FIAR 2022: The Motor Insurance Conference

The Motor Insurance Conference, organized during FIAR 2022 - The International Insurance-Reinsurance Forum focused on challenges, opportunities and the current context of the motor insurance segment at international and national levels.

The Motor Insurance Conference was supported by BAAR and AMODO as Official Partners, by EUROINS Romania as Main Partner, as well as by SOLERA, AUDATEX, eCLAIMS Assistance, ASISOFT and RECREX as Partners.

Main statements:

Iulius Marian FIRCZAK, Deputy, Secretary of the Budget & Finance Committee, Chamber of Deputies of Romania:

- The combined ratio of 160% on MTPL in Romania is unacceptable - we can even confront with the possibility that some major players might decide to leave the market, which would lead to the crumbling of the entire insurance market;
- If Romanians don't trust the MTPL system, which is a mandatory policy, they will never buy voluntary insurance policies;
- We need to change the MTPL legislation so that we can build a solid foundation, on which to continue to build;
- We are currently working on changes for the 2017 MTPL legislation, we are close to a solution;

Daniel FLOREA, Deputy, Vicechairperson, Committee for Legal Matters, Discipline and Immunities, Chamber of Deputies of Romania:

- There are many legislative initiatives on the motor insurance segment in Romania;
- A constructive approach, involving all players on the market, is the key to success. I am convinced that, if we all work together, we will find the best solutions;
- Many issues are generated by the incomplete legislation on the insurance market;
- One of the main objectives would be to make people respect the existent laws;

Adrian MARIN President, UNSAR:

- Motor insurance continues to dominate the market in Romania.
- Discussions on changing the legislation are necessary.
- Road safety is a concern for Romanians.
- Romania is the only country in the EU with an increase of more than 20% in April for new registered cars and more than 35% y-o-y. In terms of green vehicles, in 2021, of the new cars registered in Romania, 1 in 3 were electric or hybrid. Thus, Romania is close to the EU average, where 38% of new cars registered are electric and hybrid.
- The pandemic has affected, to a small extent, the number of damage claims, but not the level of compensation paid. In 2016 - 2020, the number of claims increased by 40%, from 270,000 to 380,000, and the compensation paid doubled, from 1.9 billion lei to 3.5 billion lei.
- Every working day in Romania, €2 million in compensation is paid out.
- The trend is very clear, all indicators are putting pressure on the desired balance and predictability in the market.
- The capping of MTPL tariffs is baseless. Stability and predictability are needed. More measures are needed. These include: correcting, as soon as possible, the issues relating to MTPL, not generating new violations; implementing the trauma scale; correcting articles that do not allow insurers to control costs; fighting fraud;

Tanja BLATNIK, CEO, EUROINS Romania

- We keep asking ourselves what we should do. Maybe the question is: what we shouldn't do anymore. What do we need to stop doing so that things work better?
- MTPL is a liability insurance, not a 'car insurance' - it's wrong to say that MTPL is a car insurance, instead of underlining the liability aspect of this insurance;  
- Insurance is about people's lives rather than cars - in other countries, the focus is on people's lives, not on cars when it comes to MTPL;
- We have to work on prevention, we have to build better roads; Insurers can contribute a lot to projects that build better roads - insurers can be Partners for various projects which lead to better lives, insurers can join their forces with authorities and other players, in order to support various projects;  
- Because many projects don't bring results fast, we tend to give up, instead on continuing to support them; 
- During COVID, digitalization became a normal aspect. Technology is our Partner today. Insurers need to communicate with the clients on the channels where they are active; 
- We see many insurance start-ups, they are trying to solve little problems on the market and find best solutions for them;  

Erik BARNA, Founder & Member of the Board, Life is Hard:

- Technology can help us, especially if the legislative framework supports it;
- Especially in the case of MTPL, we can benefit from technology in many ways. The first aspect would be pricing - using telematics systems, we can create customised prices for different types of customers. We have cases where some customers don't take out MTPL because they use it occasionally. Telematics insurance would help a lot in such cases. Telematics also helps to make the driver more responsible (telematics systems record driving behaviour and, depending on how the driver drives, update the price).

Madalin ROSU, President, BAAR:

- We live in a troubled market. There is no end to the mini nightmare we have been living since 2016. We seem to be learning nothing. The repetition of certain things shows that the market and the players need to make radical and rapid changes. It's the same as 2015.
- Many times, when participating in discussions in Parliament, I have asked people in various committees if they understand what MTPL means, if they would put a price on the people they carry in the car and what the price of those people's lives would be. How much does your child's life cost?
- A lot of people forget that MTPL also acts for (and covers) the people we have in the car with us. We often forget this and we only think about the plastic bar, the headlight, the price we have to pay for repairing the car.
- Initially, after the bankruptcy of CITY Insurance, we estimated the CITY's external exposure at 150 million euros, but we have already exceeded 200 million euros and I hope it will not increase, so that we do not end up with any more claim files.
- In Romania, they equate an accident in which you break a bumper with one in which you kill a person - you still get Malus.

Claudiu SOFRON, Motor Insurance Specialist, UNSAR:

- Unfortunately, in the last 10 years, the RCA line of business had been on a negative trend, it brings losses. We should implement a package of measures to turn this trend into a positive one.
- It is necessary to correct certain bills and to start projects to fight fraud, to avoid damages in terms of frequency and severity of road accidents.
- Unfortunately, Romania is in first place in terms of the number of road accidents. Every day, five people die in road accidents, which is a tragedy.
- UNSAR has been and will be involved in various actions constantly. There have been actions with the police, with APPA, with BAAR. I would mention the campaign BE AWAKE AT THE WHEEL! (FII TREAZ LA VOLAN!)
- The "Be careful on the road" campaign, launched by UNSAR, has reached its fourth edition.

Aurel BADEA, Deputy CEO, ALLIANZ-TIRIAC Asigurari:

- [on the capping of MTPL rates] It is worth mentioning that Romania is the only EU country where such restrictions were applied in 2016 and where there is an intention to apply it again. The 2016 example is relevant, we should learn from history. It did not solve the problem then and it will not solve it now.
- The argument behind the proposal is economic and social. In the economic area, the arguments should be discussed with the industry, because the economic impact will be felt by the insurance industry, by the shareholders and will eventually boomerang back as it did in 2016-2017 - any limitation has an economic impact and someone has to carry that impact, either the shareholders of the companies or the customers who pay less today but will pay more tomorrow.
- The legislation has a mechanism to protect high risk customers, because it works through BAAR.
- I think young generation (20+ years old) is used to technology. Telematics technology would be accepted by 50-60% of them.
- In order to use these technologies in pricing, we need to change the legislative environment, which needs to be anchored in the decade we have entered, in order to adapt ourselves to customer requirements.


Sandra SCHWARZ, President, Council of Bureaux The Green Card system's challenges - solutions & perspectives

- Council of Bureaux (CoB) includes 47 countries / 46 Bureaux / 30 Guarantee Funds, with over 450 million vehicle fleet. Up to 450 000 cross-border accidents are reported annually. There are over 1300 insurers issuing Green Cards;
- The goals of CoB include: facilitating international traffic, assure the efficient indemnification of victims of international motor accidents, as well as protecting Cross Border Road Traffic Victims;
- COB has multiple types of members: Green Card Bureaus, Guarantee Funds, Compensation Bodies, as well as Information Centers;
- COB is a purely technical organization, but it is influenced by any type of political development, such as sanctions, declaration of independence, and, in the worst case scenario, war;
- The invasion of Russia in Ukraine generates a series of questions: is it still appropriate for COB to only be a technical organisation? Are the changes brought by political aspects jeopardizing the functioning of the COB system? Should COB also impose sanctions or suspend Russia and, if it doesn't, how would that affect the reputation of COB?
- The challenges: certain agreements were cancelled (agreements between Russia, Ukraine, Belorussia and EEA); sanctions were imposed by EU, USA and UK; there is the risk of a damaged technical infrastructure (cyber attacks); 
- Other challenges for COB includes the transformation of the internal structures;
- Another challenge for COB: insolvencies; 

Interactive panel: Green Card system's top agenda

Madalin ROSU, President, BAAR:
- After the bankruptcy of ASTRA Asigurari, BAAR paid 46 million euro, another 13 million euro in reserve; after the bankruptcy of CARPATICA Asig - 68 million euro were paid by BAAR, another 24 million euro held in reserve; after the bankruptcy of CITY Insurance - 91 million euro paid and 149 million euro in reserve.
- I initially estimated that CITY's bankruptcy probably equals ASTRA's and CARPATICA's bankruptcies, but it exceeds them.
- BAAR launched a campaign in traffic, on several TV channels, in order to make people more aware of the dangers in traffic. 1 out of 5 cars registered in Romania causes an accident. For each accident all RCA insureds pay.

Alina OSOIANU, Executive Director, NBMIM, Republic of Moldova:
- It is admirable how colleagues in Ukraine have been active in these exceptional situations and have been able to generate solutions.
- Moldova has been impacted by the refugee wave and this has also translated into the insurance sector. The territory of the Republic of Moldova has been crossed by more than 400,000 Ukrainians and 80,000 people remained, half of them children. Which shows that a lot of cars left Moldova and went to the EU. We have had an impact on both the domestic MTPL and the Green Card, because in Moldova we issue two types of policies - one valid on the territory of the country and another valid in all EU areas.
- If between 1 January to 20 May 2021 were issued about 300 domestic MTPL policies for cars registered in Ukraine, this year, from 1 January to 20 May 2022, we have issued more than 10,000 policies valid on the territory of Moldova.
- The war in Ukraine has also affected policies issued on the Green Card system - insurers issue policies for different territorial validity areas. For Zone 2 - Ukraine, Belarus and the Russian Federation this number of policies has significantly decreased: if from 1 January - 20 May 2019, before the pandemic, 8,000 policies were issued, in the similar period of this year there were about 2,000 policies. A significant decrease due to the war. This means that people have been moving more towards EU countries.
- Zone 3: compared to 1 January - 20 May 2019 there were 47 policies issued for Zone 3 - all member countries of the Green Card scheme, this year we have over 80,000 policies.

Volodymir ROMANYSHYN, President, Motor Insurers Bureau, Ukraine

- We are taking further steps towards digitalization, for example the possibility of presenting the Green Card policy as a digital document, we are developing databases, we are trying to implement other technologies, such as QR codes for accessing the Green Card data base;
- Challenges include the legislative framework;
- The unprovoked war on Ukraine increased the demand of Green Cards (refugees) - the printed forms of Green Cards (in the new black and white format) became a limited resource. The pdf of Green Card on gadgets had not been approved;  
- For those Ukrainian fleeing the war and lacking a Green Card policy, the National Guarantee Funds provided the cover in case of accidents. Some Bureaus and some insurers provided the electronic way to purchase Green Card at the border for those refugees who needed documents;
- The Ukrainian country reacted quickly and adopted some measures, such as a solution to renew a Green Card from the distance (through the website); 

PART II

Damir PLEJIC, Automotive and Mobility Consultant, Movingdots

- The trend: connected cars; However, there's a difference between the situation in Western and Eastern Europe;
- Risky maneuvers (parameters contributing to the increased frequency of claims) include: speeding (10% increased speeding results in severe accidents with bodily injuries), aggressive drivers, distractions;
- Swiss Re Driver Score differentiates between good and bad;
- The Driver's score is calculated like this: (Distraction + Speeding + Maneuvers + Context) x Distance;
- Telematics are solutions for cautious drivers; portfolios built with telematics insurance programs avoid the riskiest customer segment;
- The Telematics solution used by SWISS Re 'coaches' drivers from their first trip (the objective is to make them reduce the problematic behavior); the trips rating give instant feedback loop to drivers, helping them correct their behaviours; 
- Coaching is supported with the appropriate incentives to drivers: drivers get 'coins', which can be turned into vouchers and rewards;
- Coaching has a positive effect on driving behavior; 
- In 2020, the most important risk factor is still a person behind the wheel, with importance of vehicle raising. By comparison, in 2030, we expect that the driver still has an influence, but the ability of vehicles to prevent accidents is very mature;
- The challenge: Although ADAS (Autonomous Driver Assisted Systems) pave the way towards an era of fully autonomous vehicles, increased road safety through ADAS is frequently not reflected in premiums.  Many insurers struggle with capturing what ADAS a vehicle is equipped with and how effective they are in reducing claims. Reflecting ADAS' impact is a complex matter that requires advanced risk knowledge and strategic partnerships with OEMs.

Marijan MUMDZIEV, CEO, Amodo

- 81% of insurance customers expect personalized products and services; 
- Customers want simplified interactions and services delivered through digital channels;
- The preference of being served digitally increased significantly after the pandemic;
- AMODO focuses on private, residential vehicles;
- Pay as you drive (PAYD) is one of the solutions in which customers are most interested in;
- 73.7% of German respondents declared they can imagine buying PAYD products (an increase from 58.5% in 2017);
- 14.7% of the Target Group in Germany would not buy the PAYD due to Privacy Concerns (down from 26% in 2017); 
- Cost and convenience - two of the most important aspects that would determine clients to buy PAYD products; 
- Amodo technology is successfully used to provide various pay-as-you-drive initiatives all over the world (New Zeeland, Croatia, Japan, Austria are some of the most interesting initiatives); In UK, Rooster Insurance launched the Try before you buy model in UK - the user downloads the app and uses it, after 30 days he/she gets a personalized insurance quote, based on his/her behavior during that month;  
- The telematics technology can be used outside the MTPL insurance segment, providing great opportunities for companies (through the smartphone, you can collect data such as: whether the person travels, whether the person has a dog);  
- Telematics means: collecting data about the client, mainly (not the car);
- 93% of the insurance clients would want to be served by only one insurance company. They are willing to pay more money for a second policy if the policy is offered by the same insurance company; 
- Two approaches of the use of telematics: 1) create a price based on telematics (more mature companies start with this), 2) implementing prevention programs (less mature companies start with prevention programs); 

Interactive panel - Technologies to improve customers' claims experience 

CALIN MATEI - Deputy General Manager, GROUPAMA Asigurari

- Globally, Romania does not score higher than 3 or 4 in terms of adoption of digital technologies. On the other hand, perhaps it is not important where we are, but what the prospects are. 
- I see that there is a significant acceleration of the digital area, in recent years, not only in insurance, but everywhere.
- New companies are coming in and bringing new technologies to the market, and insurers are increasingly looking at it. Customers are forcing us to look. The insurance customer is not just an insurance customer, but a customer of everything.
- Technologies don't just sit in one place, the important thing is to find the technology that makes sense for you and can be integrated into your processes. 
- In the pandemic, 90% of claims were found through video assistance with the customer.
- We want to come up with more. We believe that, today, the customer wants to find out for himself, and we must give him the possibility to do so, to come to his support. 
- I believe that insurers are not meant to pay claims, but to provide continuity and service to customers. If you pay claims, it should be a hygiene topic, not a primary topic.
- We are the country with the most deaths on the roads, with the most seriously injured on the roads. It's tragic what's happening, but it's the reality we live in.
- Unfortunately, prevention in Romania, however, much has been invested, is not enough. It's tragic the situation we are in, and everyone must understand, including customers. If we don't realize this, I don't know where we will end up.
- It's not the car that kills, it's the ram behind the wheel. We correct him and we correct ourselves, only when we're afraid of something. The coercive system is the most important. 
- I'd take the serious stuff from the friendly reports and fine people for it.
- At the Bonus-Malus level, we could find a system maybe a bit better or maybe develop the current one, to discriminate more between customers: good, average, bad, and worse, disastrous.

AUREL IVAN - Country Manager, AUDATEX

- The Artificial Intelligence based application is already in use at some insurers. In terms of claims, things are moving well. There are quite a few insurers who, also forced by the pandemic, have developed several things to support their customers. On the insurance side, things can be improved to increase premium volume, policies, etc.
- A more sophisticated Bonus-Malus is needed, and technology can support insurers.

Maria GANEA-BOGHIAN - Managing Partner, ASISOFT

- We have the next version of the auction system, which will be something that will be beneficial for both individuals and insurers. If, so far, we have made insurers happy, we hope to make customers happy too. We have got very close to insurers' customers, and we have good feedback. We are trying to make policyholders happy, not just insurers.
- I've been talking about this for 15 years: insurers deciding that a technically damaged car should be taken off the road. Most bad accidents go from there. There are countries where such cars don't run anymore.

Erik BARNA, Founder & Member of the Board, Life is Hard:
- We have companies in the market that have adopted the latest technologies in the claims area, but at European level there are already established companies that automate the entire claims cycle, from notification to closure. 
- Project: Through a start-up, where I am co-founder, we have an experimental solution for damage notification and assessment, all online based, it's in beta - testing with users.
- Solution to reduce accidents/damage: legislation - if it's permissive, it's harder to make someone aware of the consequences of an accident. Legislation that would make the average person reach deep into their pocket might make them more aware.

Ion MOISE, General Director, eClaims Assistance:
- A personal wish: to take out an MTPL insurance based on telematics technology. I also want to do an electronic amicable settlement. I am confident in this development and in the speed of implementation of digital solutions.
- I have several projects, one of them: a mobile online damage notification app that does all types of damage: home, including mandatory household insurance, third party liability and Motor Hull.
- Solution to reduce accidents/damages: the Bonus-Malus system to be refined. Amicable Consent - when this appeared, the Police did not agree to not giving fines.

Daniela BADALUTA, President & Founder, RECREX International:
- We have partnerships with VAN AMEYDE, as well as CROWFORD and DEKRA. The final beneficiaries are people who have accidents in Romania, the final customers are insurance companies.
- On the technology side, we are developing a solution to cover Europe, to be unified.
- Green Card - we need technology here too.
- Solution to reduce accidents/damages: more financial education.

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