1. Cross-border cooperation in motor insurance claims InterEurope AG European Law Service Head Office Hansaallee 249 40549 Düsseldorf Germany Tel. +49 211 586 584 18 Fax. +49 211 586 584 34 e-mail: headoffice@intereuropeag.com IIF 2014, Istanbul, April 6-7th. The road towards profitability Cees Werff InterEurope AG European Law Service www.intereuropeag.com

2. Fraud AGENDA Cross-border cooperation in motor claims management Data protection & privacy regulation in EU Introduction to cross-border motor claims www.intereuropeag.com 2

3. Introduction * Implementation of the system of the International Certificate of Motor Insurance (‘Green Card System’) on 01.01.1953 * Council of Bureaux (CoB) is the organisation coordinating the different National Insurance Bureaux (NIB) participating in the Green Card system. * The NIB represents around 2000 motor insurers in 47 countries in Europe, North Africa and the Middle East. CoB operates under the United Nations Number of cross-border traffic accidents reported in 2012: 355.759 General trend: declining. Reasons: economical crisis, road-safety measures, road-traffic information, safety measures car manufacturers, in car technology (mainly technology innovations) Movers and shakers in cross-border traffic accidents www.intereuropeag.com 3

4.  Relationship between TPL insurer and foreign Correspondent and his Correspondent/Representative must be considered as a legally regulated Outsourcing situation with the respective rules of Compliance and Governance.  The Correspondent / Representative is a full range defender of the interests of the mandating foreign MTPL Insurer not just a loss adjuster.  Requirements to integrate targets, structures and procedures between the mandating MTPL insurer and the foreign service provider.  International Complexity require service providers‘ total focus on international claims: international claims must be core business free of conflicts of interest. Principles in international claims www.intereuropeag.com 4

5. Without direct compensation systems Direct settlement on basis of conventions Mandatory direct compensation systems on basis of law www.intereuropeag.com 5 Claims handling schemes: traditional system vs. direct settlement of claims

6. Introduction Accidents which occurred in the country involving land vehicles registered abroad:  Top 5 countries (2012):  1. Germany (54.623)  2. France (53.914)  3. Italy (41.188)  4. Austria (29.055)  5. UK (24.875)  Top 5 countries CEE  1. Poland (12.919)  2. Romania (10.173)  3. Hungary (7.280)  4. Czech Republic (5.566)  5. HR (5.344) www.intereuropeag.com 6

7. Introduction  Countries of registration of the vehicle involved in the accident:  Top 5 countries (2012):  1. Germany: F, CH, NL, A, PL, Ro  2. France: B, CH, E, UK, I, P  3. Italy: CH, G, F, Ro  4. Austria: D, H, I, CH  5. UK: D, F  Top 5 countries CEE  1. Poland: CZ, G, F, UK, I, NL  2. Romania: G, F, UK, I, H  3. Hungary: A, G, UK, I  4. Czech Republic: A, G, UK, I, PL, SK  5. HR (5.344); BIH, I, G  Turkey: G, UK, F, I, Ro www.intereuropeag.com 7

8. 8 Migration in Europe Source: Berlin Institut für Bevölkerung und Entwicklung, Die demografische Zukunft von Europa (2008) 108.548 16.866 74.198 E P RO BG PL I CH B NL D S EST LT GB IRL 10.523 48.038 6.777 5.859 51.151 11.424 38.367 18.015 EU 25 4.865 20.785 2.312 5.989 2.074 1.695 47.000

9. Fraud AGENDA Cross-border cooperation in motor claims management Introduction to cross-border motor claims Data protection & privacy regulation in EU www.intereuropeag.com 9

10. Data protection & privacy regulation in the EU  EDPS: European Data Protection Supervisor  Started on 01.01.2004  Main tasks: Control, Advise & Cooperation  Each member state have an DPO (Data Protection Officer)  Advise after control: health status, employment, security research, etc.  Complaint procedure for EU citizens: breach of confidentiality, access to information, right of correction, erasure of information, unnecessary saving of confidentiality information  Recently special advise on: TFTP-SWIFT, e-privacy guideline for electronic communication and public access to documents  Also advise on Court of Justice: ‘Bavarian Lager case’: connection between transparency and data protection  Cooperation with Eurodac: sharing responsibility regarding control between local data-protection authorities www.intereuropeag.com 10

11. Data protection & privacy regulation in EU AGENDA Cross-border cooperation in motor claims management Introduction to cross-border motor claims Fraud www.intereuropeag.com 11

12. FRAUD  Common fraud techniques  Underwriting side (total-loss)  Claims side  Specialist fraudsters (groups)  Mobile numbers, witnesses, addresses, etc.  Vendors (garage’s)  Digital pictures (photo shopping)  Majority are coincidence fraud cases www.intereuropeag.com 12

13. Data protection & privacy regulation in EU AGENDA Fraud Introduction to cross-border motor claims Cross-border cooperation in motor claims management www.intereuropeag.com 13

14. Cross-border cooperation in motor claims management Who is entiteled to handle cross-border MTPL claims?  MIB can give delegated authority to external service providers  Insurers are member of the MIB and are allowed to handle claims  MIB can handle claims themselves as well, or can delegate this  In general insurers can appoint correspondent/representative themselves, but some exceptions apply What are selection criteria in choosing a cooperation partner? Quality (people: claims handling vs. claims processing) Main countries Finance management Data protection & privacy regulation Internal audit structure Vendor management www.intereuropeag.com 14

15. Cross-border cooperation in motor claims management What are selection criteria in choosing a cooperation partner? Quality (people: claims handling vs. claims processing) Communication Main countries Finance management Solvency II requirements Data protection & privacy regulation Internal audit structure Vendor management Client relationship structure Innovation (e.g. Telematics, electronic accident report via smart app) www.intereuropeag.com 15

16. Cross-border cooperation in motor claims management Vendor management? Many parties could be involved in the claims process: Claims service provider, technical experts, accident investigators, medical experts, external lawyers (criminal), body repairs shops, special experts, etc. SLA Auditing Costs Payment structure Quality Communication www.intereuropeag.com 16

17. Cross-border cooperation in motor claims management Euro Kasko Claims support Asssistance network (Atrium) Road-side assistance Towing network Body-repair shop network Surveyor network Mobile app Advantage: Early stage pro-active claims handling to reduce time and costs! www.intereuropeag.com 17

18. www.intereuropeag.com 18 Cross-border cooperation in motor claims management Point of view of the insurance company:  Keep indemnity/ compensation reasonable  Avoid sanctions  Accurate reserves  Governance & Compliance Data Protection Fraud prevention Controlling, reporting, auditing  Client retention (marketing function of claims management: service and assistance towards insured)

19. 19  No legal and/or contractual obligation of the policy holder to report an accident  Lower control over claims costs but also processing costs (survey reports, medical experts, legal costs)  Poor or inefficient communication with correspondents  Unclear / unstructured processes of claims handling  Competitive advantage of the car manufacturers (i.e. technology & data) Challenges for insurers

20. 20  Bentley Continental GTC 6.0 l badly damaged, estimated repair costs GBP 55,000  Credit car hire vehicle obtained on the day of the accident (Bentley Continental Flying Spur 6.0 l) – daily rate: GBP 762.50 + VAT  Claims notification: 3 weeks post accident  Confirmation of insurance cover: 7 weeks post accidents  Repairs completed: 8 weeks  Total credit car hire 159 days / GBP 121.237,50 Example for higher costs due to delays For example: Credit Car Hire in the UK

21. 21 “If detailed information about an accident could be obtained earlier, this would dramatically effect the efficiency of the claims handling process and thus reduce costs“ Hypothesis

22. 22  Telematics How can modern technology help?  Online claims forms  IT-interfaces  Automatic data transfers  Communication platforms  Apps The use of modern technologies results in changing traditional processes, reducing claims costs but also administrative and other costs

23. 23 Ideal process Insurer Call center 24/7 Telematics box TPA Data transfer Information (e.g. false alarm Instruction File opening Key processes Data transfer Contact InterEurope Claim rejection or claim settlement Expert instruction Receipt of expertises TP Signa l File opening & confirmation of insurance cover Confirmation of insurance cover Request for confirmation of insurance cover & 1st reserve Investigation & legal assesment Querries Further information, legal evaluation, reserve update Claim rejection or claims settlement Information Invoicing & file closing Payments Invoices & supporting documents

24. 24  Claims handling process becomes shorter due to faster communication  Swift decision making  Decrease of claims costs and processing costs  Better control in terms of insurer being informed of an accident  Avoiding time gaps between accident occurrence and notification of a claim  Swift access to legal expertise (InterEurope) – more adequate handling  Risk identification and reduction (taylor-made premiums) Effects / possible cost reductions

25. 25  Data protection  Future technical developments (e.g. e-call, driverless cars, google glass)  Cost pressure  Legal developments  Automatization  Standardization vs. Industrialization Challenges & summery

26. 26 Thank you for your attention! For further questions, please do not hesitate to contact me Cees Werff InterEurope AG European Law Service Cees.werff@intereuropeag.net Head Office Hansaallee 249 40549 Düsseldorf Germany www.intereuropeag.com