Russian Association of Motor Insurers
MTPL market in Russia :
Problems and trends
March 3rd - 4th, 2013
Istanbul
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MTPL essentials in Russia
Russian Association of Motor Insurers
25.04.2002
“Mandatory law on MTPL insurance” was adopted by the Federal
Parliament
08.08.2002
Set up of the Russian Association of Motor Insurers (RAMI) – 48 insurance
companies
14.10.2002
Registration of the RAMI
On 28.02.2013 there were 109 members in RSA, among them 103 companies
selling MTPL
01.07.2003
Implementing the MTPL system
01.07.2004
RAMI started to pay its first compensations
01.03.2008
Compensation limits for bodily injuries on MTPL policies were removed
(for more than one victim)
01.01.2009
Russia joined Green Card System
01.03.2009
Introduction of the direct procedure on handling claims in case of accidents
- European Protocol (Amicable report)
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MTPL essentials in Russia
Russian Association of Motor Insurers
Limit of indemnities
Bodily injuries: EUR 4 000 for each of the victims
Property: EUR 3 000, for one victim, and EUR 4 000 for more than two victims
Intention of increasing the limits
Insurance tariffs
Set by the Government
Intention of liberalization (min and max)
Insurance claims
Independent Expertise Institute
The claim has to be paid within 30 days
Insurance contract is valid:
1 year with the limited use possibility
Short term contracts (up to 20 days necessary to get to the place of registration or
inspection)
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Russian Association of Motor Insurers
Russian Association of Motor Insurers
Main functions of the RSA:
• Communication between RAMI members, developing and implementation of
professional guidelines for the companies and their enforcement;
•Handling complaints of policy holders and victims;
•Representing the members’ interests in their relations with government authorities;
•Assets compensation during the process of insurance portfolios transfer;
•Guarantee fund for the bankrupt insurers and for accidents caused by uninsured
vehicles;
•Regulating the technical inspection of the vehicles.
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MTPL Statistics
Exchange rate: EUR 1 = RUR 40
Russian Association of Motor Insurers
Insurance premiums and payments
Mln roubles
140,000
121,102
120,000
106,943
92,726
100,000
85,888
80,444
72,409
80,000
63,805
60,000
49,428
54,392
54,169
45,863
57,059
62,060
48,602
39,297
40,000
26,409
25,349
31,694
18,522
20,000
1,192
0
2004
2006
Insurance premiums
2008
2010
2012
Payments
5
MTPL Statistics
Russian Association of Motor Insurers
Number of losses claimed and paid
Тыс.
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2,440
2,358
2,292
2,602
2,4872,554
2,072
1,9791,962
1,884
1,6851,742
1,483
1,415
1,025
891
1,205
1,141
57 95
2003
2004
(July - December)
2005
2006
Number of accidents declared
2007
2008
2009
2010
2011
2012
Number of paid claims
6
Insurance Regulation for bodily injuries
Russian Association of Motor Insurers
In case of death:
- Funeral expenses;
- Compensations for relatives of the victim if certain criteria are met
In case of other bodily injury:
- Pecuniary losses (loss of wages, medical bills, etc)
- Other expenses
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Russian Association of Motor Insurers
The basic principles for bodily injury
compensation
No limits for the level of compensation for bodily injuries;
Bodily injury insurance covers pecuniary losses, medical bills and other expenses if the victim
doesn't have the right to receive them for free;
In case of bodily injury, the refuse of compensation is not allowed (even in case of the victim’s
serious negligence and no fault of the other driver that caused the accident);
 Compensations for pecuniary losses – if the financial situation of the victim is improving, it
will be taken into consideration only the income earned by the victim after the improvement and
not the average monthly income for 12 months prior the injury;
Indexation of the compensations for bodily injuries according to the level of purchasing power
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Compensations paid for bodily injuries
Russian Association of Motor Insurers
Number of paid compensations related to bodily injuries cases
Period
Death
Medical
expenses
Death + Medical
expenses
2010
11 135
9 566
20 701
2011
9 721
11 671
21 392
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Russian Association of Motor Insurers
Compensations paid for bodily injuries
Number of victims
Number of victims,
Number of victims, that
affected as a result of a
required medical
relative’s death in
treatment on bodily injury
accidents
insurance cover
Period
Number of deaths
2010
2 655
7 294
8 679
2011
2 292
6 749
10 489
Number of victims that suffered bodily injuries as a result of accidents has
increased by 13 % in 2011 in comparison to 2010
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Russian Association of Motor Insurers
Judicial practice for bodily injury
compesantions
Judicial practice for several unclear situations related to injuries:
- Compensation for lost earnings
MTPL rules stipulate obligation to provide victims with the conclusions on the
degree of disability as a percentage, but the courts charge lost earnings without this
conclusions made on the basis of days off work, as off work means 100% loss of work
capacity.
Compensations for treatment and medical bills (MTPL regulations stipulate that
these expenses are covered only if the victim is in need of these types of assistance and was
not entitled to benefit from them free of charge, but the courts charge these expenses even
if the victim was able to get them for free).
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Russian Association of Motor Insurers
A new bill to amend the MTPL Law
At present, the State Duma is considering a bill to amend the MTPL Law, that
refers, among others, to the limits and the process of compensations for bodily injuries:
 Increasing the limit of insurance compensation for bodily injuries up to EUR 13
000, including:
 In case of death/lost of the person who assured the income – less than EUR 12
000;
 Funeral expenses, to the persons who made these expenses not less than EUR 1
000
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Russian Association of Motor Insurers
A new bill to amend the MTPL Law
Compensations for additional expenses to be granted whether the victim
had the right to receive them for free or not;
Changing the compensation system for bodily injuries:
To set up the compensations for bodily injuries according to the
compensation chart for the mere fact of injury;
Subsequent additional compensations - depending on the expenses incurred
by the victim within the insured sum.
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Russian Association of Motor Insurers
Evolution of the Green card policies and paid
.
claims abroad from 2009 till present
2,500,000
6,000
5,000
2,000,000
4,000
1,500,000
3,000
1,000,000
2,000
500,000
Number of contracts
Number of accidents
1,000
0
0
2009
2010
2011
2012
Distribution of the policies depending
on coverage
All countries
47%
Belarus,
Ukraine,
Moldova
53%
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1
2
3
5
7
YUGOSLAVIA
Bosnia Herzegovina
IRELAND
LUXEMBOURG
3000
BELORUSSIA
UKRAINE
POLAND
2000
FINLAND
GERMANY
1000
LITHUANIA
ITALY
ESTONIA
FRANCE
LATVIA
UNITED KINGDOM
CHEZH REPUBLIK
MOLDOVA
AUSTRIA
BELGIUM
NETHERLANDS
NORWAY
SWEDEN
ROMANIA
SPAIN
BULGARIA
SLOVAKIA
HUNGARY
SLOVENIA
TURKEY
CRPATIA
GREECE
SWITZERLAND
SERBIA
DANMARK
500
PORTUGAL
1
F.Y.R.O.M.
0
ISRAEL
Russian Association of Motor Insurers
Loss distribution abroad
from 2009 till present
2972
2576
2500
1919
1850
1593
1500
926
588
297313344
192
133143146168173173173
68 76 83 101109
8 15 35 37 39 42 46 49
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Major losses from 2009 till present
Russian Association of Motor Insurers
Losses > EUR 200 000 – 6, of which:
• The biggest loss – Germany, insurance reserve EUR 1,1 million, EUR 206 000 paid
by RSA;
• Loss in Greece (death of a biker) – insurance reserve EUR 763 000;
• Loss in Germany (railway damage) – claim paid EUR 55 000, insurance reserve
EUR 618 000;
• Loss in Germany (death of a passenger), EUR 300 000 insurance reserve
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The disputed issues on Green Card
Russian Association of Motor Insurers
 2009: the sell of Ukrainian MTPL policies in Russia. The problem was solved in
collaboration with Motor Insurance Burro from Ukraine
 Systematical refuse of Ukrainian insurers to pay the financial claims of the Russian
insurance companies. The problem is being solved by the Ukrainian Motor Insurance
Burro. From 270 warranty claims, exposed by RSA to foreign Burros starting with
2009, approximately 90% were addressed to Ukrainian Motor Burro
 Lithuanian Green Card policies sold on the Russian territory. Measures: the
collaboration with legal authorities, with Green Card Lithuanian Burro, sent a
request to the supervisory authority to contact the Lithuanian insurance supervisory
authority.
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Russian Association of Motor Insurers
Compensations paid for those who have
suffered losses
Life and Health:
•Bankruptcy of the insurance company
•Insurer’s license withdrawal
•Unknown author of the accident
•Uninsured vehicle
Property:
• Bankruptcy of the insurance company
• Insurer’s license withdrawal
RSA members contribute to the reserve Fond for compensations 3% of premiums collected
from MTPL insurance.
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Number of companies that have left the
MTPL market
Russian Association of Motor Insurers
25
20
17
15
15
10
9
7
8
7
5
4
3
0
2005
2006
2007
2008
2009
2010
2011
2012
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Evolution of paid compensations
Exchange rate: EUR 1 = RUR 40
Russian Association of Motor Insurers
140000
20,000
18,000
120000
16,000
100000
14,000
12,000
80000
118,286
10,000
77 700
60000
8,000
86 300
4,990
40000
20000
0
84 812
22
0,5
2004
1,622
59
6 522
310
10,734
375
13,680
480
3,400
3 785
4,327
6,000
4,000
2,000
0
2005
2006
2007
2008
2009
2010
2011
2012
Total number of the paid claims
Total volume of the compensations, RUR million
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Handling the insurance fraud
Russian Association of Motor Insurers
Informational collaboration
starting January 1st 2013 unique informational database on MTPL policies has been
introduced.
Collaboration with law enforcement authorities.
Measures against unfair competition:
Practicing unjustified discounts, incentives and gifts when concluding MTPL policies;
Providing inflated commission under the agent agreement.
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Handling the insurance fraud
Russian Association of Motor Insurers
The share of claims, settled without the participation of police officers in 2012
slightly rose and represents 8% (2011 – 7,5%).
There is a need for serious improvement to the application of European Protocol
Unsolved problems:
Insurance fraud related to European Protocol - it is necessary to expand the use of video
recorders and monitoring systems
Typical schemes used in case of an accident are mandatory only for insurers and decisions
made on them are easily challenged in the courts (absence of an juridical mechanism for establishing
shared culpability),
Lack of legal culture of the drivers on the accidents registration procedure without police
officers.
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Russian Association of Motor Insurers
Proposed measures for stabilization on
the market
New amendments to the insurance legislation concerning the bankruptcy of the insurers
(the interim administration, prevention measures for bankruptcy)
Set up the managers liability of the insurance companies for their obligations
Increase the demands for the financial stability of the insurers, introduction of prudential
supervision
The introduction of a warning system related to the insurer financial situation based on:
- numbers of complaints to the number of insurance contracts,
- share of unsolved claims, etc.
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Russian Association of Motor Insurers
THANK YOU FOR YOUR ATTENTION!
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