Consumer protection in the insurance market:
the role of Consap
Congress
New instruments of consumer protection in motor insurance
Warsawa,
September
2009
Warsaw,
September
2009
New instruments
of consumer
protection28,
in 28,
motor
insurance
1
• Consap: a public insurer – overview…………………………………3
• Funds managed and services supplied by Consap…………………10
• Introducing the Clearing House……………………………………26
• New features………………………………………………………….31
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Presentation of Consap: a public insurer
Consap S.p.A. - Concessionaria Servizi Assicurativi
Pubblici is a government-owned company created in 1993
by the privatization of the Italian National Insurance
Institute (a former public entity)
100% of the equities are possessed by the State through
the Ministry of Economy and Finance
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Consap: a public insurer
Consap:
• manages Guarantee and Solidarity Funds and supplies
other relevant public services
• “handles institutional duties which exceed the simple
supply of public services and resemble the typical
commitment of a public function” (Council of State)
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Consap: a public insurer
• Consap is an “in house” company
• therefore, according to the recent Decree Law n. 78 of July
2009, the Public Administrations can assign directly the
management of public Funds and activities to the company: a
public tender is not required
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Consap: a public insurer
• Consap plays the role of “public insurer” according to a
model in which the concept of “mutuality” typical of the
insurance contracts is intended as “sharing risks reciprocally
within the whole community”
•Consap is “subsidiary” to the traditional insurance
market: some of the main Funds managed and services
provieded by Consap are related to the insurance field
• Support to the Insurance Market is particularly remarkable
when dealing with the Guarantee Fund for Victims of Road
Accidents and the Clearing House
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Consap: a public insurer
Consap acts:
• on the basis of laws/regulations and of rules provided by
Ministerial Decrees approving public licenses or agreements
undersigned with Public Administrations (Treasury,
Economic Development, Department of the Youth, etc. )
• with the support/ advise + guidance provided by ad hoc
steering committees
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Consumer protection
As experienced so far, the presence of a public insurer as a body indipendent from the National Association - is a
stimulus/help/challenge for the insurance market to:
• enhance the level of services offered by private competitors
• focus on the core business
• accomplish market strategies more efficiently
• foster rights of the Consumers’ Associations (which
strongly endorse Consap)
In other words, it can only benefit the whole society
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The Consumer protection
Consap keeps a strong relationship with the Consumers’
Associations, which are involved in the administration of the
Funds/services
Representatives of the Consumers’ Associations –
together with appointees of the competent Ministries are members of the steering committees of the Funds
Protection of consumers’ rights has become even more
important after the financial crisis hit the market in 2008
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Funds managed and services supplied by Consap
Consap administrates:
• Guarantee Funds
• Solidarity Funds
• public services
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Guarantee Funds
The Guarantee Funds have been established with the aim
of compensating armless victims of road accidents or other
painful events, who could not otherwise obtain reparation,
in those cases when a compulsory liability insurance cover
is provided by law
• Guarantee Fund for Victims of road Accidents and
Compensation Body
• Guarantee Fund for Victims of hunting accidents
• Guarantee Fund for catastrophic risks
• Guarantee Fund for insurance brokers
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The Guarantee Fund for Victims of road Accidents
The Fund was established, in 1969, when compulsory
MTPL insurance was introduced (Law n. 990)
The Fund is financially supplied by a levy of 2,5% on
MTPL insurance premium rates paid by motorists and
contributed through the insurance undertakings (in 2008:
€ 440,5 million) + administrative fines paid by insurance
companies (in 2008: about € 40 million) + revenues deriving
from assets of companies in liquidation (in 2008: about € 24
million) Total 2008 incomes: approx. € 500 million
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The Guarantee Fund for Victims of road Accident
•The mission of the Fund is to compensate fairly and
promptly victims of road accidents involving:
• untraced and uninsured vehicles or vehicles insured
with insolvent companies (53 undertakings ended in a
winding up procedure until 1998); the phenomenon
stopped thanks to the excellent job of Isvap but.. freedom of
provision of services
• vehicles circulating against the owner’s will (stolen
vehicles), despatched vehicles or vehicles with a number
plate not corresponding to the vehicle registration number
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The Guarantee Fund for Victims of road Accident
Assessment/Compensation is made through the major
Italian insurance companies (designated by Isvap)
Compensation is made within the minimum limit of
liability (at present € 774.685,35; from next December 11th
the minimum amount will be raised to € 2,5 million for body
injuries and € 0,5 million for material loss)
So far the Fund has compensated claims for a total
amount of approximately € 5,5 billion, related to
settlement of 1,2 million of claims
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The Guarantee Fund for Victims of road Accident
Figures
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The Compensation Body
The Compensation Body was established in 2003,
managed by Consap, guarantees compensation of road
accidents occurred abroad within the European Union
(network)
An Information Centre was also established at ISVAP
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The Compensation Body
Cases of intervention:
• no Claims Representative appointed
• insurer fails to present a reasoned reply within three months
of the date when the visiting victim presented his/her claim
for compensation to the insurer of the liable vehicle or its
Claims Representative
• untraced vehicle responsible for the accident
• non identification of the insurer of the vehicle within two
months after the accident
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Guarantee Fund for victims of Hunting accidents
The Fund compensates accidents involving untraced and
uninsured hunters or hunters insured with an insolvent
company (levy of 5% on the insurance policies paid by
hunters)
So far it has compensated damages for € 4,6 million
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Guarantee Fund for catastrophic risks
The Fund was established in 2005 with an initial budget
of € 50 million and assigned to Consap
• The aim is to create a voluntary insurance system
against catastrophic risks
• unfortunately the Law provision has not been enforced
so far, with the consequence that the loss due to the
recent earthquake in the territory of L’Aquila is being
repaired by the State
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Guarantee Fund for insurance brokers
The Fund compensates damages caused by insurance
brokers, in case of fraud or culpable neglicence of an
insurance Broker
The Fund was previously managed by Isvap
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Solidarity Funds
The Solidarity Funds have been established not to leave
uncompensated the victims of mafia related crimes,
extortion, usury and loss of estate property
• Solidarity Fund for victims of extortion and usury
• Solidarity Fund for Victims of Mafia related crimes
• Solidarity Fund for house buyers
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Solidarity Funds
Since the date of establishment until the end of 2008, these
Funds have supplied more than € 250 million
than € 47 million to victims of usury
(loans/mortgages)
• about € 91 million benefits to victims of extortion
• more than € 115 million to victims of mafia related crimes
• more
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Solidarity Fund for house buyers
This Fund provides compensation for those buyers of
houses under construction who have paid an advance sum
to a building company which eventually ends up in
bankruptcy before the house has been completed and
delivered
Consap has received more than 12.000 claims for an
estimated amount of damages of more than € 780 million
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Other Funds / services: Fund for credit to young people
This Fund was created in 2007 (budget of € 30 million) to
ensure young people (18 to 35 years old) an easier access
to bank credit
Young people can get access to bank loans (with a limit of
€ 6.000) guaranteed by the Fund if a consumer fails to
refund a bank (50%)
• the aim is to have a boosting effect on both family
consumes and domestic economic growth
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Fund for credit to young people
• The credit helps students to afford the payment of
university taxes and masters, to purchase a pc or to pay the
rent of an apartment
• within the first year (01/03/2008 – 31/12/2008) the Fund
has released 905 guarantees in favor of 52 banks,
corresponding to loans amounting to € 1,12 million
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Other Funds / services:
the Clearing House within the system of direct claims
settlement
Legal framework: introduced by art. 150 of the Legislative
Decree n. 209 of 2005, and implemented by Presidential
Decree n. 254 of 2006
The innovative procedure states that in case of minor body
injuries (within 9% of permanent disability) and loss of
property consequent to a car accident the damaged party can
address the claim directly to the insurer of the non
responsible vehicle
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the Clearing House within the system of direct claims settlement
A passenger (even reporting serious body injuries) can also
claim on the transporting car’s insurer regardless of the
responsibility of the driver
Claims by transported parties must be settled within the
minimum limit of liability cover
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the Clearing House within the system of direct claims settlement
• The damage is settled by an agreement: a party who
chooses to get compensated with the system of direct claims
settlement is not supported by legal aid but could still start a
litigation if the sum offered by the insurer is not considered
satisfying
• A passenger can claim on the insurer of the transporting car
regardless of the driver’s responsibility but these claims must
be settled within the minimum limit of liability cover
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the Clearing House within the system of direct claims settlement
Pros:
• companies are keen on keeping the injured party satisfied
with the best level of service offered, as the damaged party is
their customer
• Damaged parties are more confidant as they deal with their
insurance company
• Legal costs are not envisaged and handling costs are cut
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the Clearing House within the system of direct claims settlement
In order to ensure a correct and impartial functioning of
the system, Consap has been approved as manager of the
Clearing House by the Ministery of the Economic
Development
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Future perspectives
Forthcoming duties will include the management of:
• a fund for victims of financial frauds
• a fund to ease access to credit for newborns’ parents
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Fund for victims of financial frauds
The fund is established at the Ministery of the Economy
and Finance
It collects revenues deriving from “sleeping accounts” (i.e.
accounts classed as dormant after having been inactive/
untouched for 10 years and on + cheques / unclaimed life
insurance policies). No reaction = cash goes to the State
The task: to restore victims of financial frauds, as well as
to refund the investors of Alitalia in liquidation and to
finance the “social card”, a social initiative for poor
retired people > 65 yrs old
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Fund for victims of financial frauds
Consap will handle the Fund on behalf of the Treasury, in
force of an agreement to be soon undersigned
1st step: Consap will try to reunite customers - who want
to claim funds from and/or re-open a dormant account - with
their forgotten cash
So far, revenues amount at € 1 billion
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Access to credit for newborns’ parents
The fund is established at the Department for the Family
and will be handled by Consap (budget: € 85 million)
The fund will guarantee 50% of the bank loans requested
by newborns’ parents for consumer credit (limit of €
5.000 loans)
In case of insolvency, the Fund will refund the Bank with
the residual amount due, within the limit of the warranty
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www.consap.it
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