FIAR – International Insurance-Reinsurance Forum 2012 Ulrich Werwigk, Swiss Re Europe S.A. German Branch; Munich Components of Bodily Injury Claims – A European Perspective –

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012 Bodily Injury Claims in Europe Bodily Injury Scenarios in Europe – Sample of Typical Cases Swiss Re Bodily Injury Landscape – Benchmark Case and Trends Key Drivers of Bodily Injury Claims Components of Bodily Injury Claims – Overview Exemplary Reserve Calculation Conclusions: "… what is important?" 2 Agenda and Topics

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May Bodily Injury Claims in Europe– Facts and Developments*) According to last CEA statistics, published in 2010, Europe is with 315m vehicles the largest motor market of the world. Comparing with the increase of vehicles of 1,9% each year, the growth of bodily injury claims of 2,3% per year is slightly higher. Total expenditure of bodily injury claims is quoted with 50% of all MTPL claims expenditure, even though the share of counted claims is only 14% (Italy 22%, France, Germany, Austria 10%, Hungary 2,4% of counted claims). The share of large personal injury claims (>€ ) counts only 1,1% of all personal injury claims, however they represent 37% of all personal injury claims expenditure MTPL (roughly € 10bn). Statistics show a large spread between European States and an West-East divide. *) Source of data and graphs: CEA Statistics No. 38 – European Motor Insurance Market, publ. February 2010

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May Bodily Injury Scenarios in Europe – Sample of Typical Cases AccidentLossAmount*) Macedonia (Austria) British passenger severely injured (quadriplegia) € 17m (€ 8m) AustriaBritish tourist bus, 48 passengers, hereof 35 injured, 5 fatalities € 14m (€ 9m) IrelandLatvian lady as passenger severely injured (quadriplegia) € 5,4m Austria / GermanyOne person injured, quadriplegia Multiple injured, one severe (paraplegia) Up to € 8m € 4 – 5m PolandInjured (paraplegic)€ 0,5 – 0,8m Czech RepublicInjured (paraplegia)€ 0,8 – 1,2m RomaniaVarious losses of injured (severe bodily injuries) and fatality € – RomaniaPain & Suffering of injured and of relative € € 1,2m *) amount in brackets (€ 8m) reflects final settlement by insurer

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012 Hypothetical victim – Tetraplegic 30-year-old man Wife without own income 2 children (aged 2 and 5) Average income from dependent employment Severe spinal or head injury; no ventilation necessary; remains 100% disabled; cannot return to work Highest assistance level Cost components: loss of earnings, assistance, pain & suffering, remainder Slide 5 Swiss Re Bodily Injury Claims Landscape - Benchmark Case -

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012 Slide 6 Swiss Re Bodily Injury Claims Landscape European Comparison 2010 in mn €

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May Swiss Re Bodily Injury Claims Landscape European Trends 2012 Poland (EUR)Czech Republic (EUR)

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May Key Drivers in Increase of Severe BI Claims Capitalization tables Increasing welfare  Higher living standards  Increasing wages  Changes in society / social relationship  Increasing mobility Increasing claims awareness Life Expectancy  Superimposed inflation in medical and care sector  Trend to third party assistance in welfare states Exploding Medical and Care Costs / Healthcare costs  Discount rates  Changes in financial markets  From whom can I get compensation?  Stronger public awareness  Contingency fees/victim associations/TV  People live longer Legal Changes  Enforcement of victim protection (EU)  Increasing compensation of non- material losses  Role of courts – victim friendly / but also restrictive re claims Legal Systems Different Settlement Methods  Annuities vs. Lump Sum (capitalization)  Settlement periods  Non-material losses; Pain & Suffering vs. Harm of Social Status  Recourse of social security system

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012  Medical costs (medical treatment in hospital and ambulant, rehabilitation, medical follow-up treatment)  Loss of Earnings during medical treatment and later  Care costs and assistance (monthly period, calculated on hourly or daily rates)  Pain & suffering of the injured (respectively additional disfigurement)  Non-material compensation for relatives  Additional needs (prosthesis, wheelchair, conversion of flat, additional medical expenses, housekeeping loss)  Funeral costs  Alimony to family members (spouse, children)  Lawyers- and court costs 9 Components of Bodily Injury Claims - Overview

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May Reserve Calculation - Bodily Injury Claim Motor Accident (Austria) potential wage increase? carrier opportunities? discount rate? why here and not at care costs? potential future increase of costs? what is this amount in 54 years? Life expectancy / mortality tables / retirement age? Loss of Earnings / carrier opportunities? Alimony of wife and children? Home care or residential care? Potential for lump-sum agreement? Key Topics justification for reduction of LE and proportion?

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012 … one of the most complex topics in claims handling …consistent strategy and philosophy – what are the key topics for Romanian insurance industry? … consider the individual elements of bodily injury claims, the requested medical treatment, rehabilitation or assistance … clear principles enable pro-active claims management and reduction costs Therefore bear in mind – be prepared for special requirements and individual claims settlement as a part of a consistent claims strategy Swiss Re is ready to assist and support developing a strategy for bodily injury claims and to provide an appropriate forum with experts for the discussion. 11 "… what is important for Severe Bodily Injury Claims?"

Thank you Ulrich Werwigk, Attorney at Law Swiss Re Europe S.A., German Branch

FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012 Legal notice ©2012 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation. 13