ECONOMIC COUNCIL TO THE PRIME MINISTER OF THE RM

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund
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Only 2 claims in the total amount of up to $ 1000 were paid following incidents caused by the exploitation of hazardous industrial objects in 2019

4 November  2020 – This finding is based on the data collected from Moldovan insurance companies which participated in a survey organized with the support of the USAID Financial Sector Transparency Activity in Moldova.

The action takes place within the process of drafting the regulatory framework that would provide a mechanism for establishing the insurance amount of hazardous industrial objects in Moldova. Debates with the participation of all parties involved – insurers, the associative business sector, international experts, state institutions – take place on the platform of the Economic Council to the Prime Minister of the Republic of Moldova.

Participants in the discussions mentioned that there are over 4700 functional hazardous industrial objects registered in Moldova, such as elevators, industrial machinery, equipment from gas stations etc. However, those 8 insurance companies from Moldova have issued only 813 insurance policies for hazardous industrial objects, that is for 17% of the total number of objects registered in our country.

Moreover, experts say that in 2019 only two applicants submitted claims for incidents involving hazardous industrial objects, the cumulative amount of compensation being less than $ 1,000.

Today, according to the law, the amount of liability insurance for possible damages is determined based on the results of the risk assessment specific to the insurance contract for hazardous industrial objects. That is, insurance companies guide themselves according to their own criteria for determining the risk in which one object or another is registered. This is happening because in Moldova there are no guidelines that classify hazardous industrial objects according to the magnitude of the damage that they can cause. No damage statistics with the involvement of these objects are made available in our country.

Currently, neither insurers nor companies take into account the different geographical location of hazardous industrial objects of the same type – as a criterion for determining the insurance amount. In other words, damages caused by an explosion at a city gas station are radically different from one located on a route outside the city, or on a riverbank.

The legal standards do not establish today the nature of the damages that must be covered by insurance – that is, what kind of damage caused by a hazardous industrial object must be compensated, and what is the amount given the severity of each injury.

All these issues are debated in the Economic Council as a consequence of the fact that in 2018 the Parliament voted a law that expressly regulates the amount of liability insurance for possible damages in case of damage to hazardous industrial object, the amount of which varies from MDL 5 to MDL 100 million depending on the hazard category of hazardous industrial objects.

The business community then addressed the issue within the Platform, noting that the new provisions will particularly ruin small and medium-sized enterprises that will not be able to pay huge compensation because by laying down a fixed insurance amount in the Law, the amount of the insurance premium increases up to 100 times. Thus, a year later, the legislator returned to the old guidelines, provided that a regulatory framework which will offer a solution, shall be drafted in this regard.

Solutions can be found only through an extended dialogue, that is why the Secretariat of the Economic Council and the Ministry of Economy and Infrastructure resorted to international expertise in this regard, engaging in this process the experts of the USAID Financial Sector Transparency Activity in Moldova.

Following discussions with all parties involved in this process, the experts shall draft a set of recommendations to be debated in the Economic Council.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund, and the International Finance Corporation’s Investment Climate Reform Project funded by the Government of Sweden’s International Development Agency.

 

 

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