"New instruments of "New instruments of consumer protection in consumer protection in

motor insurance"motor insurance"

Maria Luisa Cavina

Director of Consumer Protection Division, ISVAP

Warsaw, 28 September 2009

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ISVAP - ISVAP - LEGAL NATURELEGAL NATURE

Il controllo interno

Endowed with legal status under public law;

Set up on 1982 (law n. 576 of 12 August 1982);

Fully autonomous in the juridical, financial, accounting, organization and management field.

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Purposes of supervision:

Stability of the insurance sector;

Solvency of companies;

Protection of policyholder.

ISVAP - AIM OF SUPERVISIONISVAP - AIM OF SUPERVISION

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ISVAP - SUPERVISED ENTITIESISVAP - SUPERVISED ENTITIES

Undertakings pursuing insurance and reinsurance

business;

Insurance groups and financial conglomerates;

Insurance and reinsurance intermediaries, loss

adjusters;

any other insurance market participants who, in any

form, performs functions partly included in the

operational cycle of insurance and reinsurance

undertakings, limited to insurance and reinsurance

profiles (outsourcers, e.g. claim settlement services);

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Grants undertakings the authorisation to pursue insurance and/or reinsurance business.

Supervises on the technical, financial and accounting management of domestic and foreign insurance undertakings (branches of undertakings with head office in a non EU country) and reinsurers subject to its supervision.

Issues all the measures deemed useful in order to safeguard the undertakings and the consumers.

Provides consultation and presents proposals to Parliament and the Government for matters within its competence for the regulation and supervision of the insurance industry.

ISVAP - FUNCTIONSISVAP - FUNCTIONS

ISVAP - FUNCTIONSISVAP - FUNCTIONS

Establishes rules aimed to guarantee the right behaviour of the market participants and the respect of the insurance law.

Take corrective, repressive and sanctioning measures or propose their adoption by the Ministry of Production Activities.

Handles and examines the consumers’ complaints.

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ISVAP - COOPERATION AMONG ISVAP - COOPERATION AMONG SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITIES

ISVAP collaborates with:

the Bank of Italy, the Supervisory Authority on securities (CONSOB), the Occupational Pensions Supervisor (COVIP), the Competition Authority (ANTITRUST) and the Communications Supervisory Authority;

the competent Authorities of the other EU Member States, not only in the insurance sector, but even in the bank and securities sector (e.g. in case of insurance companies controlled by banks or securities firms).

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CONSUMER PROTECTION DIVISIONCONSUMER PROTECTION DIVISIONStructure and competences

Il controllo interno

A “Complaints section” was founded by the Institutional law, since 1982

In 2003 the section was strengthened through the creation of the “Consumer Protection Division” made up of two Sections: “Third party protection” and “Insured person protection”

At present the Division consists of 45 people

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Manages all the complaints presented to the Authority (annually about 30.000), according to a specific procedure stated by ISVAP’s regulation No 24 of 19 May 2008;

Arranges and issues regulations permitted by law concerning motor vehicle liability insurance

Manages telephone assistance service and receives the consumers

Is a member of Fin-Net network, as national contact body, for the out-of-court settlement of cross border disputes and participates in Fin Net meeting)

Analyses general issues of the insurance market

Carries out information campaigns

Manages initiatives to the benefits of consumers, such as: The Check Box project The motor liability insurance quotation service for consumers

CONSUMER PROTECTION DIVISIONCONSUMER PROTECTION DIVISIONScope and mission

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WHY DIRECT COMPENSATION?

Answer to a deep and long-lasting crisis of compulsory car

insurance sector, due to:

Delays on claims settlement

High level of costs (repair costs, legal fees, undue involvement

of lawyers for small damages, fraud)

and consequently

High level of prices.

Outdated traditional system of compulsory liability due to the

conflict between Insurance company and Policyholder

DIRECT COMPENSATION SYSTEMDIRECT COMPENSATION SYSTEMDIRECT COMPENSATION SYSTEMDIRECT COMPENSATION SYSTEM

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DIRECT COMPENSATION makes easier

the overcoming of the conflict through a direct contact between Insurer and Policyholder, based on: mutual understanding relationship of trust verifiable service

the decrease in improper costs through

direct assistance provided by Insurers when the Policyholder submits a claim in order to resolve in shorter time the compensationno legal fee if compensation is accepted body repair network provided by Insurers

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Collision happened in Italy (including San Marino and Città del Vaticano) involving only 2 motor vehicles registered in Italy and insured for civil motor liability.

Claims must be submitted directly to the non responsible (or partly non responsible) driver’s Insurer.

Claims must refer to:

Vehicles damages

Driver’s personal injuries

if they fall within 9% permanent disability

Damages to transported goods (goods owned by the driver or passengers)

Compulsory procedure since 01/01/2007, applying to claims incurred since 01/02/2007.

DIRECT COMPENSATION – Conditions and requirements

The Insurer is obliged to pay the compensation to its own Client on behalf of the Insurer of the responsible driver, without prejudice to a subsequent settlement between insurance companies as stated by the Insurance law Code (a specific regulation states measures to define and share liability, through Bareme schemes).

The damaged/injured person shall submit claim only to his/her Insurer.

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DIRECT COMPENSATION – Conditions and requirements

coverage liability

Insurance’s office

Policyholder

Intermediaries

answerwithin 30 days

Recovery of the eventual report

First steps to the procedure:

Check of the insurance coverage

Agreement on the liability

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Actual costFixed cost “forfait”

CLEARING HOUSE

Settlements between Insurers are regulated in a Clearing House managed by CONSAP.

The non responsible Insurer does not receive the total amount refunded for the claim, but an amount corresponding to an average fixed once a year by the Technical Committee approved by the Minister of Economic Development

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PASSENGERS MANAGEMENT

Also passengers may benefit from the direct compensation scheme.

In such cases the carrier’s Insurer (direct Insurer) follows the same procedure, but personal injuries are restored even if over 9% permanent disability.

Compensation for personal injuries may be claimed to direct Insurer within compulsory coverage limits. The over compensation shall be claimed to the Insurer of the responsible driver.

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DIFFERENCES AMONG SIMILAR PROCEDURES

The comparison with other european countries adopting similar procedures for motor vehicles claims:

In Italy direct compensation is compulsory and regulated by law either as regards the technical aspects or as concerns the rules which fix the exchange of the refunds

The Insurer of the responsible driver is not allowed to know the real value of the refunds, according to the position of the Competition Authority (ANTITRUST).

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0

500000

1000000

1500000

2000000

2500000

3000000

Total reports CARD

200720082009

2007

2008

20092

.44

1.3

57

2.8

18

.95

0

1.7

77

.39

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Direct compensation

1/2/2007 – 31/12/2008

No CARD43,8 %

56,2 % CARD AMOUNTS PAID

Claims

totally/partially

refunded

Ordinary procedure

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Agreement between two parties

No agreement

Statement agreement

Voluntary system Compulsory system

Within the system

Out of system

25%

75%

CARDNo agreement

38%

62%62%

38%

Total claims CARD100%

CARDAgreement between two parties

What has changed: an increasing trend of agreement

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Decrease of time of payment(average, measuring settlement times from the report to the first payment)

2006 2007 2008

6355

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What has changed: an important result for consumers

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