"IIF 2018 - MOTOR INSURANCE - the innovation challenge" Conference takes place today in Vienna. Read the main statements
The event represents a top level environment for exchanging business insights on essential issues of the motor insurance industry, as well as an excellent meeting point with the latest trends in technological innovation.
Thus, the conference focuses on the inherent challenges brought by the technological innovations for the insurance industry, taking into account the fact that using artificial intelligence, telematics (and other smart devices) and the blockchain technology should be accompanied by a cautious strategy, keeping in mind the legal aspect - present or in preparation for the near future. For example, the legal obligations introduced by GDPR, aimed at safeguarding the rights and freedoms of data subject, might interfere in the process of data collection, storage and use.
The speakers list includes well-known specialists activating in the re/insurance field, including representatives of FMA, GEN Re, VIG, FRISS, SWISS Re and ASF.
"IIF 2018 - MOTOR INSURANCE - the innovation challenge" takes place in Vienna, Austria, on 16 March, and is supported by VIG, EUROINS and JLT Re as Main Partners, as well as by FRISS and NTT Data as Partners, being also organized with the support of RECREX.
More details are available here.
Peter BRAUMULLER, FMA-Financial Markets Authority, Austria
- Austrian insurance groups comprise about 90 subsidiaries in 23 countries in the region
- 36% of the total GWP of Austrian insurers come from the insurance business in the CESEE region
- 1/3 of all non-life premiums in CESEE derive from MTPL insurance, so the relevance of MTPL from a supervisory perspective is quite high
- MTPL cover is mandatory, therefore many people are affected by pricing, claims management etc., so there is some political sensibility in this regard
- In some countries, MTPL premiums and/or tariff structures are still fixed or regulated
- MTPL is a major source of complaints, receiving the largest or second largest number of complaints in 17 countries, according to EIOPA Consumer Trends Report
- Looking at the future, I believe that modern technologies will reshape the future of motor insurance, through the usage of BigData in product design, pricing and risk management. New EU legislation will also affect the industry, such as the revision of the Motor Insurance Directive ("Vnuk" case)
- The name of the game nowadays is digitalisation. If companies do not jump on this train, they will miss a lot or even go bankrupt. Companies and organisations that have overslept will not make it
- Soon, there will be no piece between insurers and customers. Also, everything will be online.
- Digitalisation can be an enormous advantage in terms of increasing the efficiency of motor insurance. The less developed a country is, the larger the cost ratios in MTPL are. Ukraine has a 50% cost ratio on MTPL, as opposed to Germany - 17%, Poland - 27% and Estonia with 30%.
- In 3 years, we will be discussing in such events mostly about data and what data we really need as insurers and reinsurers and less about other topics. Data will be key to everything
- Insurers and repair shops should be concerned about the ownership of vehicle data. In fact, Insurance Europe has a dedicated campaign for that, #Data4Drivers. Data should not go to vehicle manufacturers, but to the actual owners.
- Claims Development Tracker is only one of the solutions brought by SWISS Re as part of the automotive solutions. It can help a lot in tariffing motor insurance premium more efficiently and more profitable in the future.
- The SWISS Re accident model is not a tool to price individual risk in the Motor insurance business. It does not incorporate individual features like age of a person or the type or model of car, but it offers a number of strategic advantages to our clients
- Historical claim behaviour will identify new claim outliers, so we can see the deviation from the expected behaviour and take action.
- Connected services, such as telematics solutions, provide a foundation for new business models across all industries
- Telematics solutions mark the move from risk aggregation based on mathematics models to risk prevention based on individual behaviour and to understanding the customer
- To be successful with telematic tariffs, one has to gather relevant data with a clear objective in mind
- Our NTT Data Connected Service Platform forms the basis for new digital business. The system has versatile functions that offer added value for insurance customers.
- Nowadays, every company is a software company!
Ruud VAN GERWEN, FRISS, The Netherlands
- FRISS offers solutions to over 150 insurance companies in 25 countries, including leading insurers in various markets
- Fighting fraud has to be an organisation-type project
- A proper policy and a fraud-fighting menthality are of key importance to a company. So, it is not only the systems that are installed, but also the people that use them and the willingness to act.
Veselin IVANOV ATANASOV, NBIFI - National Bureau of Insurance Fraud Investigation, Bulgaria
- The lack of specific legislation to combat all type of insurance fraud is a factor that contributes to the increase of this phenomenon
- NBIFI is an association where members can exchange information, opinions, work methods and research solution in secure frauds
- All countries are silently involved in the phenomenon. Bulgaria however is, since 2007, most affected because a lot of people are registering their cars in Bulgaria due to lower costs, although they do not use those cars in the country. Therefore, there are a lot of green card frauds stemming out of this situation.
Paul IVAN, Executive Director, RECREX, Romania
- RECREX received the Correspondent quality on the Romanian territory in the international Green Card System from BAAR-The Romanian Motor Insurers Bureau in 2017. In 2017, the company started its international development.
- In 2007, when Romania joined the EU, the number of Green Card Claims in Romania increased significantly.
- Alongside the classic procedures used in claims handling activity, we developed an innovative system called "Claims Buffering System", which is focused on the application of several anti-fraud filters: customer care, documentation review, technical inspection, international technical analysis etc.
Paul SWOBODA, UNSAR & GRAWE Group, Romania
- In classical life insurance, fraud is not really an issue in theory - you can either be dead or not. But there have been cases when organised criminal groups working together with local authorities managed to declare the death of certain individuals in order to claim, which only shows that anything is possible. This shows that fraud is an issue not only in motor insurance, but also in lines of business that were thought to be covered
- New data protection legislation might hamper the efforts the companies make in order to combat fraud, i.e. claiming for 2 companies for the same insured risk.
- Romania is quite developed in comparison to Austria, Croatia or Slovenia in terms of Internet connection speeds, which can help the development and day to day usage of online systems - which, of course, help insurers fight fraud
- The implementation of IDD will also help combat selling-related frauds
Franz FUCHS, VIENNA Insurance Group, Austria
- VIG insures every 10th vehicle in the CEE. Motor business represents 25% of the total GWP of VIG. Total VIG motor GWP in 2017 is 2,44 billion EUR
- Consumer behaviour is completely different in Western Europe and in the CEE.
- 13-14% of all European vehicles are sisters in the CEE, but cause 43% of all foreign claims
- Austria has the highest average claim, but heavily dependent on material damage. Foreign claims are influencing claims costs in Eastern countries
- Romania has the highest frequency ratio on MTPL in the region with 12%, in comparison with 13% Austria, 5% Czechia, 7% Poland and 8% Slovakia, while Czechia has the worst premium to claims ratio (1:10)
- 7-8% of MTPL and MOD claims in the UK are fraud. The EU average is around 4%
- VIG has started a project aiming at lowering frauds in all the countries that we operate in, together with McKinsey. At VIG, we are not a niche player, but a major one. We want to grow, but not at any cost
- In order for telematics solution to truly make a difference, the system has to be implemented on a larger scale in the CEE region.
Klime POPOSKI, ISA-Insurance Supervisory Agency, Macedonia
- Western Balkans are home of the least developed insurance markets in Europe with penetration rates between 0,7% in Kosovo and 1,57% in Serbia
- There is a very high MTPL market share in the region which affect business models and insurers' behaviour. MTPL is by far the most important line of business (35% in Serbia being the lowest MTPL market share in the region)
- With the exception of Albania, the rest still have regulated tariffs on MTPL. Montenegro will most probably do the same in 2018. Other countries will follow or still have no clear vision in this regard
- Throughout the region, the decrease of uninsured vehicles has contributed to an increase in GWP
Florin GOLOVATIC, ASF-Financial Supervisory Authority, Romania
- It is expected that we will witness a 40-50% decrease by 2030 in motor GWP, according to a BCG and Morgan Stanley analysis.
- InsurTech companies are adopting new, innovative technology faster, especially for pricing and underwriting, but also in product distribution processes
- 256 start-up companies are focusing on product distribution, with 100 active in business process enhancement, 70 in data & analytics and 25 in claims management
- Also, automation will replace human effort across the entire insurance value chain. Insurance premiums will become highly personalised and claims settlement will be fully automated, self-services and quick to pay experience for customers
- In 2015, in Romania, 40-50% of client that have claims were not willing to renew their policy with the same company back. So it was time to go back to the needs of the clients. Price increases occurred suddenly, from one day to another. The industry itself was not able at that time to take the necessary measures. This is why the Parliament and the Government took action in order to have the market viable. Since then, the combined loss ratios went back below 100% since after a 6 months capped-tariffs period, this measure was lifted and we now have a functional market with a new MTPL Law.
- Insurance companies are making profits, some of them significant profits after a period of heavy losses.
Madalin ROSU, BAAR-Romanian Motor Insurers' Bureau
- 2017 was an interesting year because the market has previously been disrupted by two bankruptcies, namely ASTRA Asigurari and CARPATICA Asigurari. The BAAR still pays for these companies. Until the end of 2017, the BAAR paid 70 million EUR for these 2 companies
- In the mean time a new MTPL Law appeared. The most important changes are: the validity of the MTPL policies can vary between 1 up to 12 months; MTPL premiums can be paid in instalments (which can create operational issues for companies); introduction of direct compensation option to the client; introduction of telematics solutions; a new Bonus-Malus system (an advantage offered to clients); the introduction of a reference premium calculated periodically by the regulator; the concept of high-risk clients and "N" factor; a period of 30 days to settle the claim file from the notification data (which is good for the client but difficult for insurance companies) etc.
- Fraud is unfortunately still an important issue on the market