issued by ISC ASF.
Art. 25–
(1) PAID shareholders may only be legal entities which are authorized by ASF to underwrite
catastrophic risks, which alone or through or in relation to other insurance companies
controlled by the same person or group of persons exercise the rights arising from
ownership of shares cumulatively not exceeding 15% of the share of the capital of PAID or
gives it more than 15% of all rights to vote in the general PAID shareholders meeting.
(2) After PAID is established, insurers meeting the condition provided by para. (1) have the
right to become shareholders in this company, in similar circumstances as the authorized
insurers for the compulsory insurance for housing property.
Art. 26 –
(1) PAID will pay shareholders dividends of profits, if any, in correspondence with the
capital paid in its establishment.
Art. 27- The executive management of PAID shall be provided by a CEO and a deputy CEO
who must comply with the requirements according with the Law 32/2000 as subsequently
amended and completed and by the norms issued.
Art. 28- The key stockholders must fulfill the criteria provided by the ASF norms for the
implementation of Law 32/2000, as subsequently amended and completed and the
Company law 31/1990, republished, as subsequently amended and completed.
Art. 29 - PAID liquid assets may be placed with various credit institutions, in securities,
government or municipal t bonds or any other financial instruments, according to the
provisions of Law 32/2000, as subsequently amended and completed.
CHAPTER IV
Infringements
Art. 30. –
(1) The following actions are infringements of the law are:
a) Failure by individuals or legal entities to insure their dwellings, as provided for in art. 3
para (1), except the cases that the respective individuals are according to the provision of
art.11 or in advance of the maturity date provided for in art.33.
b) Failure, in any way, by insurance companies authorized to practice catastrophic risks, to
respect the provision of this law.
(2) Infringements referred to in para. (1) shall be penalized with a fine of 100 to 500 lei
(3) Infringements provided by para. (1) are identified and penalties imposed by mayors and
their designated agents for infringements.
(4) The infringements provided by para. (1) shall be treated according to the provisions of
Law 32/2000, as subsequently amended and completed., and according to the norms issued
by ISC in its application, and where it does not stipulate otherwise will apply the provisions
of Government Ordinance 2/2001 regarding the legal status of infringements, as approved
with amendments and completions by Law 180/2002, subsequently amended and
completed.
(5) Of the contravention fines established by this law 40% shall be paid to the state budget,
and the remaining 60% shall be paid to the budget of the local authority where the offender
lives.
CHAPTER V
Financial support for PAID
Art. 31
(1) The Ministry of Economy and Finance shall be authorized to contract loans for:
a) Reinsurance premium payment for the first year from the coming into force of this law,
and to supplement, as appropriate, any shortfall of reinsurance premium due for each of the
next four years.
b) Topping-up the Risk Fund, in case of large scale natural disasters where the losses are
higher than the system’s capacity of payment.
(2) The contracting conditions for the loans stipulated in para. (1) shall be established in
due course, according to the legislation in force
(3) The Ministry of Economy and Finance shall be authorized to grant the amounts
contracted according to para (1), by concluding subsidiary loan agreements with PAID.
(4) These loans shall be paid back from PAID’s own sources
Art. 32 - Central and local government authorities shall include in their annual budgets the
amounts needed to pay for the insurance premiums for the dwellings owned by the state
and the local government units.
CHAPTER VI
Final provisions
Art. 33- For the first year, the owners of housing property must conclude compulsory
insurance contracts within one year from the date mentioned in art. 3 para. (1).
Art. 34 - For 2009, mayors, through their specialized departments, shall send the data
provided by art. 17 para. (1) to PAID as follows:
c) For towns and cities, within one month of ASF approving the norms and regulations,
issued in the application of the law.
d) For communes, within 3 months of ASF approving the norms and regulation, issued in
the application of the law.
Art. 35 - (1) For the enforcement of this law, the ASF shall issue norms on:
a) The criteria which must be fulfilled by insurers willing to underwrite PADs;
b) The form and compulsory clauses to be part of a PAD, and the form of the certificate of
insurance.
c) The commissions for PADs under the provisions of this Law
d) The transfer by reinsurance of PAD insured risks;
e) The establishment of a reserve for finding damages insured by PAD, applying the
principle of separate management for insurance activities;
f) The establishment, assessment and settlement of claims;
g) Aspects that this law expressly provides that are issued in this way
Art. 36 – In order to fulfill its responsibilities under this law, PAID shall conclude cooperation
agreements with the associations and organizations under art. 28 para. (1) let. (d), and
other authorities, institutions or associations whose contribution to the purpose of this law is
considered necessary.
Art. 37 - This law is complemented by civil, commercial, insurance and reinsurance
legislation, as well as that on the insurance system.
Art. 38 - The norms and regulations for the application of this law shall be issued by Ministry
of Regional Development And Public Administration and by ASF following its publication in
the Official Gazette of Romania, Part I.
Art. 39 – This law comes into force within 120 days after following its publication in the
Official Gazette of Romania, Part I.
Below the provisions of art. II – IV of Law no. 243/2013 that are not incorporated in the
form republished Law 260/2008 and applies further, modifying the provision of the Law:
“Art II
Throughout the Law 260/2008 on compulsory dwellings insurance against earthquakes,
landslides and floods, republished, amended and supplemented by present law, the term
authorized to sign mandatory dwellings insurance is replaced with the phrase licensed to
practice disaster risk.
Art III
Throughout the Law 260/2008 on compulsory dwelling insurance against earthquakes,
landslides and floods, republished, amended and supplemented by present law, the term of
the Insurance Supervisory Commission, known as CSA is replaced by the phrase FSA, called
ASF.
Art IV
Insurance contracts in progress at the date of entry into force of the present law remains
valid under the terms of their date of conclusion. “