1. 1 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 9 – Financial Services Bilateral screening: Chapter 9 PRESENTATION OF MONTENEGRO Brussels, 10-11 June 2013

2. 2 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services MOTOR THIRD PARTY LIABILITY INSURANCE Nataša Raičević Insurance Supervision Agency natasa.raicevic@ano.co.me

3. 3 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services CONTENT 1.GENERAL REMARKS (EU Law sources, Montenegrin legislation and supervision) 2. TYPES OF COMPULSORY INSURANCE IN TRANSPORT 3. MAIN FEATURES OF MTPL INSURANCE IN MONTENEGRO (coverage, persons not entitled to claim damages, conditions for reimbursement form the liabkle person, sums insured) 4. COMPENSATION OF DAMAGE CAUSED ABROAD 5. PROOF OF INSURANCE FOR A FOREIGN VEHICLE 6. COMPENSATION OF DAMAGE FROM UNINSURED FOREIGN MOTOR VEHICLES 7. CLAIMS RESOLUTION (Claims representative) 8. NATIONAL ASSOCIATION OF INSURERS (Guarantee fund, Green card Bureau, Information centre, Compensation body) 9. TRANSITIONAL PROVISIONS – Deregulation of tariffs, rise of the sums insured 10. CONVERGENCE DYNAMICS

4. 4 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services Relevant sources of law of the European Union and relevant montenegrin legislation DIRECTIVE 2009/103/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability LAW ON COMPULSORY INSURANCE IN TRANSPORT (OG Of MNE, No.44/12) – Law on CIT Law on Insurance (OG Of MNE, No.78/06, 19/07, 45/12) Bylaws based on Law on CIT: a) Rulebook on the Content of Reports, Notifications and Other data submitted by the Association – National Bureau of Insurers of Montenegro to the ISA and the manner and deadlines for submission thereof (OG of MNE, no.02/13) b) Decision on Border Insurance (OG of MNE, no. 35/12) The Law on Compulsory Insurance in Transport, enacted in August 2012, is highly compliant with the mentioned Directive.

5. 5 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services COMPETENT AUTHORITY Insurance Supervision Agency (ISA), established under the Law on Insurance (OJ RM 78/06), operational since January 2008. Scope of supervision - manner of operating business in this class of insurance, complying with the obligations prescribed by the law and fulfilment of obligations towards the National Insurers Bureaux. Beside the role of the ISA, supervision is also performed by the Traffic Police.

6. 6 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services 1)Compulsory Insurance of Passengers in Public Transport 2)Motor Thrid Party Liability Insurance 3)Compulsory Aircraft Liability Insurance 4)Compulsory Vessels Liability Insurance Law on CIT defines: 1.Scope of the compulsory insurance 2.Main clauses of the insurance contract and claims resolution procedure 3.Sums insured 4.Exclusions from the coverage and loss of right to coverage 5.Duties and main features of the National Association of Insurers: - Guarantee Fund - Green Card - Information Centre - Compensation Body TYPES OF COMPULSORY INSURANCE OF TRANSPORT

7. 7 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services MAIN FEATURES OF THE MTPL INSURANCE IN MONTENEGRO a) Coverage Civil liability for damages caused to third parties by using a motor vehicle, including bodily injuries, death and damages to the property (as well as damage due to fall of things off a vehicle in movement) Also covers the material damage to things of the owner of a motor vehicle, which he has agreed to transport, if such things serve for personal use of the persons that are present in the vehicle. Third parties - all persons that suffered injuries as a result of an accident.

8. 8 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services MAIN FEATURES OF THE MTPL INSURANCE IN MONTENEGRO b) Persons Not Entitled to Claim Damages an owner, co-owner and any other user of motor vehicle causing damage or authorized holder of the motor vehicle, for material damage to things; a driver of the motor vehicle who caused the accident, and his/her legal successors in case of bodily injury, impaired health or death of the driver; a person that has performed or participated in illegal coming into possession of a motor vehicle the use of which has caused damage, regardless of whether he has operated the vehicle at the time of damage occurrence (driver or passenger); a person who has suffered the damage due to the dangerous use of vehicle, or natural and other hazards.

9. 9 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services MAIN FEATURES OF THE MTPL INSURANCE IN MONTENEGRO c) Indemnification with reimbursement of the paid amount by the liable party The liability for damages caused to third parties by the use of a motor vehicle is covered also for person: who has operated the motor vehicle without appropriate driving license or in an inappropriate way; who has used the motor vehicle without knowledge or approval of the owner or authorized user of such vehicle; who has operated the vehicle under the influence of alcohol above the set limit, narcotics, psychoactive medicines or other psychoactive substances, and who has avoided or refused to be subject to alcohol and other testing; who has caused the damage intentionally. Insurance company shall have the right of recourse.

10. 10 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services MAIN FEATURES OF THE MTPL INSURANCE IN MONTENEGRO d) Sum insured The lowest sum insured for MTPL insurance may be: in respect of loss due to death, bodily injury and impaired health: -€750,000 for buses and cargo vehicles; -€550,000 for other motor and unknown vehicles; -€800,000 for vehicles transporting hazardous substances; in respect of loss due to material damage or destruction: -€500,000 for buses and cargo vehicles; -€300,000 for other motor vehicles; -€550,000 for vehicles transporting hazardous substances. Sums fully enter into force in August 2015. Further increase of sums – upon a decision passed by the Government, at proposal of the ISA.

11. 11 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services COMPENSATION OF DAMAGE CAUSED ABROAD When exiting Montenegro, a green card is needed, and being checked for at the border crossing. Liability for the compensation in case of an accident caused abroad - the insurance company which has issued the green card. Maximum extent of compensation - amounts stipulated by regulations of the state in which the damage occurs, or in accordance with the international agreement, if the international document is valid in the state in which the damage occurred. Procedure of claims resolution - pursuant to the established international agreement signed by the national green card bureau (the Association). If the insurance company fails to pay the damage in accordance with paragraphs 3 and 4 of this Article, the claim shall be filed to the Association.

12. 12 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services PROOF OF INSURANCE FOR FOREIGN VEHICLES A foreigner entering the territory of Montenegro must have a green card or one of the following alternatives: a)frontier insurance b)other evidence recognised by the National Association of Insurers. After signing the Multilateral Agreement, the registration plate of a vehicle that is normally located in the territory of a state signatory of MA shall be also deemed as a valid document. The Association guarantees for the liability arising from these documents up to the sums insured specified in Article 33 of the Law on CIT. Above documents shall also be required for a motor vehicle transported to Montenegro by other means of transport, unless such vehicle is not intended to be used in Montenegro.

13. 13 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services COMPENSATION OF DAMAGE CAUSED BY AN UNINSURED FOREIGN VEHICLE Body responsible for compensation - the Association, from the Guarantee Fund, with the right to recourse of the paid amount of damage, interest and expenses from the competent organisation of the state where the vehicle is registered. Timeframe for claims resolution – same as for domestic accidents. Right of recourse from the liable party abroad.

14. 14 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services CLAIMS RESOLUTION (EU Rules) Obligation to nominate the claims representative for MTPL insurance contracts in all the European Union member states. The appointment does not represent opening a branch, nor influences the applicable law. Claims representative - natural person or a legal entity with residence or office in that country, able to resolve any issue that may arise with regard to the claim, in the official language of the country. May work for several insurers, collects all the required information in order to establish cause of the insured event, the amount of the loss incurred, and is responsible for processing, settling and payment of compensation claims in respect of damage incurred. Without prejudice to these provisions, a claim can be directly submitted to the liable company or its branch.

15. 15 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services NATIONAL ASSOCIATION OF INSURERS NATIONAL ASSOCIATION OF INSURERS (NAI) – Association introduced by the former Law on Compulsory Insurance in Transport (OJ of MNE, no. 46/07), organization with legal personality, operating since July 2007. Membership in NAI compulsory to insurance companies carrying out MTPL and other types of compulsory insurance business in order to implement the activities specified by this law and pursue their joint interests. The NAI caries out its activities within: the Guarantee Fund, Green Card Bureau and Information Centre. Upon EU accession, the NAI shall also carry out activities of the Compensation Bureau. Charter of the NAI - subject to the previous approval by the ISA.

16. 16 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services REPORTING BY THE NAI Annual plans and annual financial statements, including a separate annual plan and annual financial statement of the Guarantee Fund. The yearly financial statements are subject to external audit. Other reports and information of relevance for supervision. Legislation frame - Rulebook on the Content of Reports, Notifications And Other Data that National Association of Insurers Submits to the Insurance Supervision Agency and the Manner and Deadlines for Submission thereof (OG of MNE no. 02/13) Most of data and information is determined by the ISA`s rulebook, which defines detailed content, manner and deadlines for submission. Upon ISA`s request, NAI has to prepare other data and information, not included in the rulebook.

17. 17 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services GUARANTEE FUND (GF) Aim of establishing the GF - ensuring economic protection of third parties suffering damage where the damage has been caused by the use of uninsured or unknown means of transport, as well as where the insurance company liable for compensation of damage has been revoked its license or against which bankruptcy or liquidation proceedings were initiated, and damages arising from the green card, as well as passengers in public transport. Funding of the GF - regular contributions from the insurance companies operating compulsory insurance, proportionally to the premium realised in the previous year. The amount of the regular contribution is determined by the ISA by the end of the current year for the following business year. In case that these funds are insufficient to cover the obligations, the missing resources are provided by additional contribution, determined in the same manner and the procedure as the regular contributions. The resources of the GF are kept on a special account of the NAI, which is responsible for managing and disposing of these resources. If an insurance company fails to meet the obligation of regular contributions to the GF, the NAI shall, without delay, inform the ISA, which shall impose on the insurance company a measure ordering fulfilment of the obligation, or - in more severe conditions - the measure of revoking the license.

18. 18 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services GREEN CARD BUREAUX NAI is a full member of Green Card system since January 2011. Before that, NAI has had experience within Serbian Association of insurers, which has guaranteed also for the obligations of Montenegrin insurers. All claims received under the Green Card coverage are dealt with in line with the Internal Regulations of Council of Bureaux. Resources for payments are secured within Guarantee Fund. For all the payments done by the NAI, it has a right of recourse from the liable institutions.

19. 19 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services INFORMATION CENTER Information Centre shall be organised within the Association, for the purpose of efficient exercise of rights in respect of compensation claims in case of damages caused by the use of motor vehicles. Duties: -collecting data significant for dealing with claims and keeping the register of such data (registration markings, types, brands, etc.) MTPL insurance policy number, duration of the insurance coverage, data on insurance company giving insurance cover, data on the insured party, list of exemptions from the MTPL liability insurance coverage, etc.) ; -enabling review of these data; -providing assistance to the persons suffering damage in collecting data from its register and, in the future, the registers of information centres from the EU member states. Information Centre collects data from insurance companies, official record of motor vehicles, and may ask for data from the registers of information centres of other countries. These data shall be kept for the period of no less than seven years after the deregistration of a motor vehicle or after the expiry of an insurance policy. After the accession, the Information Centre shall have the obligation to cooperate with information centres of the EU member states with regard to assistance in data collecting.

20. 20 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services ROLE OF THE NAI AS THE CLAIMS COMPENSATION BUREAX (I) Montenegrin residents shall be able to file the claim to the Claims Compensation Bureau (CCB), for the damage caused in the territory of the EU or a third country-signatory to a multilateral agreement, if caused by a motor vehicle that is insured, or normally used in the territory of the EU member state, if: 1) the liable company or its authorised representative in Montenegro fails to pay the compensation or deliver a reasoned response within the prescribed time frame; 2) the liable person fails to appoint an authorised representative on the territory of Montenegro; 3) within 60 days from the submission date of the compensation claim it is not possible to identify a liable insurer, or the motor vehicle that has caused the accident. Except in cases when the claimant has initiated court proceedings against the liable person or liable company. Procedure stops if before expiry of the deadline for claim settlement, claimant is paid by the liable person, the liable company or third party, or if the liable company or its representative, provide a reasoned response to the claimant by the defined deadline. The CCB shall have the right to recourse for the amount of the compensation and costs paid from the claims compensation organisation of the EU member state where the vehicle that caused the accident is insured, OR, in case of unknown or uninsured vehicles, form the liable Guarantee Fund. The NAI shall have this role upon accession to the EU.

21. 21 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services TRANSITIONAL PROVISIONS 1. Deregulation of tariffs – transitional period of five years, expiring in 2017., considered as necessary and sufficient for adequate actuarial capacities of the insurance sector as a whole (including the ISA`s capacities), and sufficient data for tariff calculation. These two are essential for securing sufficiency of technical provisions securing the ability of insurance companies to answer all the obligations arising from the insurance contract. 2. Gradual rise of the sums insured in MTPL – Law on CIT enacted in August 2012 gives a period of three years of predefined rise of sums insured (art. 70 of that law), after which the sums will be risen by the Government decision, upon the initiative by the ISA. Decision based on the difference that existed between the former Law on CIT and comparative sums in other countries and the EU, as well as on the social characteristic of this class of insurance (imposed by the state, affecting large number of people). At the time of expected EU accession, the sums shall be equal to those in the EU. 3. Number of provisions entering into force upon EU accession – all provisions including obligatory information to the EU, provisions regarding claims representative, functions of Claims Compensation Bureaux and some functions of Information centre.

22. 22 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services OVERALL ASSESSEMENT OF COMPLIANCE In our opinion, the Law on Compulsory Insurance in Transport is compliant with the relevant sources of EU law, except for the following: –Sums insured – art.33 of the Law on CIT Shall be risen gradually an shall be fully compliant by the day of EU accession –Single premium rules – rules regulating territorial validity of the MTPL policy shall be introduced by the day of EU accession (the application shall start as of the day of EU accession) A detailed overview of compliance of this Law with the Directive 2009/103/EEC is presented in the transposition table.

23. 23 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services HARMONIZATION DYNAMICS The necessary amendments of the national legal framework shall be achieved with a view to its full harmonization with the relevant EU acquis governing this area. Full compliance shall be achieved by the day of EU accession.

24. 24 Thank you for your attention! QUESTIONS