Effects of Religa tax

1. ProMotorRemarks on government draft amending act on the provision of publically financed healthcare services press conference30 July 2008

2. Effects of Religa tax • Pursuant to Art. 4.1 of act of 29 June 2007 amending act on the provision of publically financed healthcare services… (Dz. U. Nr 133, poz. 922), insurance companies are obliged to levy 12%of gross premiums collected from compulsory MTPL policies towards NFZ. • Assuming that the GPW for MTPL was 6 032 mio PLN in 2007 and MTPL market growth will reach approx. 10 % in 2008 (10.7% in 1Q2008), due tax would reach approx. 796 mio PLN in 2008. • The tax paid so far has not been allocated to treatment of accident victims as no appropriate executive regulations are in force.

3. Effects of Religa tax • Religa tax rate, being in fact a form of public levy, may not be regulated by means of minister’s ordinance (this does not comply with Art. 217 of the Constitution). • Tax rate does not reflect actual costs of treatment of motor accident victims (lack of proper calculations). • Religa tax is contrary to the feeling of public justice as it is only imposed on vehicle owners and does not distinguish their claims history. • Recovery-based system is more fair as a rule as it corresponds more closely to the actual costs of treatment of accident victims. • Introduction of an effective recovery system requires amendments to the present government proposal.

4. Government draft Key objecties of the draft are as follows: • Proposal to lift the 12% lump payment and introduce a recovery-based system towards „perpetrators” of events, which result in a necessity to provide healthcare services. • Claims for compensation will be addressed to insurance companies if the perpetrator has taken out a compulsory or voluntary civil liability cover.

5. Government draft Art. 14 § 1 Entity which is obliged to finance healthcare services from public funds is entitled to lodge a claim for compensation against the person or insurance company liable for an event, the effectsof which necessitate provision of such healthcare services. Art. 14 §2 Claim referred to in par. 1. shall not be lodgedfor reimbursement of costs of healthcare services provided to the perpetrator of that event referred to in par. 1.

6. GOvernment draft Problems relating to the introduction of the government draft: • Civil code rules of liability • Evidence problems • Asserting claims by legal action • Financial implications

7. Civil liability principles A loss will not give automatic right to compensation as the following will apply: • determination of the perpetrator’s civil liability • circumstances releasing the insured from liability • issue of shared guilt • problem of double or multiple cover

8. Evidence problems • Entity obliged to finance services must substantiate the circumstances, present evidence, and facilitate the insuer to determine the scope of loss • NFZ may claim compensation from insurer before the aggrieved party lodges a claim for personal injury • NFZ is not perpared to hold numerous litigations • Insurance companies do not have appropriate tools allowing them to properly assess the purposefullness of provided services

9. Litigations Long court proceedingswill result in: • major delays in claims settlement • impossible determination of future income (NFZ)

10. Financial implications of the draft • Increased number of claims handling cases will generate extra employmment costs • Increased costs of legal service on either side of dispute due to long court proceedings • NFZ claims against uninsured entities will be ineffective • Insurance companies will be forced to form claims reserves corresponding to the amount of requested claims

11. Our position • Proposed draft comes closer to the feeling of public justice. • Draft will generate less financial burden for insurance market in the initial period.

12. Our position Our proposal Introduction of standardised valuation of healthcare service costs.

13. ProMotor Thank you for your attention.