By Dick Roche, an Irish former Fianna Fáil politician who has served, amongst others, as Minister of State for European Affairs from 2002 to 2004 and 2007 to 2011 and Minister for the Environment, Heritage and Local Government from 2004 to 2007.
Transparency in public administration is widely recognized as a cornerstone of democracy. Both the Treaty on the Functioning of the European Union and the EU Charter of Fundamental Rights affirm the fundamental right of EU citizens to access EU documents. EU Regulation 1049/2001 gives these rights concrete, practical effect. The European Insurance and Occupational Pensions Authority (EIOPA), though not widely known, plays a crucial role in protecting the interests of insurance policyholders and pension scheme members. Yet, rather than embracing openness and transparency to enhance its reputation, EIOPA behaves as though EU commitments to these principles do not apply to it.
In its 2023 Report on Supervisory Activities, EIOPA reviews its activities over the year, calls for an extension of its powers, and outlines what it describes as its “key public milestones.” One of those milestones is an “independent own assessment of the Technical Provisions (gross and net of reinsurance) for the motor third-party liability portfolio of an insurance undertaking.” While EIOPA does not identify the company concerned, this clearly refers to Euroins Romania.
An Industry in Turmoil
The Euroins Romania case has a significant backstory.
By 2019, Romania’s motor insurance industry was in crisis. City Insurance—serving over three million customers—was facing severe financial difficulties. Eleven other companies had already been forced out of business, including Astra Asigurări, which had 1.8 million customers with 2.5 million active policies when it collapsed in 2015, and Carpatica Asig, with a portfolio of 1.3 million contracts (including over 930,000 MTPL policies), which went bankrupt the following year.
This turmoil was mirrored within the Autoritatea de Supraveghere Financiară (ASF), the agency regulating the industry. ASF lost its first President, Dan Radu Rușanu, in March 2014. When his resignation was announced, Mr. Rușanu was in custody, having been arrested pre-emptively on charges from which he was fully acquitted in June 2017.
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His successor, Mișu Negrițoiu, was dismissed by the Romanian Parliament in May 2017 as a moratorium on MTPL premium increases was about to expire.
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Negrițoiu’s replacement, Leonardo Badea, also had a short tenure, resigning in 2019 to become Deputy Governor of the National Bank of Romania.
Upon taking office, Mr. Badea’s successor, Nicu Marcu, pledged to “clean up” ASF. As he assumed control, allegations surfaced that ASF staff had deliberately inserted “serious errors” into documents presented to its board. Several key ASF personnel were dismissed, others retired, and some “stepped back” from their positions.
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The Euroins Case
In 2019, as City Insurance teetered on the brink of collapse and the Romanian MTPL market faced further chaos, ASF sought to persuade Euroins—part of the Euroins Insurance Group (EIG), one of the largest independent insurers in Central and Eastern Europe—to acquire City Insurance. Viewing City as effectively bankrupt, Euroins declined; City collapsed in 2021.
ASF did not take Euroins’ refusal well. Over the next three years, Euroins Romania faced an unrelenting campaign of repeated investigations, fines, and sanctions. At one point, ASF placed the company into temporary administration, alleging that its board members had not been properly vetted.
The campaign peaked on 2 February 2023, when ASF issued a Permanent Capital Report (PCR) alleging major deficiencies at Euroins Romania. The regulator claimed shortfalls of €400 million in the company’s Solvency Capital Requirement and €320 million in its Minimum Capital Requirement, while also questioning its reinsurance arrangements.
This PCR starkly contrasted with ASF’s previous positions on Euroins Romania. Just four months earlier, its annual review raised no serious concerns. The two previous annual reviews were also free of “red flags.”
EIG responded vigorously, accusing elements within ASF of mounting an attack that “threatens the financial stability of the company, the entire insurance sector and the economic stability of the country.”
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EIG then approached EIOPA, proposing an independent expert review under EIOPA’s supervision—hardly the action of a company with something to hide.
Independent Interventions That Fell on Deaf Ears
ASF’s report triggered reactions from Bulgaria’s Financial Supervision Commission (FSC) and the European Bank for Reconstruction and Development (EBRD).
Bulgaria’s FSC, the “home” regulator of EIG, raised concerns with EIOPA about ASF’s actions and supported an independent review of Euroins.
EBRD also challenged ASF’s analysis and backed the idea of an independent expert review. Its intervention was particularly significant. The bank held a €2.5 billion investment portfolio in Romania and, after City Insurance’s collapse, had invested €30 million in EIG to stabilize the insurance sector “while providing comfort to customers and regulators.”
Citing due diligence carried out by leading auditors and German insurance specialists before investing in EIG, EBRD contested ASF’s claims of a capital deficiency and noted that Euroins’ reinsurance contracts had long been accepted by ASF. Most importantly, while insisting there was no crisis at Euroins, EBRD stated that if a problem existed or additional capital was required, remedial action could be taken.
Yet the interventions of both the Bulgarian regulator and the EBRD fell on deaf ears.
Conflicting Reports
Rejecting the proposal for an independent review, EIOPA instead decided to conduct its own assessment—the “milestone” referenced in its 2023 Report.
Euroins was excluded from the process—a decision widely seen as being in bad faith. The company that had requested the review was denied any opportunity to participate, respond to allegations, or provide data for the investigation. In contrast, ASF was fully involved and, it is suggested, supplied much of the data used in the review.
EIOPA’s assessment was completed on 28 March 2023. ASF was given full access and allowed to use the report in court proceedings against Euroins. ASF selectively cited elements of the EIOPA report in press briefings.
Euroins, however, was denied access to the assessment until May 2023—by which time its fate was effectively sealed.
The EIOPA report has not been published. Its full findings remain undisclosed. The source of its data is unclear. One key conclusion was, however, revealed on the website of the Board of Appeal of the European Supervisory Authorities [BoA-D-2023-01 of 8 June 2023]:
“According to the EIOPA Report, Euroins Romania had a deficiency of the net best estimate for the MTPL business as at 30 September 2022. In EIOPA’s view, the deficiency was in the range between EUR 550 million and EUR 581 million.”
This conclusion diverges dramatically from ASF’s three previous annual reports on Euroins and even from ASF’s controversial 2 February 2023 report.
It also conflicts with the independent analysis commissioned by EIG with EBRD’s support after EIOPA failed to act on the call for an independent review of ASF’s February report. Conducted by a major international audit and actuarial services provider, the analysis concluded that as of the end of 2022 Euroins was solvent, with “no capital gap,” and that its reinsurance contracts met Solvency II requirements.
EBRD stated this report gave no reason “to revise [its] view of the strong financial standing of Euroins Romania at the time its license was withdrawn.”
As the independent review commissioned by EIG and EBRD got underway, EBRD asked Romanian authorities to request ASF to “hold off” on action until 31 March 2023, when the review would be complete. The request was ignored. ASF revoked Euroins Romania’s license on 17 March 2023 and began insolvency proceedings.
The following day, ASF issued a statement declaring it was “not talking of a market bankruptcy of a company that goes bankrupt due to economic reasons. The decision to withdraw the authorization to operate at this company is a measure designed to penalize behaviour”—a dramatic shift from its previous emphasis on Euroins’ alleged capital deficiency and reinsurance issues.
Why the Secrecy?
As noted, the EIOPA report remains unpublished. Its findings have not been disclosed, and its data sources are unclear. The report has even been withheld from the European Parliament, to which EIOPA is accountable.
Multiple attempts to probe its contents via Parliamentary Questions (PQs) have been rebuffed. After months of evasive responses, the European Commission finally admitted the report had not been shared with it. The Commission’s standard response to questions about the Euroins case—that decisions relating to insurance licensing “are the exclusive competence and responsibility of the national supervisory authorities”—while technically correct, does not explain the veil of secrecy around EIOPA’s actions in this case.
The available information calls into question the accuracy of EIOPA’s analysis of Euroins Romania—a report that EIOPA itself describes as a “key public milestone” of its 2023 activities. Without full access to the report, no meaningful examination of its findings can take place.
If EIOPA and the Commission, which has “run cover” for it over the last two years, are confident in the accuracy of EIOPA’s work in this case, one question remains:
Why the cover-up?
