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

a.Overview of Romania: -Romanian territory: 238,391 km ,700 km 2 (Black Sea platform) = 262,091 km 2 -Number of inhabitants: 9,043, (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 3 rd 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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

The Romanian Bureau has 11 members: ABC Asigurari – 508,877,41 EUR Allianz – Tiriac Asigurari – 37,842, EUR Asirom VIG – 50,990, EUR Astra Asigurari – 76,357, EUR Carpatica Asig – 56,106, EUR City Insurance – 10,436, EUR Euroins Romania – 91,494, EUR Generali Romania – 17,027, EUR Groupama Asigurari – 38,370, EUR Omniasig VIG – 45,430, EUR Uniqa Romania – 30,994, EUR (data transmitted to the Romanian Bureau - VGP 2012) Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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. Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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. Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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! Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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; Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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; Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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! Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

The Monitoring procedure was adopted by the General Assembly of B.A.A.R. in 2007 and updated 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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

By applying this strict and long lasting procedure, the purpose was achieved, namely: 1. The number of guarantee calls significantly decreased Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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! Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

2. Our members avoid entering under the monitoring of our Bureau 3. The correct behavior also continues after the monitoring is concluded Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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. Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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. Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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!!! Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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; Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

B.A.AR. directly or through its members, honors the GCs within the term of one month Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

Any questions so far? Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Due to developments within the Green Card System, the Romanian legislation and practice, new criteria were established in , criteria which are still in force Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 RON Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

In respect to the criterion no. 6, its fulfillment can be proved if: a.At any given moment, the amount of at least 100, EUR cash appears in its bank accounts or b.At any given moment, it has a credit line with a balance of at least 100, EUR or c. It has to receive from the insurers on behalf of which it acts the amount of at least 50, EUR (copy of RDs + proof of transmission by or fax) and it has to have in its bank accounts the amount of at least 50, EUR Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 It was updated on On , a new contract was signed, due to the changes within the Green Card System, with all the approved correspondents at that date Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

The Mandate Contract provides the following chapters: I.Preliminary provisions II.The object of the contract III.The duration of the contract IV.How to obtain/lose to quality of correspondent on Romanian territory V.The approval and the withdrawal of the quality of correspondent VI.The rights and obligations of the Romanian Bureau VII.The rights and obligations of the correspondent VIII. Others Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 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 500 files… 2500 EUR >1001 files). If it is not paid in due time, penalties of 0.2 % / day of delay are applied Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

After the withdrawal of the mandate, the correspondent no longer has the right to handle any claim file Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

-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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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; Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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). Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

There is a constant decrease in the no. of notified claim files 8.26% less in 2013 than in 2012 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest BG41.42 % D9.63 % E9.18 % I8.93 % H5.51 % Accidents in Romania produced by foreign vehicles Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

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 Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

Any questions? Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager

Thank you for your kind attention! Stability and financial discipline - Romanian Bureau 3 rd of April 2014, Bucharest Cristina-Daniela OANCEA – Claims Manager