Fight against uninsured motorists in the Czech Republic past and present

1. Fight against uninsured motorists in the Czech Republicpast and present Jakub Hradec

2. 1999 MTPL Insurance Act– data exchange as a closed circle • MTPL contractual data collected by CKP • Collected MTPL data forwarded to CZ Central Register of Vehicles • MTPL data compared with registration data • Result = feed back to CKP • 2nd checking at CKP → identification of uninsured registered vehicles • Uninsured vehicles reported by CKP to local registers of vehicles for further procedures

3. 1999 MTPL Insurance Act – sanctions against uninsured driving • Register of vehicles to check the case → if uninsured use of a vehicle proven to: • impose fine between 0 and 20 000 CZK (cca 720 €) and/or • withdraw driving license up to 1 year • Between 2000 - 2003 2 reforms of state administrative bodies in the Czech Republic → deterioration → scope of uninsured driving unchanged • CKP yearly reported ca 300 000 uninsured vehicles • Ca 5 000 uninsured claims reported yearly to CKP • 1.7 % of all MTPL claims • Constantly increasing financial volume

4. 1999 MTPL Insurance Act – uninsured claims´ recoveries • Right for full recovery of a paid uninsured claim against: • Liable person (driver or operator) • As of 2004 owner and operator of an uninsured vehicle debtors in solidum even if not directly liable for the claim • Average CKPrecovery over 30 % • Selling of CKP receivables in 2009 for 30 % • 5000 cases yearly = low effect to uninsured driving reduction

5. 2008 Amendmentto 1999 MTPL Insurance Act 1 • 2006 survey in Europe – Finnish and Swedish models of fighting uninsured driving identified to be • highly effective (< 1 % of uninsured vehicles) • reasonably applicable in the Czech Republic • 2007 long lasting discussions with: • Government (clerks against double sanctioning!) • Politicians (in favour to increase the law enforcement) • 2008 June approved by the Parliament • 2009 January 1st = date of effect

6. 2008 Amendmentto 1999 MTPL Insurance Act 2 • Contribution of an operator and owner (debtors in solidum) of an uninsured registered vehicle to the CKP´s Guarantee Fund • 2 parts/elements of the contribution • Daily rate per category of a vehicle for each day of uninsurance • Cost of claiming as well as of enforcement • Daily rates per categories of vehicles: • attached to the MTPL Insurance Act • highly above the highest commercial MTPL premium

7. 2008 Amendment to 1999 MTPL Insurance Act – daily rates, costs • Motorcycle to 350 cm3 20 CZK ~ 0,71 € • Motorcycle above 350 cm3 30 CZK ~ 1,07 € • Personal car to 1850 cm3 50 CZK ~ 1,78 € • Personal car above 1850 cm3 70 CZK ~ 2,50 € • Bus 160 CZK~ 5,71 € • Lorry up to 12 t 130 CZK~ 4,64 € • Trailer or lorry above 12 t 300 CZK~ 10,71 € Costs calculated by CKP: • Cost of 1st invoice 150 CZK~ 5,35 € • Cost of reminder 50 CZK~ 1,78 € • Cost of debt collection 8 % of the debt

8. Preparation 2007-2008 • 2007 • CKP visit to FIN VAKES and to S TFFMANY THANKS! • Legislation and business schemes development • 2008 • SW development, detailed procedures development • Intensive (massive) PR campaign to invite or inform people • to deregister not operated vehicles (big portfolio in CZ!) or to take out MTPL insurance • increased (doubled) state fines • the new contribution to the CKP´s Guarantee Fund • consequences of uninsured claims ( = full recovery) • Slogans • Uninsured driving is dangerous! • The most expensive MTPL insurance is the one you do not have!

9. Introduction into operation in 2009 • Until mid February insurance and registration data matching • Invoices distribution: • Started before end of February • Until end October 95 000 invoicesdistributed • 70 % delivered • 30 % of delivered quickly paid • Until end October collected 44 millions CZK(ca 1,57 millions €) • By end of 2009 expected 50 millions CZK at least (ca 1,78 millions €)

10. First results of PR campaign and of invoicing • Vehicles at 30th September 2008/2009 • Registered + 0,7 % • Deregistered + 172 % (10/2008 to 10/2009 volume equals 2,7 years volume before campaign) • Insured + 5 % (by 4,3 % higher growth than the growth of registered vehicles) • Uninsured – 30 % (1st significant drop since 2000) • Reported uninsured claims 01/2009 – 09/2009 • by 20 % less cases to previous years • ca 15 % reduction in payments or RBNS reserves (PD only) so far

11. Development of vehicles 2006 – 2009 (1) • Increase of registered vehicles by 0.7% between 30.9.2008 - 2009 • Deregistration of not used vehicles, decline in new registrations • Despite this Increase of insured vehicles by 5% in the same time •  reduction of uninsured vehicles

12. Development of vehicles 2006 – 2009 (2) • Most of never insured vehicles rather not used any more • Very old passenger cars and small motorcycles Significant difference between 2 methods of estimates of uninsured vehicles(both with decreasing trend in 2009)

13. Positive impact on number of uninsured claims (1) • Drop of uninsured claims by at min. 20%

14. Positive impact on number of uninsured claims (2) • More stable results achieved after larger time for reporting the claims

15. Expectations • 2010, 2011 • Contributions of insurers to GF 50 % less than in 2009 • 2012 • Contributions of insurers to GF 80 % less than in 2009 • Uninsured claims 2010 – 2012 • Portfolio dropping • Bodily injuries only slightly reduced in financial volume→ % of recovery will be dropping • Annual cash flow needs of Guarantee Fund as of 2012/2013 covered by income from • recoveries of claimsfrom uninsured and • daily charges from uninsured persons