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The Evolution of the Legislation in Romania as regards the Motor Third Party Liability Insurance

The Evolution of the Legislation in Romania as regards the Motor Third Party Liability Insurance. Viena 14th September 200 6. GARANTA INSURANCE Co. Share Capital: 5,8 mill EUR SHAREHOLDERS The ETHNIKI 93,02 % OTHERS 6,98 %

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The Evolution of the Legislation in Romania as regards the Motor Third Party Liability Insurance

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  1. The Evolution of the Legislation in Romania as regards the Motor Third Party Liability Insurance Viena14th September 2006 GARANTA Insurance Co.

  2. GARANTA INSURANCE Co. Share Capital:5,8 mill EUR SHAREHOLDERS The ETHNIKI 93,02 % OTHERS 6,98 % RANK: 18 out of 36 Insurers Network : 10 branches Social Headquarters: 19-21 Ion Mihalache Bld., Sector 1, Bucharest, Romania Tel: 00 4021 307 99 71 - 78 Fax: 00 4021 307 99 70 E-mail: info@garanta.ro www.garanta.ro GARANTA Insurance Co.

  3. Topics Laws in the insurance field in Romania A few words about the Romanianinsurancemarket How to act as to defend the interests of a foreign citizen who was damaged / injured in a road accident on Romanian territory Conclusions GARANTA Insurance Co.

  4. Romanianinsurancemarket (1) Information about Romania: • Country surface is of 237,500 km2 • Population is of 22 million • There are 198,776 km of road open for public circulation There are 4.2 million vehicles registered (85% with motor TPL insurance) There are 36 insurance companies, out of which 16 issuing motor TPL insurance policies GARANTA Insurance Co.

  5. Romanianinsurancemarket (2) The gross written premiums for general and life insurance as per 2005 are of 1,220.77 million EUR GARANTA Insurance Co.

  6. Romanianinsurancemarket (3) The gross written premiums for motor insurance as per 2005 are of 632 million EUR GARANTA Insurance Co.

  7. Romanianinsurancemarket (4) The average claim for material damages is of 500 EUR in 2005 The average claim for bodily injuries is rather small (representing app. 1% out of total TPL claims)in 2005 GARANTA Insurance Co.

  8. Laws in the insurance field in Romania: Law no.136/1995 as regards the insurance and reinsurance in Romania, with its further modifications and completions (there are numerous modifications, especially in 2005 and 2006) • Law no. 32/2000 as regards the insurance activity and surveillance, with its further modifications and completions (there are also several modifications especially in 2005) GARANTA Insurance Co.

  9. Motor TPL insurance is settled by: Norms issued on the basis of the law as regards TPL insurance, which have been several times modified on a yearly basis and which today are as follows: • a) Ordinance no. 3108 / 2004 issued by the Insurance Supervisory Committee valid since 2005 and up to the moment when Romania adheres to the European Union, • b) Ordinance no. 3116 / 2005 issued by the Insurance Surpervisory Committee, valid since the moment Romania adheres to the European Union. GARANTA Insurance Co.

  10. Motor TPL insurance is obligatory for all classes of vehicles subject to registration as follows: Vehicles and trailers (trailers only starting with 2007) if registered in Romania, must be insured for a 6 or 12 months period • Also the following vehicles* must be insured as above (*which in other countries are exempted): • - vehicles owned by state authorities • - military vehicles • - trams • - troleys • To be mentioned that certain agricultural or site machines, motor-scooters not exceeding 49 km/hour, carriages do not have to be registered. Vehicles and trailers which are not registered in Romania must have either registration numbers which certify the insurance validity or international insurance documents valid in Romania. GARANTA Insurance Co.

  11. Law Applicability Limits The legislation as regards motor TPL insurance is applicable also to the foreign visitors and is applied for liabilities both in case of bodily injuries and material damages. TPL insurance has compensation limits which are not minimal for the moment, but are maximum limits falling under the Insurer’s liability. After the adhesion to the European Union, the law allows that the limits of compensation be minimal. GARANTA Insurance Co.

  12. COMPENSATION LIMITS FOR MOTOR TPL CLAIMS AS PER 2006 The maximum limits of compensation which can be granted by TPL insurers for damages/injuries caused due to one and the same accident, no matter the number of persons responsible for the accident, applicable to the obligatory TPL insurance policies whose validity starts in 2005 and for those accidents occurred in the calendar year 2006 are as follows: a) starting from 30 EUR up to maximum 100,000 EUR, no matter the number of damaged parties, in case of damage or destruction of property, for direct and indirect material losses of over 30 EUR b) up to 55,000 EUR for each person, but not more than 270,000 EUR, no matter the number of injured parties, in case of injuries or death, including for losses without patrimonial character GARANTA Insurance Co.

  13. COMPENSATION LIMITS FOR MOTOR TPL CLAIMS YEAR: after the adhesion (1) The maximum limits of compensation established by the TPL Insurers must be: a) at least 100,000 EUR, in RON equivalent as at the date of accident, no matter the number of damaged parties, in case of damage or destruction of property, for direct and indirect material damages; b) at least 350,000 EUR, in RON equivalent as at the date of accident, for each person, in case of bodily injuries or death, including for losses without patrimonial character. The insurance contracts will be concluded with a reached deductible - minimum limit of compensation - of 50 EUR in RON equivalent as at the date of accident. GARANTA Insurance Co.

  14. In case of accidents occurred outside Romanian territory, but within the territorial cover limits, the insurer grants compensations according to: COMPENSATION LIMITS FOR MOTOR TPL CLAIMS YEAR: after the adhesion (2) a) the legislation in force in the state where the accident occured and according to the highest level of compensation as between the respective country and Romania; b) the Romanian legislation in force, if the damaged parties are citizens of the EU states, during a trip connecting directly two territories where the institution treaty as of the EEC is valid, if there is no national Bureau on the territory crossed where the accident occurred. GARANTA Insurance Co.

  15. Compensation Payment (1) In case of bodily injuries or death, the compensations are granted both for the persons outside the vehicle which caused the accident, as well as for the persons who were in that vehicle, except for the driver of the respective vehicle. For the damage or destruction of property, compensations are granted for the goods outside the vehicle causing the accident and for the goods inside that vehicle, only if they were not transported on the basis of a contractual relation with the owner or user of the respective vehicle, as well as if they did not belong to the owner, user or driver of the vehicle causing the accident. GARANTA Insurance Co.

  16. Compensation Payment (2) Compensations are granted also when the persons submitting a claim are the spouse of or the persons supported by the owner or driver of the insured vehicle, liable for the accident. IN 2006 adatabases was elaborated with all MOTOR TPL INSURED. At “CEDAM” information center, one can search on the site “www.cedam.csa-isc.ro/english/index.php” for the identification of the Insurer of one vehicle (if the registration number of the vehicle is known). There are guarantee funds and protection funds for street victims (which, as in many countries, do not validate in case of CASCO recoveries). GARANTA Insurance Co.

  17. Court Actions: The damaged party or the authorised party may act: • against the guilty party; • against the TPL Insurer in Romania, but with the compulsory subpoena of the guilty party. If the guilty party has an external insurance (green card) and the accident takes place in Romania, the action in court can be initiated against the Motor Insurers Bureau in Romania or against its correspondent. A claim falls under prescription after 3 years since the date of the accident. GARANTA Insurance Co.

  18. Cases in which the Insurer has the right to refuse the compensation payment Several aspects can fall under the above category: - the lack of responsibility due to the policy validity period (there is no grace period) - there is a series of exclusions: depreciation of goods after the damage, damages due to events occured while the vehicle plays the role of machinery or work installation, while loading or unloading procedures - if the agreement of the guilty person does not exist (but this stipulation is no longer valid in case of a court action) - for claims related to lack of usage (but this stipulation is no longer valid in case of a court action) GARANTA Insurance Co.

  19. How to handle a claim in Romania (1) Until Romania adheres to the European Union, recovery actions as of compensations from Insurers in case of an accident occurred in Romania are as follows: 1. In case of a CASCO recovery: • one verifies the Insurer at CEDAM Information Center • one contacts directly the Insurer in Romania or the Motor Insurers Bureau in Romania (BAAR), if the guilty party has a green card insurance issued by an external Insurer • the documents proving the right for recovery are submitted • all documents regarding the file are submitted (see List 1 attached), only after the Insurer replies in order not to lose the originals GARANTA Insurance Co.

  20. How to handle a claim in Romania (2) For CASCO recoveries, the law obliges the TPL Insurer to accept loss evaluations which can be elaborated by either the CASCO Insurer or by an independent expert The equivalent of the survey is not borne by the TPL Insurer according to TPL norms, but it can be recovered from the guilty party. GARANTA Insurance Co.

  21. How to handle a claim in Romania (3) The CASCO insurercan subrogate in the rights of the damaged party only to the extent of what it actually paid on CASCO, any possible deductible must be recovered by the insured or authorised person directly. Whatever the CASCO insurer cannot recover from the TPL insurer, as for instance the depreciation of the good after the damage which was enlisted previously as an exclusion, cannot be recovered either from the guilty party. GARANTA Insurance Co.

  22. How to handle a claim in Romania (4) 2. In case of a direct action of the damaged party (or an authorised party): • one verifies the Insurer at CEDAM Information Center • one contacts directly the Insurer in Romania or the Motor Insurers Bureau in Romania (BAAR), if the guilty party has a green card insurance issued by an external Insurer • the representation mandate is submitted in copy • all documents regarding the file are submitted (see List 2 attached), only after the Insurer replied, in order not to lose the originals GARANTA Insurance Co.

  23. How to handle a claim in Romania (5) If it is not the case of a CASCO recovery, only the loss evaluation elaborated by the TPL Insurer in Romania is accepted and no external survey is accepted; in case the evaluation of the TPL Insurer is missing, the law says that the due compensation is paid according to the information recorded in the documents issued by the competent authorities. GARANTA Insurance Co.

  24. COMMON ASPECTS IN CLAIMS SETTLEMENT (1) In case of accidents with victims, the procedure is much more complicated, it lasts quite long, though the law allows settlements even without the resolution of the court in certain conditions. • At present, the police officer establishes in all cases the guilt and issues a police report, but the “Constat Amiable” is expected to be introduced in 2007, as it is at the moment in many European countries. • An exception would be the cases of bodily injuries, where the guilt is established after a penal investigation. • The damaged party can at present challenge within 15 days the police report. GARANTA Insurance Co.

  25. COMMON ASPECTS IN CLAIMS SETTLEMENT (2) Another aspect is the fact that at present the law requires that an amiable payment is made by the TPL Insurer only if the TPL Insured and the damaged party’s agreement also exist, otherwise the case must go to court. Another agreement which leads to delayed payments is that imposed by law through which the damaged party must declare that he was fully compensated by the Insurer. Though the initial intention was to protect the Insured who must have the chance to check the amount due, such an agreement blocks almost all cases of CASCO recoveries, where surely this agreement is not obtained. GARANTA Insurance Co.

  26. COMMON ASPECTS IN CLAIMS SETTLEMENT (3) As regards the compensations for bodily injuries, the covers for amiable payments are very low (only expenses provable with documents) and for damages without patrimonial character, though for app. 2 years amiable and not through court payments have been allowed, at present there is no evaluation system so that the Insurers do not grant compensations amiably claiming it is impossible to establish the damage. Multiple problems are also on the technical evaluation side, for instance as regards damaged vehicles, there are norms also as regards the calculation of the wear and the carcasses (for amiable payments). GARANTA Insurance Co.

  27. List 1LIST OF DOCUMENTS NECESSARY FOR A CASCO INSURER RECOVERY (1) • - the motor TPL or green card insurance policy of the guilty party - a copy of the CASCO insurance policy valid at the date of accident of the person in whose rights the CASCO Insurer subrogates - the loss evaluation elaborated by the CASCO Insurer (adopted technological solutions, the evaluation and establishment of the compensations) and any possible photos of the damaged good - the declaration of the damaged party in original, according to which by receiving the compensation afferent to the respective accident, he has no further claims whatsoever from the TPL Insurer (guilty person) GARANTA Insurance Co.

  28. LIST OF DOCUMENTS NECESSARY FOR A CASCO INSURER RECOVERY (2) • - a copy of the document proving the payment made by the CASCO Insurer for the damages suffered by the damaged party - the compensation claim together with the afferent proving documents, in original • a copy of the act of property of the good for which compensations are requested GARANTA Insurance Co.

  29. LIST OF DOCUMENTS NECESSARY FOR A CASCO INSURER RECOVERY (3) - the documents in original issued by the competent authorities in Romania which state the cause, the guilty party, the damaged party and the damages afferent to the notified event - the compensation claim together with the afferent proving documents, in original - the agreement of the guilty party to pay amiably - the authorisation in original for the person having signed on behalf of the damaged party all documents afferent to the claim file, if the case should be. GARANTA Insurance Co.

  30. List 2LIST OF DOCUMENTS NECESSARY FOR RECOVERIES BY MANDATE (1) - the TPL or green card insurance policy of the guilty party - the representation mandate (including for legal assistance) - the loss evaluation elaborated by the TPL Insurer in Romania (or by the Bureau’s correspondent for a green card case) - the declaration of the damaged party in original, according to which by receiving the compensation afferent to the respective accident, he has no further claims whatsoever from the TPL Insurer (guilty person) GARANTA Insurance Co.

  31. LIST OF DOCUMENTS NECESSARY FOR RECOVERIES BY MANDATE (2) - a copy of the document proving the payment for the repairs effected - the compensation claims together with the afferent proving documents in original - a copy of the property document of the good for which compensations are claimed - the documents in original issued by the competent authorities in Romania which state the cause, the guilty party, the damaged party and the damages afferent to the notified event GARANTA Insurance Co.

  32. LIST OF DOCUMENTS NECESSARY FOR RECOVERIES BY MANDATE (3) - the agreement of the guilty party to pay amiably - the authorisation in original for the person having signed on behalf of the damaged party all documents afferent to the claim file, if the case should be. GARANTA Insurance Co.

  33. Conclusions Certainly, 10 years ago, our reception of the need to protect damaged parties was almost inexistant, but I believe that also at present there are a lot of stepts to be taken and even though there are always good intentions, new factors appear which will delay the evolution of the system in Romania. Additional obstacles in the system evolution will be:- the increase of the loss ratio as up to the level of that in the EU. In Romania profit was recorded out of TPL business for a long time at a loss ratio of below 70%, which endured up to the time when the TPL premiums were liberalized. - the occurence of the first financial problems (bankrupcies), experienced by many European countries in the past, after the TPL insurance was liberalized. - the increase of the standard of living, the prices for utilities and services, but also the level of education. GARANTA Insurance Co.

  34. THANK YOU! PLEASE DO NOT HESITATE TO CONTACT US FOR ANY CLAIM CASE OCCURED IN ROMANIA. GARANTA Insurance Co.

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