1. Regulation of compensation for moral damages and bodily injuries Madalin Rosu, Head of Motor Insurance Section Budapest, April 2016 Motor Insurance Conference

2. Romania from MTPL perspective MTPL policies MTPL claim files Frequency ~ 4,5 mil ~ 340.000 7- 8 % Romanian traffic the highest risk for death in Europe (together with Bulgaria). No of deaths per million of inhabitants : Romania 95 / Sweden 27 / Average Europe 51,5 Indemnities in a worrying increasing trend Specialized “hunting companies” = “claim farmers“ Non-unitary judicial practice Same type of bodily injury – the compensation granted by one court can be 100 times larger than the one granted by another court

3. Unfortunate events can not be prevented. But insurers are trying to make them more bearable, by answering two questions: How likely is for an unpleasant event to happen? How much would it cost removing its effects? In both cases, the key word is. 02 Predictability

4. What is happening in Romania? 02 Growth of 1000% Romania faces a lack of legislation in the field of moral damages. The amount of compensation is unpredictable: compensation paid for bodily injuries on MTPL is alarmingly growing, from year to year (25% of all claims paid in 2014 represents moral damages).

5. What is happening in Romania? 02 Growth of 2000% Discrimination between victims of accidents who suffered similar damage frequently appears. Marginal undesirable situations are created: veritable networks that “hunt” victims for representation before the insurers (“claim farmers”). Additional costs generated by the absence of a predictable system are transferred to policyholders. The 470 million lei (approx. 105 million euro) paid in 2014 represented an increase of 24% over 2013 and more than 2000% over 2007.

6. What is happening in Romania? 02 28% 36%33% 106% 87% 64%

7. OCTOBER 2014 – A TRUCK hit a car column 5 people lost their lives, 20 people were injured. Increasing severity of claims 02 AUGUST 2015 -A minibus crash 2 people lost their lives, 5 people were injured. Catastrophic accidents caused by vehicles registered in Romania

8. DECEMBER 2015 – Collision between a truck and a minibus, Sibiu 3 people lost their lives, 3 people were injured. 02 FEBRUARY 2016 – Bus crash near Ploieti 5 people lost their live, 19 people were injured. Catastrophic accidents caused by vehicles registered in Romania Increasing severity of claims

9. 17 people were injured and 5 people lost their lives, including three members of male handball team CSU Targoviste 02 Catastrophic accidents caused by vehicles registered in Romania Increasing severity of claims

10. European experience 03 In 2013, the IMF recommended Italy a move towards a table system to reduce uncertainties related to the costs of moral damages and ensure equal treatment of victims. Objective criteria for granting moral damages exist across Europe: Spain, Czech Republic, Slovakia, Germany, France, Austria, Italy.

11. 11 European experience 04 RomaniaItaly Source: Annual report of Financial Supervisory Authority 2013 Source: IMF Country Report No. 13/346 – December 2013 Combined ratio – Romania vs. Italy

12. Solution TABLE SYSTEM FOR GRANTING COMPENSATION OBJECTIVITY A stable and predictable computing system, with objective criteria, established by specialists in forensic medicine for moral compensation NO DISCRIMINATION People with similiar injuries receive similar compensation FAIR COSTS Enables accurate estimation of costs for future unpleasant events EFFICIENCY Allows relieving courts and reduces waiting times for receiving compensation

13. What it implies? 05 -Torts regulation for damages caused by vehicle crashes -Systematization and consolidation of legislation related to MTPL insurance and entities involved -Introducing a new evaluation concept for moral damages: a table system with points for bodily injuries and death traumatic point (TP) persistent vegetative state (PVS) traumatic scale for 0 to 200 TP assumed average level of suffering maximum possible adjustment for compensation: 25% determining the TP value

14. What are the rules? 05 PVS PPC TL PC Permanent vegetative state Traumatic lesion Posttraumatic complication Permanent posttraumatic complication 200 TP Maximum point value Independently of no of lesions Total value = TL+(maxPC)+(maxPPC) Each TL has a value in points. Each TL can have post traumatic complication estimated in points. All time will be used the highest no of points in case of more complication In case of PPC also highest value will be taken into consideration.

15. Examples 05

16. Examples and final conclusion 05 Scientific study done by Romanian National Institute of Legal Medicine network; Objective and neutral position toward insurance market; Treating all traumatic lesions but also posttraumatic complications; Complete “baremo” for any type of trauma and post trauma; Points between 0 and 200.

17. 17 Thank you. www.unsar.ro