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MTPL as a challenge to actuaries

MTPL as a challenge to actuaries. The Czech and the Austrian motor insurance market different countries but similar problems. Development of motor insurance market. CZECH Rep. 1.1.2000 demonopolization minimum sums insured PD 150 000 EUR BI 550 000 EUR

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MTPL as a challenge to actuaries

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  1. MTPL as a challenge to actuaries The Czech and the Austrian motor insurance market different countries but similar problems

  2. Development of motor insurance market CZECH Rep. • 1.1.2000 demonopolizationminimum sums insured PD 150 000 EUR BI 550 000 EUR • 1.1.2000-31.12.2002 partial regulation of premium • 1.1.2003 full deregulationbonus-malus system • 1.5.2004EU&adoption 4th directive PD 550 000 EUR BI 1 060 000 EUR Austria • 1.8.1977introduction of the bonus-/malus system (private cars, taxi and hired cars) • 1.9.1994MTPL-insurance law 1994 (deregulation) • 1.7.1997minimum sum insured 1.09million EUR (15million ATS) • 1.1.2002EURO • 2004 (?)minimum sum insured 3million EUR

  3. Rating factors used in MTPL CZECH Rep. OLD (bound solely to vehicle): • Vehicle type • Engine cubage or vehicle weight NEW: • bound to policy holder: • Bonus/malus class • Age • Region • Person/company • bound to vehicle: • Age of car • others: • Sum insured Austria • Power of engine (kW) • Bonus-/malus-class • Sum insured (1.09 mio EUR to 10 (15) mio EUR) • Additional rating factors • Age of policy holder • User of the car • Additional bonus classes or discounts • Sex (?) • (Region) • (Type of car) • (Age of car) • (Firms) • ...

  4. Bonus/malus-system Czech Rep. (prevalent BM) • 16 classes (starting = 10) • function f „claims-free duration“ = time spent in the system • if claim  f=f-36months Austria • 18 classes • Starting class 09 • Claim-free year  1 step towards bonus • Claim 3 steps toward malus 00 120M 50% 01 <108,118>M 55% 02 <96,107>M 60% ... 09 <12,23>M 95% 10 <0,11>M 100% 11 <-12,-1>M 125% 12 <-24,-13>M 150% ... 14 <-48,-37>M 200% 15 <-60,-49>M 250% 00 50% 10 120% 01 50% 11 120% 02 60% 12 140% 03 60% 13 140% 04 70% 14 170% 05 70% 15 170% 06 80% 16 200% 07 80% 17 200% 08 100% 09 100%

  5. The Austrian bonus/malus-system

  6. The Czech bonus/malus-system not unified heterogenity in: • range of scale • maximum bonus = 50% (unified) • maximum malus in range <0;150%> • number of B/M states <11;17> • size of one step • bonus steps 5% or 10% • malus steps are generally increasing and differ from company to company (below are examples of malus scales): • 25%, 50%, 75%, 100%, 150% • 5%, 10%, 15%, 20%, 25%, 30%, 50%, 100% • 10%, 20%, 30%, 60%, 120% • malus NA

  7. The implications of the deregulation in Austria Source: VVB – Versicherungsverband (Association of Austrian Insurance Companies)

  8. Development of average MTPL premiumin Czech Republic Full deregulation Estimate Demonopolization Source: Czech Insurers Bureau

  9. The implications of the deregulation in Austria hail event Source: VVB – Versicherungsverband (Association of Austrian Insurance Companies)

  10. Expectations for the Czech market • Higher competition • Trend towards bonus • Lower average premiums • Decrease in claims frequency • Higher sums insured • Higher average claims • Increase in claims ratio

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