Motor Insurance Day

Sinaia, May 22nd, 2013

Presented by: Artur BOROWINSKI

MTPL – GWP vs Paid Claims period 2008 - 2012

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Data source: ISC annual reports

Negative trend of the claims paid comparing to the GWP trend for the analyzed period:- Steady increase of claims paid (gross), affected by the increasing of the claims

frequency and the negative impact of bodily injuries cases;- At the end of 2011, GWP have decreased with 20% compared with the end of 2010.

For 2012 is forecasted that the premiums will be at the level of 2008;- Compared with 2008 the paid claims have increased with 25%.

Mio

EU

R (G

WP,

Cla

ims)

.000

Pie

ces

(reg

iste

red

cars

)

Top 10 MTPL players @ 12M 2012

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Number of MTPL players in CEE, 2012

Source : - Insurance Profile; - Fondul de Protectie al Victimelor Strazii;- NBS (National Bank of Slovakia)

Company 12M 2012 12M 2011 Market share %

% change in RON RON mn RON mn 12M

2012

12M

20111. ASTRA Asigurari -10.8 410.3 445.5 19.1 22.62. EUROINS Romania 56.1 392.1 234.0 18.1 12.33. Carpatica ASIG 45.3 261.4 174.1 12.1 8.84. Asirom VIG -25.9 227.6 297.6 10.5 15.1

5. Omniasig VIG -45.6 213.8 381.0 9.9 19.3

6. GROUPAMA Asigurari 119.1 201.0 88.8 9.3 4.5

7. ALLIANZ-TIRIAC 10.01 174.6 153.6 8.09 7.88. UNIQA Asigurari 66.6 161.0 93.4 7.4 4.79. GENERALI Romania -23.3 66.9 84.5 3.1 4.210. CITY Insurance 616.9 47.7 6.4 2.2 0.3TOTAL TOP 10 6.04 2,156.7 1,968.2 99.8 99.8TOTAL MTPL MARKET 6.06 2,159.5 1,970.5 100% 100%

Source : -Insurance Profile 1/2013 (38)

CASCO – GWP vs Paid Claims - period 2008 - 2012

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Data source: ISC annual reports

Mio

EU

R (G

WP,

Cla

ims)

- Huge decrease by ca. 56% (2012 vs 2008) mainly caused by the decreasing of the Leasing / new cars business;

- Very bad situation on the market: since 2010 the insurance companies have paid more claims comparing to the written premium!

- Casco market is almost entirely controlled by multinational companies which have lost a lot of money for this line of business

KPI MTPL business: VIG companies in CEE 2011 – 6M 2012

5Source: Internal data

Claims frequency Avg paid material domestic claim in €

Avg paid bodily injury domestic claim in €

Average Premium in €

20116M

20122011

6M 2012

20116M

20122011

(market)

VIG CZ 3.8% 3.6% 1,055 990 3,688 3,231 90

VIG SK 8.2% 8.3% 622 655 2,499 2,494 129

VIG PL 5.3% 4.9% 977 1,030 2,407 2,781 140

VIG RO 6.9% 7.4% 990 873 7,976 7,768 100

KPI CASCO business: VIG companies in CEE 2011 – 6M 2012

6Source: Internal data

Claims frequency Avg paid claim in € Average Premium in €

2011 6M 2012 2011 6M 2012 8M 2012

VIG CZ 11.0% 11.5% 1,191 1,053 238

VIG SK 17.4% 18.4% 1,470 1,520 380

VIG PL 18.9% 17.7% 1,186 1,282 303

VIG RO 53.0% 50.4% 885 904 501

Foreign Exchange Rates used:

1 EUR = 24.319 CZK / Year 20111 EUR = 25.173 CZK / 8M 2012Czech National Bank; online currency converter http://www.currency.me.uk/convert

1 EUR = 4.1198 PLN / Year 20111 EUR = 4.2145 PLN / 8M 2012National Bank of Poland;

1 EUR = 4.2379 RON / Year 20111 EUR = 4.3903 RON / 8M 2012National Romanian Bank

Main problems in MTPL for 2010 – 2012(Romanian market general)

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Main problems in CASCO for 2010 – 2012 (market general)

• The average premium for CASCO is decreasing due to the increase of the Romanian motor fleet age and in many cases the tariff is based on the sum insured (premium rate);

• Almost 100% payments to the repair shops;   

• Increasing of fraud cases;

• No deductibles in many cases;

• Extremely high frequency >50% and as result the highest prices in CEE;

• Big problems with loss ratios for imported cars;

• No real bonus-malus system and no mechanism for prevention in order not to insure the clients with many claims

• Only few information regarding the loss history for fleets.

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Back-up slides

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Calculation of MTPL premium (profitability exercise)

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No Item Deaths caused by road accidents

Heavily injured

Total

1 Official police statistics for year 2011 2.018 8.768 10.786

2 No of family members to receive compensations

4 - -

3 No of claimants 8.072 8.768 16.840

4 Bodily Injury [BI] claim per person (EUR) 10.000 10.000 -

5 Value of compensations (4*3) 80.720.000 87.680.000 168.400.000

6 No of MTPL insured vehicles (estimation) - - 4.500.000

7 Value of BI compensation per policy (5/6) in EUR

- - 37.4

8 Domestic claim per policy (average claim EUR 1.000; 6% frequency) in EUR

- - 60.0

9 Green card claim per policy (average claim EUR 5.000; 0.4% frequency) in EUR

- - 20.0

10 Claim per policy in total (sum[7,8,9]) - - 117.4

11 Avg premium per policy with 30% costs loading

- - 152.6

Conclusions reg. profitability of MTPL business

• A crucial and unpredictable point is the value of Bodily Injury claims, especially moral damages which are not clearly regulated by the law;

– If we use the amount of EUR 20.000 as average compensation, the correct price is ca. EUR 202

• Of course the result depends very much on portfolio structure but the figures are average rough estimations;   

• In my opinion, the correct average premium in Romania is in the range of EUR 150-200;

• The self-regulation of the market is unrealistic;

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