Motor Insurance Day

Sinaia, May 22nd, 2013

Presented by: Artur BOROWINSKI

 MTPL – GWP vs Paid Claims period 2008 - 2012

.000 Pieces (registered cars)

Mio EUR (GWP, Claims)

Data source: ISC annual reports

Negative trend of the claims paid comparing to the GWP trend for the analyzed period:
- Steady increase of claims paid (gross), affected by the increasing of the claims
frequency and the negative impact of bodily injuries cases;
- At the end of 2011, GWP have decreased with 20% compared with the end of 2010.
For 2012 is forecasted that the premiums will be at the level of 2008;
- Compared with 2008 the paid claims have increased with 25%.

2
Top 10 MTPL players @ 12M 2012

Company 12M 2012 12M 2011 Market share %

% change in RON RON mn RON mn 12M 12M

2012 2011
1. ASTRA Asigurari -10.8 410.3 445.5 19.1 22.6
2. EUROINS Romania 56.1 392.1 234.0 18.1 12.3
3. Carpatica ASIG 45.3 261.4 174.1 12.1 8.8
4. Asirom VIG -25.9 227.6 297.6 10.5 15.1
5. Omniasig VIG -45.6 213.8 381.0 9.9 19.3
6. GROUPAMA Asigurari 119.1 201.0 88.8 9.3 4.5
7. ALLIANZ-TIRIAC 10.01 174.6 153.6 8.09 7.8
8. UNIQA Asigurari 66.6 161.0 93.4 7.4 4.7
9. GENERALI Romania -23.3 66.9 84.5 3.1 4.2
10. CITY Insurance 616.9 47.7 6.4 2.2 0.3
TOTAL TOP 10 6.04 2,156.7 1,968.2 99.8 99.8
TOTAL MTPL MARKET 6.06 2,159.5 1,970.5 100% 100%

Source :
-Insurance Profile 1/2013 (38) Number of MTPL players in CEE, 2012

Source :
- Insurance Profile;
- Fondul de Protectie al Victimelor Strazii;
- NBS (National Bank of Slovakia)
3
CASCO – GWP vs Paid Claims - period 2008 - 2012
Mio EUR (GWP, Claims)

Data source: ISC annual reports

- Huge decrease by ca. 56% (2012 vs 2008) mainly caused by the

decreasing of the Leasing / new cars business;
- Very bad situation on the market: since 2010 the insurance companies
have paid more claims comparing to the written premium!
- Casco market is almost entirely controlled by multinational companies
which have lost a lot of money for this line of business
4
 KPI MTPL business: VIG companies in CEE
2011 – 6M 2012

Claims frequency Avg paid material Avg paid bodily Average

domestic claim in injury domestic Premium
€ claim in € in €
6M 6M 6M 2011
2011 2011 2011
2012 2012 2012 (market)
VIG CZ 3.8% 3.6% 1,055 990 3,688 3,231 90
VIG SK 8.2% 8.3% 622 655 2,499 2,494 129
VIG PL 5.3% 4.9% 977 1,030 2,407 2,781 140
VIG RO 6.9% 7.4% 990 873 7,976 7,768 100

5
Source: Internal data
 KPI CASCO business: VIG companies in CEE
2011 – 6M 2012

Claims frequency Avg paid claim in € Average Premium in €

2011 6M 2012 2011 6M 2012 8M 2012

VIG CZ 11.0% 11.5% 1,191 1,053 238
VIG SK 17.4% 18.4% 1,470 1,520 380
VIG PL 18.9% 17.7% 1,186 1,282 303
VIG RO 53.0% 50.4% 885 904 501

Foreign Exchange Rates used:

1 EUR = 24.319 CZK / Year 2011

1 EUR = 25.173 CZK / 8M 2012
Czech National Bank; online currency
converter http://www.currency.me.uk/convert

1 EUR = 4.1198 PLN / Year 2011

1 EUR = 4.2145 PLN / 8M 2012
National Bank of Poland;

1 EUR = 4.2379 RON / Year 2011

1 EUR = 4.3903 RON / 8M 2012
National Romanian Bank

6
Source: Internal data
 Main problems in MTPL for 2010 – 2012
(Romanian market general)

• Unsustainable MTPL prices caused by crazy competition (underwriting for cash-flow by

some companies)

• Avg. price in total ca. EUR 100-110

• Very low prices for trucks/ transport vehicles; offers for haulage companies even below
than EUR 1.000

• Material claims are paid almost 100% to the repair shops;

• Huge increase of Bodily Injury claims and Green Card claims; they represent ca. 40-
50% of the value of all claims incurred (in numbers represent only ca. 5-6% !!!)

• Relatively high frequency >7%;

• No automatic renewal;

• Relatively high commissions;

• Trends in Europe: higher protection toward the clients (replacement car etc.)

• Great initiative of CSA/ ASF: to force the insurers to have the combined ratio <100%
(Norm 3/2013)
7
 Main problems in CASCO for 2010 – 2012 (market
general)

• The average premium for CASCO is decreasing due to the increase of the Romanian
motor fleet age and in many cases the tariff is based on the sum insured (premium rate);
• Almost 100% payments to the repair shops;
• Increasing of fraud cases;
• No deductibles in many cases;
• Extremely high frequency >50% and as result the highest prices in CEE;
• Big problems with loss ratios for imported cars;
• No real bonus-malus system and no mechanism for prevention in order not to insure the
clients with many claims
• Only few information regarding the loss history for fleets.

8
Back-up slides

9
Calculation of MTPL premium (profitability exercise)

No Item Deaths caused Heavily Total

by road injured
accidents
1 Official police statistics for year 2011 2.018 8.768 10.786
2 No of family members to receive 4 - -
compensations
3 No of claimants 8.072 8.768 16.840
4 Bodily Injury [BI] claim per person (EUR) 10.000 10.000 -
5 Value of compensations (4*3) 80.720.000 87.680.000 168.400.000
6 No of MTPL insured vehicles (estimation) - - 4.500.000
7 Value of BI compensation per policy (5/6) in - - 37.4
EUR
8 Domestic claim per policy (average claim - - 60.0
EUR 1.000; 6% frequency) in EUR
9 Green card claim per policy (average claim - - 20.0
EUR 5.000; 0.4% frequency) in EUR
10 Claim per policy in total (sum[7,8,9]) - - 117.4
11 Avg premium per policy with 30% costs - - 152.6
loading
10
 Conclusions reg. profitability of MTPL business

• A crucial and unpredictable point is the value of Bodily Injury claims, especially moral
damages which are not clearly regulated by the law;
– If we use the amount of EUR 20.000 as average compensation, the correct price is
ca. EUR 202

• Of course the result depends very much on portfolio structure but the figures are
average rough estimations;

• In my opinion, the correct average premium in Romania is in the range of EUR 150-200;

• The self-regulation of the market is unrealistic;

11