Cross-border cooperation in motor insurance claims

1. Cross-border cooperation in motor insurance claims InterEurope AG European Law Service Head Office Hansaallee 249 40549 Düsseldorf Germany Tel. +49 211 586 584 18 Fax. +49 211 586 584 34 e-mail: headoffice@intereuropeag.com IIF 2014, Istanbul, April 6-7th. The roadtowardsprofitability Cees Werff InterEurope AG European Law Service www.intereuropeag.com

2. www.intereuropeag.com AGENDA Introductiontocross-bordermotorclaims Data protection & privacy regulation in EU Fraud Cross-bordercooperation in motorclaimsmanagement

3. www.intereuropeag.com Introduction * Implementation of the system of the International Certificate of Motor Insurance (‘Green Card System’) on 01.01.1953 * Council of Bureaux (CoB) is the organisation coordinating the different National Insurance Bureaux (NIB) participating in the Green Card system. * The NIB represents around 2000 motor insurers in 47 countries in Europe, North Africa and the Middle East. • CoB operates under the United Nations • Number of cross-border traffic accidents reported in 2012: 355.759 • General trend: declining. Reasons: economical crisis, road-safety measures, road-traffic information, safety measures car manufacturers, in car technology (mainly technology innovations) • Movers and shakers in cross-border traffic accidents

4. Relationship between TPL insurer and foreign Correspondent and his Correspondent/Representative must be considered as a legally regulated Outsourcing situation with the respective rules of Compliance and Governance. The Correspondent / Representative is a full range defender of the interests of the mandating foreign MTPL Insurer not just a loss adjuster. Requirements to integrate targets, structures and procedures between the mandating MTPL insurer and the foreign service provider. International Complexity require service providers‘ total focus on international claims: international claims must be core business free of conflicts of interest. www.intereuropeag.com Principles in international claims

5. www.intereuropeag.com Claims handling schemes: traditional system vs. direct settlement of claims Withoutdirectcompensationsystems Directsettlement on basisofconventions Mandatorydirectcompensationsystems on basisoflaw

6. www.intereuropeag.com Introduction Accidents which occurred in the country involving land vehicles registered abroad: • Top 5 countries (2012): • 1. Germany (54.623) • 2. France (53.914) • 3. Italy (41.188) • 4. Austria (29.055) • 5. UK (24.875) • Top 5 countries CEE • 1. Poland (12.919) • 2. Romania (10.173) • 3. Hungary (7.280) • 4. Czech Republic (5.566) • 5. HR (5.344)

7. www.intereuropeag.com Introduction • Countries of registration of the vehicle involved in the accident: • Top 5 countries (2012): • 1. Germany: F, CH, NL, A, PL, Ro • 2. France: B, CH, E, UK, I, P • 3. Italy: CH, G, F, Ro • 4. Austria: D, H, I, CH • 5. UK: D, F • Top 5 countries CEE • 1. Poland: CZ, G, F, UK, I, NL • 2. Romania: G, F, UK, I, H • 3. Hungary: A, G, UK, I • 4. Czech Republic: A, G, UK, I, PL, SK • 5. HR (5.344); BIH, I, G • Turkey: G, UK, F, I, Ro

8. Migration in Europe EU 25 Source: Berlin Institut für Bevölkerung und Entwicklung, Die demografische Zukunft von Europa (2008) 2.074 47.000 EST 5.989 S 1.695 IRL LT 48.038 GB 6.777 NL 4.865 B 5.859 51.151 D PL 38.367 20.785 CH RO 10.523 I 11.424 18.015 E 74.198 BG 2.312 P 16.866 108.548

9. www.intereuropeag.com AGENDA Data protection & privacy regulation in EU Introduction to cross-border motor claims Fraud Cross-bordercooperation in motorclaimsmanagement

10. www.intereuropeag.com Data protection & privacyregulation in the EU • EDPS: European Data Protection Supervisor • Started on 01.01.2004 • Main tasks: Control, Advise & Cooperation • Each member state have an DPO (Data Protection Officer) • Advise after control: health status, employment, security research, etc. • Complaint procedure for EU citizens: breach of confidentiality, access to information, right of correction, erasure of information, unnecessary saving of confidentiality information • Recently special advise on: TFTP-SWIFT, e-privacy guideline for electronic communication and public access to documents • Also advise on Court of Justice: ‘Bavarian Lager case’: connection between transparency and data protection • Cooperation with Eurodac: sharing responsibility regarding control between local data-protection authorities

11. www.intereuropeag.com AGENDA Fraud Introduction to cross-border motor claims Data protection & privacy regulation in EU Cross-bordercooperation in motorclaimsmanagement

12. www.intereuropeag.com FRAUD • Common fraud techniques • Underwriting side (total-loss) • Claims side • Specialist fraudsters (groups) • Mobile numbers, witnesses, addresses, etc. • Vendors (garage’s) • Digital pictures (photo shopping) • Majority are coincidence fraud cases

13. www.intereuropeag.com AGENDA Cross-bordercooperation in motorclaimsmanagement Introduction to cross-border motor claims Data protection & privacy regulation in EU Fraud

14. www.intereuropeag.com Cross-bordercooperation in motorclaimsmanagement Who is entiteled to handle cross-border MTPL claims? • MIB can give delegated authority to external service providers • Insurers are member of the MIB and are allowed to handle claims • MIB can handle claims themselves as well, or can delegate this • In general insurers can appoint correspondent/representative themselves, but some exceptions apply What are selection criteria in choosing a cooperation partner? • Quality (people: claims handling vs. claims processing) • Main countries • Finance management • Data protection & privacy regulation • Internal audit structure • Vendor management

15. www.intereuropeag.com Cross-bordercooperation in motorclaimsmanagement What are selection criteria in choosing a cooperation partner? • Quality (people: claims handling vs. claims processing) • Communication • Main countries • Finance management • Solvency II requirements • Data protection & privacy regulation • Internal audit structure • Vendor management • Client relationship structure • Innovation (e.g. Telematics, electronic accident report via smart app)

16. www.intereuropeag.com Cross-bordercooperation in motorclaimsmanagement Vendor management? • Many parties could be involved in the claims process: • Claims service provider, technical experts, accident investigators, medical experts, external lawyers (criminal), body repairs shops, special experts, etc. • SLA • Auditing • Costs • Payment structure • Quality • Communication

17. www.intereuropeag.com Cross-bordercooperation in motorclaimsmanagement Euro Kasko Claims support • Asssistance network (Atrium) • Road-side assistance • Towing network • Body-repair shop network • Surveyor network • Mobile app Advantage: Early stage pro-active claims handling to reduce time and costs!

18. www.intereuropeag.com Cross-bordercooperation in motorclaimsmanagement Point of view of the insurance company: • Keep indemnity/ compensation reasonable • Avoid sanctions • Accurate reserves • Governance & Compliance • Data Protection • Fraud prevention • Controlling, reporting, auditing • Client retention (marketing function of claims management: service and assistance towards insured)

19. Challenges for insurers • No legal and/orcontractualobligation of thepolicy holder to report an accident • Lowercontroloverclaimscosts but also processingcosts (surveyreports, medicalexperts, legal costs) • Poororinefficientcommunicationwithcorrespondents • Unclear/ unstructuredprocesses of claimshandling • Competitiveadvantage of thecarmanufacturers (i.e. technology & data)

20. Example for higher costs due to delays • Forexample: • Credit Car Hire in the UK • Bentley Continental GTC 6.0 l badlydamaged, estimatedrepaircosts GBP 55,000 • Credit carhirevehicleobtained on theday of theaccident (Bentley Continental Flying Spur 6.0 l) – daily rate: GBP 762.50 + VAT • Claims notification: 3 weeks post accident • Confirmation of insurancecover: 7 weeks post accidents • Repairscompleted: 8 weeks • Total creditcarhire 159 days / GBP 121.237,50

21. Hypothesis “If detailed information about an accident could be obtained earlier, this would dramatically effect the efficiency of the claims handling process and thus reduce costs“

22. How can modern technology help? The use of modern technologiesresults in changing traditional processes, reducingclaimscosts but also administrative and othercosts • Telematics • Online claimsforms • IT-interfaces • Automatic datatransfers • Communicationplatforms • Apps

23. Ideal process Signal Call center 24/7 Key processes Data transfer Contact Telematics box Information (e.g. falsealarm File opening & confirmation of insurancecover Instruction Requestforconfirmation of insurancecover & 1st reserve Confirmation of insurancecover Investigation & legal assesment Data transfer Furtherinformation, legal evaluation, reserve update Insurer File opening Querries InterEurope TPA Expert instruction Claim rejectionorclaimssettlement Information Receipt of expertises Invoicing & fileclosing TP Invoices & supportingdocuments Payments Claim rejection or claim settlement

24. Effects / possible cost reductions • Claims handling process becomes shorter due to faster communication • Swift decision making • Decrease of claims costs and processing costs • Better control in terms of insurer being informed of an accident • Avoiding time gaps between accident occurrence and notification of a claim • Swift access to legal expertise (InterEurope) – more adequate handling • Risk identification and reduction (taylor-made premiums)

25. Challenges & summery • Data protection • Future technicaldevelopments (e.g. e-call, driverlesscars, googleglass) • Costpressure • Legal developments • Automatization • Standardization vs. Industrialization

26. Thank you for your attention! For further questions, please do not hesitate to contact me Cees Werff InterEurope AG European Law Service Cees.werff@intereuropeag.net Head Office Hansaallee 249 40549 Düsseldorf Germany www.intereuropeag.com