The Compulsory Automobile Liability Insurance in Taiwan

Transcription

1 The Compulsory Automobile Liability Insurance in Taiwan The Compulsory Automobile Liability Insurance (CALI) is one of the important systems established to compensate the basic loss of the victims in traffic accidents. Many countries in the world require automobile owners, or drivers, to have automobile liability insurance, which ensures the victims could receive basic coverage for the injuries caused by traffic accidents and maintains traffic safety. Therefore, after consulting the legislative systems of many other countries and hearing the voices of local activists, the legislative procedures of the Compulsory Automobile Liability Insurance Act (the "CALI Act") were finally completed in December The CALI Act became effective on January 1, Statistics of Compulsory Automobile Liability Insurance MotorVehicle Unit: NT$ Thousand Year/ Month Vehicle Insured Income 2 Policies In Force 3 Pure Claims Paid (L iability Based) 4 Ratio of Claims Paid (Liability Bas ed) to Pure % ,315,473 11,337,662 6,531,480 9,066, ,720,993 11,961,357 6,820,546 9,513, ,808,623 11,748,758 7,092,863 9,297, ,884,785 11,774,590 7,195,206 9,315,550 6,975, ,882,734 11,231,651 7,326,516 8,813,411 6,200, ,830,751 10,311,432 7,353,094 7,909,253 5,918, ,987,173 9,583,025 6,809,865 7,092,024 6,125, ,229,004 9,317,479 6,986,900 6,672,733 6,440, ,321,361 9,377,767 7,126,638 6,695,588 6,967, ,570,537 9,635,741 7,300,827 6,863,221 6,928, ,849,993 9,938,297 7,497,933 7,069,419 6,826, ,800,952 9,916,919 7,663,460 7,060,237 1

2 Motorcycle Year/ Month Motorcycle Insured Income 2 Policies In Force 3 Pure Claims Paid (L iability Based) 4 Ratio of Claims Paid (Liability Based) to Pure % ,542,058 5,742,702 8,535,972 4,247, ,372,360 5,560,735 8,772,617 4,105, ,785,535 6,040,757 9,059,956 4,489, ,916,023 6,158,179 9,425,775 4,587,885 3,949, ,295,020 6,472,705 9,906,000 4,825,643 3,868, ,261,670 5,917,256 10,137,891 4,302,969 3,963, ,583,608 5,765,418 9,930,762 4,218,137 4,357, ,776,315 5,778,868 10,153,998 4,293,196 5,251, ,965,669 5,908,754 10,370,494 4,402,618 5,519, ,334,275 6,048,369 10,614,309 4,558,652 5,908, ,648,574 5,956,371 10,695,439 4,454,389 6,194, ,918,295 6,146,477 10,796,855 4,606,204 Source: Taiwan Insurance Institute ( Note: 1. The annual and monthly figures are cumulative figures from the beginning of the year to the end of the given month. 2. The premium income indicated in this table represents written premiums collected during the specified period (including expected losses, the business expenses of insurers, contribution to the Stabilization Fund, overhead associated with actuarial calculation of rates, research and development, information inquiry services, information transmission and other expenses necessary to ensure the soundness of this insurance. However, this does not include contribution to the Compensation Fund.) 3. Prior to December 2009, the statistical data for the number of policies in force indicated in this table was calculated based on the statistical cutoff month. Starting from January 2010, the calculation is based on the statistical cutoff date, which is also the last day of each month. 4.The figures in this column are liability based paid losses, which are calculated by converting, on the basis of liability, the amount of the claims paid for the year. They are an insurance cost used in the premium rate calculation basis. The figures represent paid claims. For any outstanding claims, the accident liability ratio is undetermined, so the figures do not include the difference between year end outstanding losses and year opening outstanding losses. 5. This table uses business statistics as its basis; it therefore differs from other tables that use financial accounting as their basis. 6. income is calculated by expected losses and collected when the insurance contract is entered into. Nevertheless, insured events and claims could occur years after the premium income was collected. Therefore,it is considered appropriate to place the development of net premium income and liability based paid losses under long term observation. The Framework of the Compulsory Automobile Liability Insurance Differentiation Supervision Mechanism The Framework of the Compulsory Automobile Liability Insurance Differentiation Supervision Mechanism (DSM) for insurance companies was approved by the Financial Supervisory Commission (FSC) in June 2007 to enhance insurance companies' operations of the CALI, to achieve the goal of the legislation, and to accelerate sound development of the CALI system. It 2

3 is also expected that, through the implementation of DSM, corporate governance and insurers' disciplinary agreements will be strengthened. I. Purposes of DSM 1. To establish a way to examine the effectiveness of the insurance companies' operations of the CALI in order to accelerate sound development of the CALI. 2. To strengthen corporate governance and insurer s disciplinary agreements by examining the differences among insurance companies operations of the CALI. 3. To help insurance companies operate the CALI more efficiently, the FSC manages insurance companies differently by using the results found in DSM. II. Key points of DSM and ways of implementation: 1. Establishing key indicators from financial, business and managerial points of view a. Financial Aspects To make a reserve according to regulations. To manage the pool account and the claim recovery according to the pool disciplinary agreements. To check and review the adequacy and stability of ratio of the risk based capital ratio. b. Business Aspects To write the business according to regulations. To transmit the data to the CALI database according to regulations. To handle claim cases according to regulations. To deposit its apportionment of the Motor Vehicle Accident Compensation Fund (MVACF) according to regulations. c. Managerial Aspects To check and review the establishment and implementation of internal audit system. To comply with the Regulations Governing the Accounting Arrangements and Procedures for Submitting Business and Financial Reports of the CALI. To check and review the establishment and implementation of mediation system for disputes. To verify whether or not there are major moral hazards caused by internal or external party. To check and review the finances, business and operating results of the CALI. 2. Establishing a scoring system for each indicator to differentiate insurance companies. 3. Frequency of application: annually Compulsory Automobile Liability Insurance Comprehensive Audit Mechanism The Comprehensive Audit Mechanism (CAM) for insurance companies was approved by the FSC in January The goal of the CAM is to improve insurance companies' operations of the CALI. I. Purposes of the CAM 1. To ascertain whether insurance companies are acting in compliance with the laws and regulations related to the CALI. 2. To ascertain whether insurance companies are qualified to operate the CALI. 3. To provide a platform for discussion with related agencies when questions arise from the laws and regulations related to the CALI. 4. To track and rectify defects to ensure that insurance companies are incompliance with the laws. 5. To invite the participation of external units in order to enhance the accountability of the CALI's operational results. 6. To use the audit results as a reference for scoring the indicators of the CALI II. Differentiation Supervision Mechanism. Audit System 3

4 III. 1. Internal audit: Insurance companies should self audit in accordance to the CALI internal audit system. 2. External audit: It is divided into standard audit and special audit. Standard audit should be handled by Non Life Insurance Association of the R.O.C and supported by the Taiwan Insurance Institute. Special audit should be based on the analysis of a special topic and handled by the MVACF as commissioned by the competent authority. Scope of the Audit The scope encompasses: CALI Act, its derived law, and other related regulations on financial accounting, business operations, management, complaints and etc Motor Vehicle Accident Compensation Fund The system planned under the Act differs substantially from the original Compulsory Automobile Third Person Liability Insurance, especially in regards to Article 3 of the CALI Act. Formulated in reference to the systems in the United States, Britain and Japan, this article stipulates the establishment of the Motor Vehicle Accident Compensation Fund (MVACF) to provide compensation for parties injured in an automobile traffic accident when: the accident vehicles cannot be traced; the accident vehicles are uninsured automobiles; insured accident vehicles were used or managed without the consent of the insured; and/or all or some of the accident vehicles are exempt from this insurance. The goal is to provide basic protection to the victim or the survivors who are unable to obtain claim payment based on the stipulations of the CALI Act, thus offsetting the insufficiency of the CALI. I. Functional purposes of MVACF to perform CALI In accordance with Article 1 of the CALI Act: This Act is specially adopted in order to ensure prompt basic coverage for the injured parties in automobile traffic accidents that result in injury or loss of life and to maintain roadway traffic safety. and Article 38: The Compensation Fund shall be established in order to ensure prompt basic coverage for all the injured parties in automobile traffic accidents under this Act, and to ensure the soundness of this insurance system. The Compensation Fund shall maintain separate accounts for automobiles and for motorcycles as a basis for calculation of fees., the legislative purpose indicates the function of the MVACF to protect the basic right of the victims in traffic accidents and ensure the soundness of the CALI system. The Act stresses the CALI system and MVACF are to enhance the public safety. MVACF accumulates the recommendations of practical experience to provide the authority as the amended opinions and cares for the victims on our own initiative to maintain the popularity of the CALI for better social security development. The system performs as following: 1. To ensure the soundness of the CALI system. a. Special audit is based on the analysis of a special topic and handled by the MVACF as commissioned by the competent authority to track and rectify defects to ensure that insurance companies are incompliance with the laws. b. According to the current issue of the actual work of discovery, MVACF offer opinions and suggestions of amendments to ensure the CALI law practice to perform better by fair and reasonable. c. To hold education training to practice the claims affairs, MVACF provide two way exchange of views on the opportunity to explore practical problems and answers to doubt, to ensure that the insurance payment standards converge. 2. MVACF provide the assistance for insurance company processing the CALI practice questions of individual cases and take the initiative to care for victims of major accidents to assist the application of the insurance or compensation, and sent staff to assist as needed. The CALI gives the victim has a direct right to request, for the purpose of making claims or compensation can be immediate and effective assistance to the victims. Some significant traffic accidents need assistance for its complex situation. For the reason, to cares for the victims on our own initiative and provide onsite service can ensure prompt basic coverage for the injured parties in automobile traffic accidents and enhance the popularity of the CALI. 4

5 3. The CALI can be one of the social assistance systems. In addition to care cases actively, system maintenance still has the need for periodic inspection to achieve sustainable development goals. Therefore, to avoid repeated violations of claimant's application, MVACF regularly review data of the victims through the system, in order to prevent and control the illegal compensation of the insurance payment situation. II. Statistics of the Compensation Fund Unit: NT$ Thousand Year/Month Income from Shared Quota Compensation Expenditure 1 Compensation Cases , , , ,627 1, , ,400 2, , ,086 2, , ,752 3, , ,439 3, , ,097 3, , ,907 3, , ,535 3, , ,518 3, , ,832 3, , ,972 3,923 Source: Motor Vehicle Accident Compensation Fund( Note: 1.Compensation Expenditure includes settled and unsettled amount, the settled amount is estimated at the date Compensation Cases are filed. Since its implementation in 1998, the CALI has been in force for more than a decade. Moreover, according to recent surveys, approximately 90% of the general public is satisfied with the CALI system. No doubt, the CALI has become an important part of Taiwan social security systems. As of Dec. 2015, more than 18.5 million motor vehicles were covered by the CALI. The total number of loss of life paid out thus far by insurers has amounted to 77,654 cases; disability benefits paid out amounted to 185,054 cases, and medical benefits paid out amounted to 5

6 3,434,425 cases. The amount of total has paid insurance benefits NT billion and compensation NT 8.5 billion (41,672 cases) from MVACF. 6