1. MTPL as a challenge to actuaries The Czech and the Austrian motor insurance market different countries but similar problems

2. Development of motor insurance market Austria  1.8.1977 introduction of the bonus- /malus system (private cars, taxi and hired cars)  1.9.1994 MTPL-insurance law 1994 (deregulation)  1.7.1997 minimum sum insured 1.09 million EUR (15million ATS)  1.1.2002 EURO  2004 (?) minimum sum insured 3million EUR CZECH Rep.  1.1.2000 demonopolization minimum sums insured PD 150 000 EUR BI 550 000 EUR  1.1.2000-31.12.2002 partial regulation of premium  1.1.2003 full deregulation bonus-malus system  1.5.2004 EU&adoption 4th directive PD 550 000 EUR BI 1 060 000 EUR

3. Rating factors used in MTPL Austria  Power of engine (kW)  Bonus-/malus-class  Sum insured (1.09 mio EUR to 10 (15) mio EUR)  Additional rating factors  Age of policy holder  User of the car  Additional bonus classes or discounts  Sex (?)  (Region)  (Type of car)  (Age of car)  (Firms) ... CZECH Rep. OLD (bound solely to vehicle):  Vehicle type  Engine cubage or vehicle weight NEW:  bound to policy holder :  Bonus/malus class  Age  Region  Person/company  bound to vehicle :  Age of car  others:  Sum insured

4. Bonus/malus-system Austria  18 classes  Starting class 09  Claim-free year  1 step towards bonus  Claim  3 steps toward malus 00 50% 10 120% 01 50% 11 120% 02 60% 12 140% 03 60% 13 140% 04 70% 14 170% 05 70% 15 170% 06 80% 16 200% 07 80% 17 200% 08 100% 09 100% Czech Rep. (prevalent BM)  16 classes (starting = 10)  function f „claims-free duration“ = time spent in the system  if claim  f=f-36months 00120M 50% 01 M55% 02 M60%... 09 M95% 10 M100% 11 M125% 12 M150%... 14 M200% 15 M250%

5. The Austrian bonus/malus-system

6. The Czech bonus/malus-system not unified  heterogenity in:  range of scale  maximum bonus = 50% (unified)  maximum malus in range  number of B/M states  size of one step  bonus steps 5% or 10%  malus steps are generally increasing and differ from company to company (below are examples of malus scales):  25%, 50%, 75%, 100%, 150%  5%, 10%, 15%, 20%, 25%, 30%, 50%, 100%  10%, 20%, 30%, 60%, 120%  malus NA

7. The implications of the deregulation in Austria Source: VVB – Versicherungsverband (Association of Austrian Insurance Companies)

8. Development of average MTPL premium in Czech Republic Source: Czech Insurers Bureau Demonopolization Full deregulationEstimate

9. The implications of the deregulation in Austria Source: VVB – Versicherungsverband (Association of Austrian Insurance Companies) hail event

10. Expectations for the Czech market  Higher competition  Trend towards bonus  Lower average premiums  Decrease in claims frequency  Higher sums insured  Higher average claims  Increase in claims ratio