Norm No. 25/2022 on the authorisation of companies and the conduct of insurance and reinsurance business

On 11 October 2022, the Financial Supervisory Authority (FSA) Norm No. 25/2022 on the authorisation of companies and the conduct of insurance and reinsurance business (the Norm) was published in the Official Gazette and entered into force. The Norm implements Law No. 237/2015 on authorisation and supervision of insurance and reinsurance activities in light of the Solvency II[1] update. The Norm represents an overhaul of the procedures laid down by the former Norm No. 20/2016 which it repeals, providing details on, among others:

  • the authorisation process for insurance and reinsurance companies
  • the conduct of business
  • the transfer of insurance portfolio/ merger and spin-off
  • specific rules for insurance/reinsurance companies in difficulty
  • voluntary dissolution and liquidation
  • passporting rules

1.     Authorisation process

Insurance/reinsurance companies (the Companies) are subject to a two-step authorisation process: (i) prior approval required for setting up the Company and registration with the Commercial Registry in the form of a joint-stock company; and (ii) authorisation process which also includes the authorisation of significant shareholders and management.

The entire authorisation process cannot exceed six (6) months and any supplementary documents required by the FSA must be submitted within 30 days. Documents must be submitted in Romanian language or accompanied by a notarised translation into Romanian language.

Executive management is prohibited from carrying out similar activities in other companies. Moreover, management cannot exercise their functions within the Company before they are authorised in such capacity by the FSA.

2.     Conduct of business

Within the first 3 years of operation, Companies must perform an annual update of their 3-year business plan (general insurance business) or 5-year business plan (life insurance business). They must also carry out and submit to the FSA an analysis of the achieved vs. estimated results.

Companies must implement several policies and procedures including (i) anti-money laundering and anti-terrorism policies; and (ii) business continuity procedures for the performance of key functions ensuring the re-distribution of such key functions and ensuring such functions are not exercised by individuals working for branches located in third countries.

3.     Transfer of portfolio/ Merger and spin-off

Portfolio transfers are subject to the FSA’s approval. The Companies involved in the transfer must submit to the FSA the portfolio transfer agreement together with several other documents within 90 days of the reference date set out in the portfolio transfer agreement.

The FSA assesses, among others, if the transferee Companies in Romania or in other Member States meet the following conditions:

  • are authorised with respect to risks or classes of insurance corresponding to the contracts being transferred
  • have sufficient own funds to cover solvency capital requirements (SCR) before and after taking over the portfolio
  • have assets covering gross technical reserves after taking over the portfolio
  • pay the portfolio transfer fee

The involved Companies must perform additional notification obligations with respect to the insured counterparties and must execute a portfolio handover minutes.

Merger and spin-offs are subject to the FSA’s approval. The process must be approved by the FSA within six (6) months. At this stage, the FSA assesses whether the Companies comply with the legal functioning requirements (e.g., own funds, technical reserves, assets covered, SCR, minimum capital requirements (MCR)) and if there are any outstanding debts towards the FSA/Insurance Guarantee Fund and if the relevant merger/spin-off fee was paid.

Depending on the contemplated changes resulting out of the merger/spin-off (e.g., shareholding structure, management structure, portfolio transfer), related authorisation procedures must be complied with.

4.     Companies in difficulty

The Norm provides for comprehensive rules on the supervision and carrying out of the insurance/reinsurance activity of Companies which are undergoing financial difficulties. The Norm does not regulate insolvency/bankruptcy proceedings which are subject to specific and distinct legislation.

5.     Voluntary dissolution and liquidation

Voluntary dissolution and liquidation are subject to the FSA’s authorisation.

If, as a result of the assessment carried out, the FSA has reasonable grounds to consider that the interests of the contractual counterparties and beneficiaries are prejudiced, it may reject the request for approval of voluntary dissolution and liquidation.

6.     Right of establishment and freedom to provide services

Where Companies establish subsidiaries in Member States to conduct direct insurance business, their appointed representatives must be notified to the FSA.

If Member States where Companies operate under the right of establishment and the freedom to provide services withdraw from the European Union, such Companies can choose between the following courses of action:

  • transfer their entire portfolio (related to the withdrawing Member State) to insurers established in those states; or
  • request permission from supervisory authorities of the withdrawing Member State to continue their activity, under the conditions set out by local legislation, and request the FSA’s approval to carry out activities in third countries.


[1] Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II)


*This ePublication is provided by Radu Taracila Padurari Retevoescu SCA and is for information purposes only. It does not constitute legal advice or an offer for legal services. The distribution of this document does not create an attorney−client relationship. If you require advice on any of the matters raised in this document, please call your usual contact at Radu Taracila Padurari Retevoescu SCA at +40 31 405 7777.