1 Regulation of insurance rates for compulsory insurance classesMoscow, 29 July, 2014
2 Russian Association of Motor InsurersRussian Association of Motor Insurers (RAMI): Was established in accordance with the Federal Law “On Compulsory Third-Party Liability Insurance for Motor Vehicle Owners” Professional association of insurers; Non-profit entity; Purpose – cooperation of CMTPL insurers. RAMI: Lays down the professional rules for RAMI members; Represents interests related to compulsory motor TPL insurance provided by RAMI members in state authorities; Implements compensation payment if: insurer’s license is revoked; offender’s liability isn’t insured; Organizes the system of motor vehicle technical inspection.
3 Compulsory Motor Third-Party Liability Insurance (CMTRL)Federal Law “On Compulsory Motor Third-Party Liability Insurance” Government Decree No. 739 on approval of insurance rates for compulsory motor third-party liability insurance
4 Insurance Rate = Basic insurance rate*КТ*КBМ*КVS*КО*КМ*КS*КNRate principles of CMTPL Insurance Rate = Basic insurance rate*КТ*КBМ*КVS*КО*КМ*КS*КN KT – Ratio of Insurance Rates Depending on the Territory of Predominant Use of the Vehicle КBМ – Bonus–malus Ratio KVS – Ratio of Insurance Rates Depending on the Age and Driving Experience of the Driver Authorised to Drive the Vehicle КО – Information about the Number of Persons Authorised to Drive the Vehicle КМ – Ratio of Insurance Rates Depending on the Engine Power of the Light Motor Vehicle and Taxi КS – Ratio of Insurance Rates Depending on the Period of Use of the Vehicle КN = 1.5, applied to reflect gross violation
5 CMTPL Problems Problem: 31 regions are unprofitable in CMTPLProblems to prolong / sign contracts of CMTPL -> more complaints Conclusion: KT in some regions does not reflect real situation !!! To solve temporarily the problem of complaints growing Sales of CMTPL contracts in unprofitable regions to be increased. Presidium of RAMI approved Temporary procedure for providing extra insurance policies for RAMI members in unprofitable regions. Extra insurance policy forms: + 50% for the 2nd & the 3rd groups of risk; % for the 4th group of risk the 5th group of risk and stop-list – no extra policy form Solutions based on system approach: Basic insurance rates and ratios changes (especially КТ) - to increase rates by 11,79% Implementation of the ‘tarriffs corridor’
6 Calculation of basic insurance rateMotor Vehicle Types RAMI offers Government Decree No. 739 Light motor vehicles – individuals and private entrepreneurs 2113 1980 Light motor vehicles – legal entities 1128 2375 Light motor vehicle trailers 279 395 Light motor vehicles used as taxis 6803 2965 Trucks with a permissible gross weight of 16 tonnes or less 1858 2025 Trucks with a permissible gross weight over 16 tonnes 2513 3240 Truck trailers 1310 810 Buses with the number of passenger seats up to 20 2041 1620 Buses with the number of passenger seats over 20 seats 2775 Buses used as taxis 6757 Trolleybuses 4578 Trams 1642 1010 Tractors, self-propelled road-building and other machines 1249 1215 Tractor trailers 259 305 Motor cycles and scooters 447
7 Assessment of the Ratios of Insurance Rates (КVS, КО, КМ, КS)Drivers age Driving experience KVS Assessment Current KVS Up to 22 years of age up to 3 years 2.08 1.80 Over 22 years of age 1.81 1.70 over 3 years 1.86 1.60 1.00 Ratio depending on availability of data on the number of persons allowed to drive (KO) Period of use of the Motor Vehicle Assessment КS Current КS 3 months 0.65 0.50 4 months 0.70 0.60 5 months 0.75 6 months 0.80 7 months 0.85 8 months 0.90 9 months 0.95 10 months or more 1.00 Assessment КМ Current КМ up to 50 0.54 0.60 over 50 to 70 1.00 over 70 to 100 1.10 over 100 to 120 1.06 1.20 over 120 to 150 1.11 1.40 over 150 1.16 1.60
8 Assessment of the KT ratiosTerritories KT Assessment KT Khasavyurt (Dagestan) 1,00 0,69 Malgobek (Ingushetia) 1,20 0,85 Prokhladnyj (Kabardino-Balkaria) 0,64 Neryungri (Yakutia) 1,30 0,73 Yakutsk 2,00 1,66 Krasnokamensk (Zabajkalskij region) 0,39 Spassk-Dalnij (Primorye) 0,57 Ust-Kut (Irkutsk region) 0,67 Salsk (Rostov region) 0,68 Other cities and towns of the Yamal-Nenets Autonomous Area 1,10 0,77 Territories KT Assessment KT Kumertau (Bashkortostan) 1,10 2,27 Tuimazy (Bashkortostan) 1,30 2,40 Zelenodolsk (Tatarstan) 2,15 Petropavlovsk-Kamchatsky 1,99 Blagoveshchensk (Amur region) 1,40 2,56 Arkhangelsk 1,80 2,75 Murmansk 1,70 3,19 Severomorsk (Murmansk region) 2,54 Dzerzhinsk (Nizhny Novgorod region) 2,16 Ulyanovsk 2,97 Kopejsk (Chelyabinsk region) 1,50 2,37 Territories KT Assessment KT Moscow 2,00 1,94 Moscow region 1,70 1,66 Leningrad Region 1,60 1,45 St. Petersburg 1,80 1,85
9 IMPLEMENTATION “TARIFFS CORRIDOR”Risk of the mass insolvency of insurers if a min rate is lower rate then a calculated gross-rate Min rate should tally with gross rate No preconditions for insolvency of insurers Impact on the Ratios of Insurance Rates, including adjustment KT in upprofitable regions Price competition is an advantage for the consumer
10 Increase of Insurance RatesIncrease cover limits Increase cover limits Increase of Insurance Rates increase the limit of liability of the compensation for the damage caused to life and health of the victims, up to Rubles including fixed payments for bodily damage 24.23% 15.96% increase the cover limit to recompense property damages, up to Rubles 28.3% For the existing cover limits, the current insurance rates should be increased by 11.79% (included basic insurance rates and all ratios of insurance rates changes, including КТ) Such changes to the law require an increase of insurance rates by 70.5% (average premium=3329Rubles,increase premium=3329Rubles*70.5%= Rubles) 𝟏+ 𝟏𝟏.𝟕𝟗 𝟏𝟎𝟎 ∗ 𝟏+ 𝟐𝟖.𝟑 𝟏𝟎𝟎 + 𝟐𝟒.𝟐𝟑 𝟏𝟎𝟎 −𝟏 ∗𝟏𝟎𝟎%≈𝟕𝟎.𝟓%
11 Increase in payments under the court decisionsCaused by: No common methodology damage assessment Inefficient claims regulations The scope of Consumer Protection widens to cover CMTPL
12 Consumer Protection Law covers only segments of CMTPLIf: This Law covers CMTPL in full Then: Insurers are obliged to pay fines, forfeit charges and moral damages under this Law PROPOSITION Segments of CMTPL this Law: Forfeit charges and fine not used if payments made on time or sent motivated failure. Forfeit charges forfeit charges equal to 1% if the payment is not made on time and equal to 0.05% - in case of failure motivated direction; Fine (50% of the outstanding payment) - levied in case the undisputed part is not paid on time by the insurer;
13 Compulsory liability insurance of hazardous facilities owners for inflicting damage due to accidents at the hazardous facility
14 Compulsory liability insurance of hazardous facilities owners for inflicting damage due to accidents at the hazardous facility July 27, 2010 signed by the President of the Russian Federation Federal Law № 225-FZ «On compulsory liability insurance of hazardous facilities owners for inflicting damage due to accidents at the hazardous facility» October 1, 2011 signed by Russian Federation Government Resolution № 808 "On approval of insurance rates on compulsory liability insurance of hazardous facilities for inflicting damage due to accidents at the hazardous facility, their structure and the application of the insurers in the calculation of insurance premium" November 3, 2011 signed by the Russian Federation Government Decree № 916 "On approval of compulsory liability insurance of hazardous facilities owners for inflicting damage due to accidents at the hazardous facility"
15 Tariffication (1) Insurance premiumsDeclared hazardous facility (depending on the maximum possible number of victims): Undeclared hazardous facility (depending on the industry): Industry affiliations Sum insured Chemicals, petroleum refining……………… mln.rubles Pipeline of gas consumption and gas supply……………… mln.rubles Other………………………………….……………...10 mln.rubles Number of victims Sum insured More then 3000…………….…....6,5 bln.rubles …………………… bln.rubles ……………….……… mln.rubles ………………… mln.rubles 75-150………………………… mln.rubles 10-75………………….……… mln.rubles Less then 10 …………….…… mln.rubles Insurance premium = Claims х Insurance Rate Insurance Rate = Basic Insurance Rate х К1 х К2 х К3
16 Tariffication (2) The period of validity К3 01.01.12 – 31.12.13К1 – coefficient depending on the damage that may be caused as a result of an accident at a hazardous facility, and the maximum possible number of victims. К1 = 1 for the period up to 31 December 2014 К2 - coefficient depending on the absence or presence of insured events that occurred in the period of the preceding compulsory insurance contract due to the violation of norms and rules of operation of a hazardous facility, established by the legislation of the Russian Federation. К2 = 1 for the period until 31 December 2016 К3 - additional reduction factor as determined on the basis of the level of safety of a hazardous facility, including, subject to the requirements of technical and fire safety in the operation of a hazardous facility, ready for the prevention, containment and elimination of emergency resulting from an accident at a hazardous facility. Intervals of possible values of the coefficient: The period of validity К3 – – after
17 Tariffication (3) Basic rates of insurance rates for some classes of dangerous objects Class of hazardous facility Basic rates of insurance rates (percent of the sum insured) Hazardous production facilities of coal, oil shale and peat industry 0.85 – 4.94 Hazardous production facilities of ore mining and non-metal mining industry 0.94 – 3.10 Hazardous production facilities, which are stored retrieved and used explosives 1,96 Hazardous production facilities of oil and gas complex 0.02 – 1.50 Hazardous production facilities of the main pipeline transport 0.31 Hazardous production facilities of geological and geophysical field development 0.53 Hazardous production facilities of the chemical, petrochemical and refining industries, special chemicals and other explosive and hazardous industries 0.41 Hazardous production facilities of petroleum products 0.13 Hazardous production facilities of gas supply 0.20
18 Compulsory insurance of carriers’ civil liability for damages to life, health or property of passengers
19 Compulsory insurance of carriers’ civil liability for damages to life, health or property of passengers June 14, 2012 the President of the Russian Federation signed the Federal Law № 67-FZ "On compulsory insurance of carriers’ civil liability for damages to life, health, property of passengers and on the order of compensation for damages caused during transportation of passengers underground" December 20, 2012 signed by Government Decree № 1344 "On Approval of the limit (minimum and maximum) values of insurance rates of compulsory insurance of carriers’ civil liability for damages to life, health and property of passengers" December 30, 2012 signed by Government Decree № 1484 "On Approval of the Rules for Determining the number of passengers for the purposes of calculating insurance premiums for compulsory insurance contract carriers’ liability for damages to life, health and property of passengers"
20 Tariffication (1) Classes of carriers Railways Airways Marine riskslong distance commuting distance Airways Marine risks Inland waterways commuter, intercity, transit, local routes tourist routes Buses intercity suburban city transport city transport by the order Trolleybuses Tramways TAXI and Metro are not insured
21 Tariffication(2) Insurance amounts must be specified separately for each risk civil liability per passenger: Risk of life damage – up to Rubles; Risk of health damage – up to Rubles; Risk of property damage – up to Rubles. Insurance amounts established for each insured event and cannot change during the period of compulsory insurance contract.
22 Tariffication (3) Factors affecting the amount of insurance premiumNumber of passengers Type of transport Type of transport operation Availability of franchise (risk "for injury to property") The inclusion or exclusion of reasons for exemption of the insurer to indemnify (nuclear, war risks, etc.) Other risk factors, including the level of safety provided by the carriers’ transport and technical condition of vehicles Carrier Government Decree of № 1344 sets limits (maximum and minimum) value of insurance tariffs
23 Tariffication (4) Bank of Russia conducts annual monitoring the compulsory insurance, insurance rates levels, and their validity as well as the impact of compulsory insurance on the development of business activities in the transport industry. To the state and local government bodies receive monitoring reports and the public through the massmedia and the Internet. To perform this function, the Bank of Russia is authorised to request relevant information from other federal executive bodies, executive bodies of subjects of the Russian Federation, local authorities, insurers and their associations.
24 Thank you for your attention!Questions & Answers