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"New instruments of consumer protection in motor insurance". Maria Luisa Cavina Director of Consumer Protection D ivision , ISVAP Warsaw , 28 September 2009. Il controllo interno. ISVAP - LEGAL NATURE. Endowed with legal status under public law;

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"New instruments of consumer protection in motor insurance"

Maria Luisa Cavina

Director of Consumer Protection Division, ISVAP

Warsaw, 28 September 2009


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Il controllo interno

ISVAP - LEGAL NATURE

  • Endowed with legal status under public law;

  • Set up on 1982 (law n. 576 of 12 August 1982);

  • Fully autonomous in the juridical, financial, accounting, organization and management field.


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ISVAP - AIM OF SUPERVISION

Purposes of supervision:

  • Stability of the insurance sector;

  • Solvency of companies;

  • Protection of policyholder.


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  • ISVAP - SUPERVISED ENTITIES

  • Undertakings pursuing insurance and reinsurance business;

  • Insurance groups and financial conglomerates;

  • Insurance and reinsurance intermediaries, loss adjusters;

  • any other insurance market participants who, in any form, performs functions partly included in the operational cycle of insurance and reinsurance undertakings, limited to insurance and reinsurance profiles(outsourcers, e.g. claim settlement services);


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ISVAP - FUNCTIONS

  • Grants undertakings the authorisation to pursue insurance and/or reinsurance business.

  • Supervises on the technical, financial and accounting management of domestic and foreign insurance undertakings (branches of undertakings with head office in a non EU country) and reinsurers subject to its supervision.

  • Issues all the measures deemed useful in order to safeguard the undertakings and the consumers.

  • Provides consultation and presents proposals to Parliament and the Government for matters within its competence for the regulation and supervision of the insurance industry.


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ISVAP - FUNCTIONS

  • Establishes rules aimed to guarantee the right behaviour of the market participants and the respect of the insurance law.

  • Take corrective, repressive and sanctioning measures or propose their adoption by the Ministry of Production Activities.

  • Handles and examines the consumers’ complaints.


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ISVAP - COOPERATION AMONG SUPERVISORY AUTHORITIES

ISVAP collaborates with:

  • the Bank of Italy, the Supervisory Authority on securities (CONSOB), the Occupational Pensions Supervisor (COVIP), the Competition Authority (ANTITRUST) and the Communications Supervisory Authority;

  • the competent Authorities of the other EU Member States, not only in the insurance sector, but even in the bank and securities sector (e.g. in case of insurance companies controlled by banks or securities firms).


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Il controllo interno

CONSUMER PROTECTION DIVISION

Structure and competences

  • A “Complaints section” was founded by the Institutional law, since 1982

  • In 2003 the section was strengthened through the creation of the “Consumer Protection Division” made up of two Sections: “Third party protection” and “Insured person protection”

  • At present the Division consists of 45 people

  • 8


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CONSUMER PROTECTION DIVISION

Scope and mission

  • Manages all the complaints presented to the Authority (annually about 30.000), according to a specific procedure stated by ISVAP’s regulation No 24 of 19 May 2008;

  • Arranges and issues regulations permitted by law concerning motor vehicle liability insurance

  • Manages telephone assistance service and receives the consumers

  • Is a member of Fin-Net network, as national contact body, for the out-of-court settlement of cross border disputes and participates in Fin Net meeting)

  • Analyses general issues of the insurance market

  • Carries out information campaigns

  • Manages initiatives to the benefits of consumers, such as:

  • The Check Box project

  • The motor liability insurance quotation service for consumers

  • 9


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DIRECT COMPENSATION SYSTEM

DIRECT COMPENSATION SYSTEM

  • WHY DIRECT COMPENSATION?

  • Answer to a deep and long-lasting crisis of compulsory car insurance sector, due to:

  • Delays on claims settlement

  • High level of costs (repair costs, legal fees, undue involvement of lawyers for small damages, fraud)

  • and consequently

  • High level of prices.

  • Outdated traditional system of compulsory liability due to the conflict between Insurance company and Policyholder

  • 10


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  • DIRECT COMPENSATION makes easier

  • the overcoming of the conflict through a direct contact between Insurer and Policyholder, based on:

  • mutual understanding

  • relationship of trust

  • verifiable service

  • the decrease in improper costs through

  • directassistanceprovidedbyInsurerswhen the Policyholdersubmits a claim in ordertoresolve in shortertime the compensation

  • no legalfeeifcompensationisaccepted

  • body repair network providedbyInsurers

11


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DIRECT COMPENSATION – Conditions and requirements

  • Compulsory procedure since 01/01/2007, applying to claims incurred since 01/02/2007.

  • Collision happened in Italy (including San Marino and Città del Vaticano) involving only 2 motor vehicles registered in Italy and insured for civil motor liability.

  • Claims must be submitted directly to the non responsible (or partly non responsible) driver’s Insurer.

  • Claims must refer to:

Driver’s personal injuries

if they fall within 9% permanent disability

Vehicles damages

Damages to transported goods (goods owned by the driver or passengers)

12


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DIRECT COMPENSATION – Conditions and requirements

  • The damaged/injured person shall submit claim only to his/her Insurer.

  • The Insurer is obliged to pay the compensation to its own Client on behalf of the Insurer of the responsible driver, without prejudice to a subsequent settlement between insurance companies as stated by the Insurance law Code (a specific regulation states measures to define and share liability, through Bareme schemes).


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First steps to the procedure:

Check of the insurance coverage

Agreement on the liability

Policyholder

Intermediaries

Insurance’s office

Recovery of the

eventual report

liability

coverage

answer

within 30 days


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Settlements between Insurers are regulated in a Clearing House managed by CONSAP.

The non responsible Insurer does not receive the total amount refunded for the claim, but an amount corresponding to an average fixed once a year by the Technical Committee approved by the Minister of Economic Development

CLEARING HOUSE

Fixed cost “forfait”

Actual cost

15


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PASSENGERS MANAGEMENT

Also passengers may benefit from the direct compensation scheme.

In such cases the carrier’s Insurer (direct Insurer) follows the same procedure, but personal injuries are restored even if over 9% permanent disability.

Compensation for personal injuries may be claimed to direct Insurer within compulsory coverage limits. The over compensation shall be claimed to the Insurer of the responsible driver.

16


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DIFFERENCES AMONG SIMILAR PROCEDURES

The comparison with other european countries adopting similar procedures for motor vehicles claims:

In Italy direct compensation is compulsory and regulated by law either as regards the technical aspects or as concerns the rules which fix the exchange of the refunds

The Insurer of the responsible driver is not allowed to know the real value of the refunds, according to the position of the Competition Authority (ANTITRUST).

17


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2008

2007

2009

2.818.950

2.441.357

1.777.398


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1/2/2007 – 31/12/2008

Direct compensation

AMOUNTS PAID

Claims

totally/partially

refunded

56,2 %

CARD

Ordinary procedure

43,8 %

No CARD


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What has changed: an increasing trend of agreement

Voluntary system

Compulsory system

Statement agreement

Total claims CARD100%

25%

Agreement between two parties

Within the system

38%

CARD

Agreement between two parties

62%

62%

75%

No agreement

Out of system

CARD

No agreement

38%


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What has changed: an important result for consumers

Decrease of time of payment(average, measuring settlement times from the report to the first payment)

63

55

52

2007

2008

2006


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