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Insurers may again increase the cost of "auto insurance". Such recommendations are given to them by the association of market participants - MTIBU. And although insurance companies will retain the right to sell insurance cheaply, they admit that the cost of the MTIBU will still increase in price.
The cost of the MTIBU should be calculated exclusively using the maximum coefficients from the proposed "fork". This is stated in the letter of the Motor (Transport) Insurance Bureau (MTIBU) to insurers, a copy of which is at FinClub's disposal. The basis for such conclusions was the bureau's actuarial calculations. According to MTIBU, over the past year the cost of the payment increased from 435.15 UAH to 483.29 UAH (+11.1%).
The MTIBU proposes to insure Kyiv cars at the maximum coefficient - 4.8 (the “fork” of the K2 coefficient – from 3.2 to 4.8). Residents of the cities – satellites of the capital – Boryspil, Boyarka, Brovary, Irpen, Vasylkiv, Vyshneve, Vyshgorod (2.5), as well as cities with a population of 500 thousand to 1 million people – Donetsk, Dnipro, Zaporizhia, Kryvyi Rih, Lviv (2.8). For cities with a population of more than a million people (Odesa, Kharkiv), the range was narrowed from 2.3-3.5 to 3.4-3.5, and for cities with a population of 100-500 thousand people – from 1.3-2.5 to 2.2-2.5. An increase is also provided for the coefficient K3 (scope of use of the vehicle) and K4 (driver's experience).
Since May, the MTIBU Directorate will calculate and inform each insurer - MTIBU members, the bureau's presidium and the National Committee for Financial Services - of "information on the share of domestic insurance contracts concluded by each insurer for the reporting month with the application of a reduced basic insurance premium (180 UAH) or adjustment coefficients, the value of which is lower than that calculated by the bureau".
The current recommendation of the MTIBU is not the first attempt to raise prices. Two years ago, the bureau already called on insurers not to dump and use increased tariffs. To monitor the implementation of the recommendations, an additional payment has been developed for the Insurance Commission - contribution to the Victims' Protection Fund for those insurance companies whose level of payments was below the average on the market. But at the end of 2016, the National Committee of Financial Services banned charging any additional payments from insurance companies. Therefore, sanctions for using lower payments were never introduced. «The MTIBU Directorate will hold consultations with the National Committee of Financial Services, which performs the functions of the MTIBU Coordination Council, on establishing differentiated rates of deductions to the Victims' Protection Fund depending on the insurer's tariff policy, as well as carry out work to ensure an increase in the maximum values of the ranges of correction coefficients», – the bureau promised.
Insurance companies admit that they use not only the maximum coefficients in their work. «We use the «plug» established by law. The coefficients are set at the average market level: not maximum, but not minimum,», – says the chairman of the board of the insurance company «Arsenal Insurance» Serhiy Avdeev. «The size of the coefficients depends on sales channels and technologies. This tariff also fluctuates depending on the conditions of sale (for example, regional preference)», – explained the chairman of the supervisory board of the insurance company «VUSO» Oleksandr Shoikhedenko. In regions where the loss rate is lower, the OSCPV is cheaper.
The increase in prices for OSCPV is a regularity. «This is confirmed by calculations, where it is clearly visible that the frequency and average loss have increased significantly, and the premiums have remained at the level of previous years. Already today, many losses exceed the established limits, and accordingly, the increase in the frequency of losses will only continue in the future», – believes Sergey Avdeev.
Meanwhile, many companies use understated coefficients to attract customers. Dumping – is one of the main problems in the insurance market. At the same time, the problem of dumping cannot be solved with recommendations alone. «If the tariff is not raised, large companies will gradually move away from this type of insurance, and unscrupulous players will concentrate the entire market in their hands, and then they will also leave. For example, they will go bankrupt. This is a path to nowhere, it can lead to the destruction of such a type of insurance as OSCPV», – « paints» a catastrophic picture of Oleksandr Shoikhedenko. «The price in each specific case must reflect the risk that the insurer takes on. Given the inflation of losses and the increase in frequency, and therefore the increase in losses, the tendency to increase the cost of the OSCPV policy is objective, – believe the “Oranta” Insurance Company.
But not everyone agrees with this position. “The root of the problem – is not dumping, but the lack of regulatory control over the quality of insurance companies' assets. With adequate control over assets and verification of reporting, no company will be able to afford to sell at undervalued prices,” believes the chairman of the supervisory board of the “Salamandra-Ukraine” Insurance Company, Yuriy Yavtushenko.
The optimal way out of the current situation may be the transition to free pricing. “The regulator must regulate the mandatory nature of payments. What is the point of limiting the upper limit of the tariff if the company can offer, and the client can purchase, albeit expensive, but not average, but high-quality service? » – asks Oleksandr Shoikhedenko. Now, in his opinion, companies, increasing profitability, either offer the client a reduced payment or stretch it out over time. «And the state limits insurance companies, not allowing them to go beyond the upper limit of the coefficient. An increased tariff can ensure both timely payment and high-quality service», – he explains.
«In principle, if the OSCPV goes to the free market, the insurer will be able, based on its portfolio and other internal empirical data, to calculate such a tariff grid that will contribute to reducing unprofitability. Companies will be able to easily adjust the tariff in problem areas, making it dynamic and flexible. Of course, there will be companies that will dump such tariffs, but they, as a rule, do not last long», – says Sergey Avdeev. «Without strict regulation of the market by the state, free pricing will lead to disaster. Free prices are possible only when the insurer's assets are reliably secured», – Yuriy Yavtushenko believes.
| Type of adjustment coefficient, depending on: | Actually justified adjustment coefficients at BP = 180 UAH | Sizes of adjustment coefficients approved by the National Commission for Financial Services and the Law on OSCPV |
| II. Places of vehicle registration (K2) | ||
| 1) Kyiv city | 4.8 | 3.2-4.8 |
| 2) Boryspil, Boyarka, Brovary, Irpin, Vasylkiv, Vyshneve, Vyshgorod | 2.5 | 1-2.5 |
| 3) cities with a population of more than 1 million people (Odesa, Kharkiv) | 3.4 | 2.3-3.5 |
| 4) cities with a population of 1 million – 500 thousand people (Dnipropetrovsk, Donetsk, Zaporizhia, Kryvyi Rih, Lviv) | 2.8 | 1.8-2.8 |
| 5) cities with a population of 500 – 100 thousand people (Alchevsk, Berdyansk, Bila Tserkva, Vinnytsia, Dniprodzerzhynsk, Horlivka, Yevpatoriya, Zhytomyr, Ivano-Frankivsk, Kamianets-Podilskyi, Kerch, Kirovograd, Kramatorsk, Kremenchuk, Lysychansk, Luhansk, Lutsk, Makiivka, Mariupol, Melitopol, Mykolaiv, Nikopol, Pavlograd, Poltava, Rivne, Sevastopol, Severodonetsk, Simferopol, Slavyansk, Sumy, Ternopil, Uzhgorod, Kherson, Khmelnytskyi, Cherkasy, Chernivtsi, Chernihiv) | 2.2 | 1.3-2.5 |
| 6) other settlements of Ukraine | 1.5 | 1-1.6 |
| 7) for vehicles registered in other countries | 3 | 2-4 |
III. Areas of use of the vehicle (K3)
| ||
| 1) passenger car (except taxi), motorcycle, scooter, used by an individual | 1 | 1 |
| 2) passenger car (except taxi), motorcycle, scooter, used by a legal entity | 1.4 | 1.1-1.4 |
| 3) trucks, buses, trailers for trucks and passenger cars | 1 | 1 |
| 4) a passenger car or bus with up to 20 seats, used by an individual to provide services for the transportation of passengers and cargo by public road transport or to provide services for the transportation of passengers and their luggage by taxi | 1.4 | 1.1-1.4 |
| 5) a passenger car or bus with up to 20 seats, used by a legal entity to provide services for the transportation of passengers and cargo by public road transport or to provide services for the transportation of passengers and their luggage by taxi | 1.5 | 1.1-1.5 |
| IV. Driving experience of persons admitted to driving a secured vehicle (K4) | ||
| 1) regardless of driving experience (for insured persons – individuals, including if the insured person – individual's driving experience is less than three years) | 1.6 | 1.27-1.76 |
| 2) three years and more (for insured persons – individuals persons) | 1.6 | 1-1.76 |
| 3) for legal entities | 1.2 | 1.2 |
| Bonus-malus coefficient | 1 | 0.5-2.45 |
Source: Financial Club
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