Impact of direct settlement of motor claims on time and costs of compensation The case of Spain

Impact of direct settlement Impact of direct settlement of of

motor claims on time and motor claims on time and costs of costs of

compensationcompensationTheThe case of Spain case of Spain

ANA GARCÍA BARONATechnical and Reinsurance DirectorConsorcio de Compensación de Seguros

Warsaw, 7 – 9 May 2008

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Impact of direct settlement of motor claims on time and costs of compensation. The case of Spain.

II-nd Warsaw International Motor Insurance Forum 8-9 May 2008

I.I. CCS Functions and CoverageCCS Functions and Coverage

II. Motor Vehicles RegisteredMotor Vehicles Registered

III.III. Claim FilesClaim Files

IV.IV. Claims Economic CostClaims Economic Cost

V.V. Sequence of Claim ManagementSequence of Claim Management

VI.VI.Human Resources CostHuman Resources Cost

C.C.S. Motor Vehicle Compulsory C.C.S. Motor Vehicle Compulsory InsuranceInsurance

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I. CCS FunctionsI. CCS Functions Public vehicles (on request)

Unaccepted (rejected) private vehiclesDIRECT INSURANCE:

Unidentified vehicles (2nd Directive)

Stolen vehicles (2nd Directive: optional)

Uninsured vehicles (2nd Directive)

Winding-up undertakings

Disputed claims (Controversy)

GUARANTEE FUND:

F.I.V.A. (Insured Vehicles Registry)

Information CentreNON INSURANCE

DUTIES:

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I. CCS I. CCS CompensationCompensationss

Until 31/12/2007 Starting 01/01/2008

Personal injury € 350,000 per victim € 70,000,000 per event

Property damage € 100,000 per claim € 15,000,000 per event

Sanitary assitance

Burial Expenses

COMPULSORY VEHICLES INSURANCE LIMITS

Unlimited

Unlimited

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The estimate of vehicles in Spain in 2007, according to

the Directorate-General for Road Traffic (Ministry for

Internal Affairs) was:

29,700,000 (plus 2,500,000 scooters)

(22,700,000 drivers)

II. Motor Vehicles RegisteredII. Motor Vehicles Registered

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III. CCS III. CCS PortfolioPortfolio

Number of policies2006 2007

Private vehicles under 3.5 tons 6,482 4,782

Private vehicles over 3.5 tons (lorries, vans, coaches...) 357 317

Private tw o-w heeled vehicles (motorcycles, scooters) 67,408 63,032

Subtotal private vehicles 74,247 68,131Official vehicles under 3.5 tons 54,352 55,753

Official vehicles over 3.5 tons (lorries, vans, coaches...) 29,272 29,334

Official tw o-w heeled vehicles (motorcycles, scooters) 21,368 20,952

Subtotal official vehicles 104,992 106,039

Total policies in portfolio 179,239 174,170

Type of vehicle

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III. Total claims III. Total claims submittedsubmitted

2003 2004 2005 2006 2007

Direct Insurance. Private vehicles 22,997 27,032 25,964 20,262 17,976

Direct Insurance. Off icial vehicles 12,037 12,297 12,961 12,608 12,826

Guarantee Fund. Uninsured vehicles 55,365 53,330 51,641 50,526 49,263

Guarantee Fund. Unidentif ied vehicles 4,094 4,017 4,271 4,172 4,283

Guarantee Fund. Stolen vehicles 2,388 2,144 1,946 1,879 1,667

Guarantee Fund. Companies Winding-up 34 23 15 7 0

Total claim files 96,881 98,820 96,798 89,447 86,015

Number of claims by year of recordingCategory of insurance

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III. Trend of claims submitted by III. Trend of claims submitted by category of insurance category of insurance (year of (year of recording)recording)

0

10,000

20,000

30,000

40,000

50,000

60,000

2002 2003 2004 2005 2006 2007

Tota

l cla

ims

Direct Insurance. Private vehicles Direct Insurance. Official vehiclesGuarantee Fund. Uninsured vehicles Guarantee Fund. Unidentified vehiclesGuarantee Fund. Stolen vehicles

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III. Breakdown of claims submitted by III. Breakdown of claims submitted by category of insurance, year of category of insurance, year of recording: 2006 recording: 2006

23%

14%

56%

2%5%

Direct Insurance. P rivate vehicles

Direct Insurance. Official vehicles

Guarantee Fund. Uninsured vehicles

Guarantee Fund. Unidentified vehicles

Guarantee Fund. Stolen vehicles

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IV. Direct indemnities by category of IV. Direct indemnities by category of insuranceinsurance

2005 2006 2007Direct Insurance. Private vehicles 37,203,141 35,338,248 32,046,122

Direct Insurance. Off icial vehicles 14,474,085 15,535,781 14,955,552

Guarantee Fund. Uninsured vehicles 115,750,530 107,328,772 98,374,292

Guarantee Fund. Unidentif ied vehicles 36,005,031 31,888,922 36,847,058

Guarantee Fund. Stolen vehicles 6,280,921 6,786,576 6,527,224

Guarantee Fund. Companies Winding-up 4,017,070 1,280,169 785,993

Total € 213,730,778 198,158,468 189,536,241

Total paid by year of paymentCategory of insurance

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III. Breakdown of direct indemnities by III. Breakdown of direct indemnities by category of insurance, year of category of insurance, year of payment: 2006payment: 2006

18%

8%

55%

3%

16%Direct Insurance. P rivate vehicles

Direct Insurance. Official vehicles

Guarantee Fund. Uninsured vehicles

Guarantee Fund. Unidentified vehicles


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IV. Trend of direct indemnities by IV. Trend of direct indemnities by category of insurance category of insurance (year of payment)(year of payment)

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

2002 2003 2004 2005 2006 2007

Tota

l €

Direct Insurance. Private vehicles Direct Insurance. Official vehicles

Guarantee Fund. Uninsured vehicles Guarantee Fund. Unidentified vehicles


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IV. Payouts by type of damage IV. Payouts by type of damage (payouts (payouts and accruals)and accruals)

2002 2003 2004 2005 2006 2007

Material damage 41,096,090 44,740,611 45,598,174 46,742,741 42,404,759 36,491,123

Personal injuries 122,028,284 133,927,161 114,865,616 105,345,143 90,119,559 52,219,102

Sanitary Asistance 9,924,353 12,709,257 12,383,012 12,217,084 11,913,246 9,232,893

Total € 173,048,727 191,377,029 172,846,802 164,304,968 144,437,564 97,943,118

Year of ocurrenceType

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IV. Breakdown of payouts by type of IV. Breakdown of payouts by type of damage, year of occurrence: 2006damage, year of occurrence: 2006

65%

7%

28%

Property damage

Personal injuries

Sanitary Asistance

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IV. Breakdown of indemnities by type IV. Breakdown of indemnities by type of personal injury, year of occurrence: of personal injury, year of occurrence: 20062006 4%

19%

13%

54%

5%

2%

3%

Severely disabled

Death

Incapacity for any gainful employment

Permanent total disability

Permanent partial disability

Permanent disability with impairments

Temporary disability

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IV. Average direct-indemnity per claimIV. Average direct-indemnity per claim

2004 2005 2006

Direct Insurance. Private vehicles 2,166 2.001 2,020

Direct Insurance. Official vehicles 1,777 2,171 2,290

Guarantee Fund. Uninsured vehicles 4,117 3,880 3,724

Guarantee Fund. Unidentif ied vehicles 14,306 13,802 11,384

Guarantee Fund. Stolen vehicles 5,551 4,359 4,422

Guarantee Fund. Companies Winding-up 21,435 315,172 0

Total € 3,562 3,446 3,363

Category of insuranceYear of occurrence

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IV. Trend of the average direct-IV. Trend of the average direct-indemnity per claimindemnity per claim(year of occurrence)(year of occurrence)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2002 2003 2004 2005 2006

Euro

s

Direct Insurance. Private vehicles Direct Insurance. Official vehiclesGuarantee Fund. Uninsured vehicles Guarantee Fund. Unidentified vehiclesGuarantee Fund. Stolen vehicles

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IV. Cost of sanitary IV. Cost of sanitary assistanceassistance

2005 2006 2007

First medical consultation (no hospital stay) 1,950,720 1,720,906 1,894,330

Intensive Care Unit 1,180,789 1,208,284 1,058,858

Hospitalization and others (1) 7,078,697 7,067,956 8,899,986

Rehabilitation 970.043 905,618 970,836

Transport 639.454 694,817 804,862

Total € 11,819,702 11,597,582 13,628,871Number of victims assisted 18,131 18,691

(1) Diagnostic tests, prothesis, burial expenses, etc.

Year of paymentType of assistance

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IV. Breakdown of the cost of IV. Breakdown of the cost of sanitary assistance, year of sanitary assistance, year of payment: payment: 20062006

15%

10%

8%6%

61%

First medical consultation(no hospital stay)

Intensive Care Unit

Hospitalization and others

Rehabilitation

Transport

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IV. Cost of claim adjustments by IV. Cost of claim adjustments by category of insurancecategory of insurance

2005 2006 2007Direct Insurance. Private vehicles 314.938 246,575 189,252

Direct Insurance. Official vehicles 173.918 156,980 152,006

Compulsory vehicle insurace (not classified) 498.244 505,076 --

Guarantee Fund. Uninsured vehicles 563.567 550,114 496,177

Guarantee Fund. Unidentified vehicles 3.497 761 2,956

Guarantee Fund. Stolen vehicles 42.384 40,102 40,976

Guarantee Fund. Companies Winding-up 0 79 0

Total € 1,596,549 1,499,687 847,913

Number of loss adjusters 728 643

Year of paymentCategory of insurance

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IV. Cost of claim adjustments by IV. Cost of claim adjustments by category of insurance category of insurance (year of (year of payment)payment)

0

100,000

200,000

300,000

400,000

500,000

600,000

2002 2003 2004 2005 2006 2007

Euro

s

Direct Insurance. Private vehicles Direct Insurance. Official vehiclesCompulsory vehicle insurance (not classified) Guarantee Fund. Uninsured vehiclesGuarantee Fund. Unidentified vehicles

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IV. Cost of attorneys by category IV. Cost of attorneys by category of insuranceof insurance

2005 2006 2007Direct Insurance. Private vehicles 347,188 342,581 315,396

Direct Insurance. Official vehicles 120,150 104,785 109,338

Guarantee Fund. Uninsured vehicles 2,460,993 2,486,744 2,328,885

Guarantee Fund. Unidentified vehicles 370,028 343,134 337,124

Guarantee Fund. Stolen vehicles 169,816 182,840 162,687

Guarantee Fund. Companies Winding-up 22,080 14,905 11,882

Total € 3,490,258 3,474,992 3,265,312

Year of payment

Number of attorneys: 112 (last 13 designated only for recoveries)

Category of insurance

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IV. Cost of attorneys by category of IV. Cost of attorneys by category of insuranceinsurance(year of payment)(year of payment)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2002 2003 2004 2005 2006 2007

Euro

s

Direct Insurance. Private vehicles Direct Insurance. Official vehiclesGuarantee Fund. Uninsured vehicles Guarantee Fund. Unidentified vehiclesGuarantee Fund. Stolen vehicles Guarantee Fund. Companies Winding-up

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IV. CCS Motor Vehicle Insurance IV. CCS Motor Vehicle Insurance Loss RatioLoss Ratio

Category of Insurance 2006 2007

Direct Insurance. Private vehicles 118.04 131.85

Direct Insurance. Official vehicles 119.96 123.19

Guarantee Fund 55.63 53.41

LOSS RATIO (% RISK PREMIUM)

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IV. Status of the claims submitted as IV. Status of the claims submitted as of of 31/03/200831/03/2008

2003 2004 2005 2006 2007Recorded 94,424 96,846 95,862 87,185 79,624

Rejected and Cancelled 44,638 46,408 46,855 43,294 39,829

Being processed 2,534 2,395 2,867 4,287 12,844

Partially paid 1,389 1,405 268 1,531 2,240

Totally paid 47,252 48,043 46,140 39,604 26,951

Number of claims by year of ocurrenceClaim files

Total claim files outstanding as of: 43,732

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V. Sequence of claim V. Sequence of claim management, 2007 management, 2007 (days from occurrence, average)(days from occurrence, average)

Compulsory Motor Vehicle Insurance

Extraordinary Risks (natural catastrophes and terrorism)

Occurrenceday 0

Recording80 days45 days

Adjustment171 days96 days

Authorization333 days120 days

Payout375 days128 days

Recovery794 days

- -

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V. Average time lapse from V. Average time lapse from occurrence to payment occurrence to payment

Category of insurance Directclaim

Sanitaryassistance

Judicial proceeding

Direct Insurance. Private vehicles 179 359 743

Direct Insurance. Official vehicles 117 216 716

Guarantee Fund. Uninsured vehicles 195 302 921

Guarantee Fund. Unidentified vehicles 382 326 877

Guarantee Fund. Stolen vehicles 271 394 994

Guarantee Fund. Winding-up companies 4,088 5,646 3,978

All lines 189 322 904

Days by type of claim

Number of judicial files being processed as of 31/12/2007: 5,28025.04%

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V. Average time lapse from recording V. Average time lapse from recording to paymentto payment

Category of insurance DirectClaim

Sanitaryassistance

Judicial proceeding






Guarantee Fund. Winding-up companies 2,766 2,448 3,243

All lines 129 206 695

Type of Claim

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V. Average time lapse from V. Average time lapse from occurrence to claim recordingoccurrence to claim recording

Category of insurance Direct claim Sanitaryassitance

Judicial proceeding






Guarantee Fund. Winding-up companies 3,596 4,141

All lines 103 64 420

Days by type of Claim

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V. Average time lapse from V. Average time lapse from recording to delivery for loss recording to delivery for loss adjustmentadjustment


Judicial proceeding

Direct Insurance. Private vehicles 44 306

Direct Insurance. Official vehicles 36 226

Guarantee Fund. Uninsured vehicles 75 279

Guarantee Fund. Unidentified vehicles 220 175

Guarantee Fund. Stolen vehicles 102 322


All lines 61 289

Days per type of Claim

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V. Average time lapse for loss V. Average time lapse for loss adjustmentadjustment


Judicial proceeding






Guarantee Fund. Winding-up companies 0 99

All lines 18 8


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V. Average time lapse for V. Average time lapse for authorizationauthorization


Judicial proceeding







All lines 93 376

Days by type of claim

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V. Average time lapse from V. Average time lapse from authorization to paymentauthorization to payment


Sanitaryassistance

Judicial proceeding






Guarantee Fund. Winding-up companies 7 0 302

All lines 24 39 117


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V. Average time lapse for V. Average time lapse for recoveriesrecoveries


Sanitaryassitance

Judicial proceeding


Direct Insurance. Official vehicles 872




Guarantee Fund. Winding-up companies 2,468

All lines 354 242 662


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VI. Human Resources, VI. Human Resources, 20072007

Number of staff

Gross Cost €

Numberof staff

Gross Cost €

Central Office 47 2,277,021 26 1,275,132

18 Regional Offices 153 6,354,393 86 3,558,460

CAT (call centre) 33 695,858 18 389,680

Totals 233 9,327,271 130 5,223,272

(1) As per files recorded in 2007: 56%

Total all branches Weighted Motor Vehicle (1)Claims Management

Staff

Documents

Impact of direct settlement of motor claims on time and costs of compensation The case of Spain