stability and financial discipline romanian bureau

Stability and financial discipline

Romanian Bureau

3rd of April 2014, Bucharest

a.Overview of Romania:

-Romanian territory: 238,391 km2 + 23,700 km2 (Black

Sea platform) = 262,091 km2

-Number of inhabitants: 9,043,767.00 (according to

the Institute for Statistical Data – 2011)

-Number of registered vehicles: 5,985,085 (according

to the Romanian Registration Authority – 2012)

Stability and financial discipline - Romanian Bureau 3rd of April 2014, Bucharest

Cristina-Daniela OANCEA – Claims Manager

b. Overview of the MTPL/Green Card market:

-Number of companies issuing MTPL/Green Card: 11

-Volume of gross premium (2012): aprox. 460 mil. EUR



The Romanian Bureau has 11 members:

ABC Asigurari – 508,877,41 EURAllianz – Tiriac Asigurari – 37,842,784.92 EURAsirom VIG – 50,990,934.59 EURAstra Asigurari – 76,357,535.39 EURCarpatica Asig – 56,106,949.66 EURCity Insurance – 10,436,960.82 EUREuroins Romania – 91,494,961.50 EURGenerali Romania – 17,027,784.01 EURGroupama Asigurari – 38,370,126.67 EUROmniasig VIG – 45,430,910.01 EURUniqa Romania – 30,994,596.94 EUR

(data transmitted to the Romanian Bureau - VGP 2012)



c. The Romanian Bureau (B.A.A.R.) and its members:

B.A.A.R. attentively follows the entire fulfillment of

the obligations arisen from the provisions of the

Internal Regulations and the Multilateral

Agreement, focusing on the provisions of art. 5, 8

and 13 of the I.R.



B.A.A.R. along with its members and the Romanian

Registration Authority have established a mechanism

so that the answers requested through art. 8 and

art. 13 of the I.R. are to be given by B.A.A.R. in

due time and the answers are complete and definite

In the last 7 years, we only had one case in which the

handling was made on the basis of paragraph two of

art. 13 of the I.R.



B.A.A.R.’s Constitution has clear provisions related

to the monitoring of its members

According to art. 12 of the Constitution, if B.A.A.R.

receives for one member:

5 GC per month or 10 GC within 3 months

Monitoring!



The monitored Member should send to B.A.A.R. within

15 days an updated situation of all demands of

reimbursement (due and overdue)

Every Monday, the monitored Member sends to B.A.A.R.

all the payments made in the previous week, as well as

the demands of reimbursements received in that week



The data communicated by the monitored Member is

verified and a report is written in order to provide the

following:

-the analysis of the weekly report;

-the analysis of the report in respect to the data

previously communicated;

-the assessment of the improvement of the situation

and the need to take measures, if necessary;



B.A.A.R. issues a report and the Management Committee verifies it and according to the trend of payments and GC received or not, can decide for continuing or stopping the Monitoring procedure

During the Monitoring procedure, our Bureau also aims at mending and improving the behavior of the member in its totality

In case of no improvement, the Management Committee can invite the management of the monitored member to discuss and analyze the situation;



In order to reduce the receipt of GCs on behalf of the

monitored member, B.A.A.R.’s General Assembly of 2013

decided that the procedure is to be improved with the

following new provision:

If the monitored Member does not prove the payment of

a reimbursement demand within 45 days from its

release, B.A.A.R. will make the payment in the name and

on behalf of the monitored member, with a 2 days

notice before the payment



After the payment is made by B.A.A.R., the monitored

member is obliged to reimbursed B.A.A.R. the paid

amount along with the corresponding costs within a

maximum of 10 days

If no payment is received within 10 days =>

late interest of 12% year are calculated

A provision strictly applied!

=> the monitored member pays directly



At the end of the Monitoring procedure, the

Management Committee can:

- sanction the member with WARNING !!!

- propose to the General Assembly of B.A.A.R. to

send a Notification to the Financial Supervisory

Authority in order to withdraw the MTPL license for

that Member!



The Monitoring procedure was adopted by the General

Assembly of B.A.A.R. in 2007 and updated 27.06.2013

In the past 4 Members were monitored => their behavior

significantly improved during the Monitoring process

The longest period of monitoring occurred for a period of

almost 2 years



The main issues of the members, observed during the

Monitoring process were:

- Problems with organizing the flow of the claims handling

(IT system, follow-up)

- Lack of professional training of the claim handlers

involved in this flow



By applying this strict and long lasting procedure, the

purpose was achieved, namely:

1. The number of guarantee calls significantly decreased



In such a ranking it is best to be no. 46!

Several Bureaux maintain the number of GC at zero

The fight against GCs will continue until we will reach no. 46!



2. Our members avoid entering under the monitoring of

our Bureau

3. The correct behavior also continues after the

monitoring is concluded



Even if the number of GCs has significantly decreased in

the last period of time, our Bureau has an internal

procedure which is applied for the GCs received for our

members.



If B.A.A.R. receives a GC for its Member, B.A.A.R. asks the

Member to:

- pay the amount within 10 days;

- inform B.A.A.R. about the payment;

- send the proof of payment;

If not, B.A.A.R. pays directly to the Handling Bureau

abroad and notifies the Member about this.



The Member has to reimburse B.A.A.R. within 30 days

from Notification => if overdue, the penalty is 12% per

year

Not a single non-reimbursement situation!!!



BAAR has a very solid financial structure, in order to fulfill

all the obligations as National Green Card Bureau:

- Green Card Fund;

- Reinsurance XL Contract for non-insured driving

(including false or forged GCs) with a retention of EUR

400,000. It is concluded starting with 2007 and

it is annually renew. It is a common contract with the

Romanian Guarantee Fund. The broker is AON Benfield;



B.A.AR. directly or through its members, honors the

GCs within the term of one month



Any questions so far?



d. The Romanian Bureau and correspondents:

-In order to receive the quality of correspondent (generic quality) on Romanian territory, the person needs to fulfill the criteria established by the General Assembly of the Romanian Bureau

-The first such criteria to be fulfilled were established and applied in 1999, updated in 2002

-Due to developments within the Green Card System, the Romanian legislation and practice, new criteria were established in 31.03.2011, criteria which are still in force



In order to obtain the quality of correspondent on Romanian territory and in order to maintain this quality, a person needs to cumulatively fulfill the following criteria:

1.According to its Constitution, to be able to undergo on Romanian territory the activity of assessing and evaluation claims due to traffic accidents and to pay compensations

2. To have a minimum social capital of 10000 RON



3.Its legal representative and/or the person leading the assessing-evaluation of claims department must have at least 2 years experience in this field of activity

4.It can prove that it owns an informational system that allows an electronic communication as well as a clear evidence of the activity related to assessing-evaluation the damages and paying the compensations



5. It can prove that it is able, directly or through services contracts, to make assessments and evaluations of damages with qualified personnel, on the entire Romanian territory, within a short time from the date of the notification

6. It can prove at any given moment its capacity to compensate the damaged parties within the conditions of the Romanian legislation, without requesting an advance from the insurer



In respect to the criterion no. 6, its fulfillment can be proved if:

a.At any given moment, the amount of at least 100,000.00 EUR cash appears in its bank accountsorb.At any given moment, it has a credit line with a balance of at least 100,000.00 EURorc. It has to receive from the insurers on behalf of which it acts the amount of at least 50,000.00 EUR (copy of RDs + proof of transmission by e-mail or fax) and it has to have in its bank accounts the amount of at least 50,000.00 EUR



- The fulfillment of the criteria mentioned before are verified by the Management Committee which decides the date of the verification, without discrimination for all the correspondents, anytime it is considered to be necessary, but at least once each calendar year

- In practice, they are verified at a random date (the third day, the twenty-second day of a month, etc.) which is anterior to the date of the request

- The proofs are bank documents certified for conformity to the original by the manager of the correspondent



- The quality of correspondent is obtained on the basis of a decision issued by the General Assembly

- The quality of correspondent is lost on the basis of a decision issued by the General Assembly, at the proposal of the Management Committee, following the lack of fulfillment of the criteria mentioned before or of the provisions of the Mandate Contract



- The relationship between the Romanian Bureau and its approved correspondents is based on the provisions of the Mandate Contract

- The first Mandate Contract was signed in 1999. It was updated on 19.12.2003

- On 16.04.2008, a new contract was signed, due to the changes within the Green Card System, with all the approved correspondents at that date



The Mandate Contract provides the following chapters:

I.Preliminary provisionsII.The object of the contractIII.The duration of the contractIV.How to obtain/lose to quality of correspondent on Romanian territoryV.The approval and the withdrawal of the quality of correspondentVI.The rights and obligations of the Romanian BureauVII.The rights and obligations of the correspondentVIII. Others



Out of the previously mentioned chapters, we note the following:

-The right to handle ends:

a.At the date of the request to cancel the contract issued by the correspondent

b.At the date of the withdrawal by the Romanian Bureau, as sanction, of the mandate given to the correspondent



- The Romanian Bureau can withdraw the mandate given on the basis of the present contract, if:

a. the correspondent does not comply with the new provisions established by the Bureau within a maximum of 3 months from the date of notification

b. 5 justified complaints (breach of national law and/or I.R.) are received within an interval of 3 months for the approved correspondent



c. within an interval of 3 months, the correspondent handles without having a mandate 2 or more claim files

d. the correspondent does not pay the annual tax provided in the contract until 31.03 of the current year. The annual tax is established in respect to the no. of notified claim files in the previous year (ex.: 500 EUR < 200 files; 1000 EUR 201>500 files… 2500 EUR >1001 files). If it is not paid in due time, penalties of 0.2 % / day of delay are applied



- At the analyzing meetings, the correspondent is invited;

- The decision of the Management Committee will be communicated to the correspondent as well

- In case of withdrawal of the mandate with the title of sanction, the former correspondent cannot re-obtain this quality earlier than one year from the date of the respective sanction

- When the right to handle ends, the correspondent will present the Bureau with all its claim files, regardless of their current stand



After the withdrawal of the mandate, the correspondent

no longer has the right to handle any claim file



- Rights of the correspondent:

1. To be approved if it fulfills the criteria

2. To receive all the claim files it has received a mandate for

3. To receive reimbursement for the costs it made with the handling and settling of claim files



- Obligations of the correspondent:

1. To handle the claim files in strict conformity to the Romanian legislation, the provisions of the I.R. and those of the Mandate Contract

2. To make an adequate defense (in front of the courts, of the public or private authorities or any other) of the interests of the insurers it represents, but respecting the right to be compensated of the TP



3. To request the Romanian Bureau to intercede to other Bureaux in case the presumable insurer does not answer to the request for coverage confirmation within a period of maximum 30 days from the date the correspondent was notified of the respective claim file. In practice, if a complaint is received from the TP and the motivation received from the correspondent is that the handling was not done because the presumable insurer did not respond, but the correspondent did not notify our Bureau within 30 days, the complaint is considered to be justified and if 5 such complaints are received within an interval of 3 months, the contractual sanctions are applied up to the withdrawal of the quality of correspondent;



4. To not condition the payment towards the TP to the receipt of the amount from the insurer

5. To inform the insurer, at request or on its on volition, of claim files with serious consequences in relation to the manner of settling the claim file

6. To urgently inform the insurer and to send to our Bureau any claim file whose settling can lead to a `conflict of interests



7.To urgently send to our Bureau any claim file for which it does not have a mandate or the claim files with Frontier Insurance. If such a handling is done, the correspondent is obliged to pay to our Bureau, with the title of sanction, the received handling fee and, in case it does not obtain the reimbursement of the compensation/external costs, it does not have the guarantee of the our Bureau

8.To urgently transfer to our Bureau the claim file in which the foreign insurer denies the validity of the insurance



9.To support any penalty and pecuniary sanctions to which it is obliged by our Bureau, following an non-adequate handling of claim files

10. To provide to our Bureau, within 15 days, any information requested



The provisions of the Mandate Contract lead to a better regulations of the correspondents’ activity.

It is permanently analyzed if the correspondents fulfill the contractual provisions.

If it was/is the case, sanctions were/are applied.

Up to now, pecuniary sanctions were applied and even the withdrawal of quality of correspondent (June 2013).



There is a constant decrease in the no. of notified claim files

8.26% less in 2013 than in 2012




BG 41.42 %D 9.63 %E 9.18 %I 8.93 %H 5.51 %

Accidents in Romania produced by foreign vehicles


The policy of B.A.A.R. is a pro-active one. The Bureau

wishes to assist, sustain and develop any aspect

related to the relationship with its members /

correspondents



B.A.A.R. regularly organizes meetings, conferences,

bilateral meetings, courses (taking one day or

one week), etc. for professional training and in

order to keep its members / correspondents informed

about any development



Any questions?



Thank you for your kind attention!



stability and financial discipline romanian bureau

Documents