Expectations and reality: compensation for damage after a road accident under the OSCPV

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As the Great Spoke The schemer Ostap Bender, a character from Ilf and Petrov:

"Only an insurance policy can give a person complete peace of mind."

I propose to look into and answer the questions:

1. Is this how it works in practice in Ukraine, with regard to compulsory motor third party liability insurance policies (OSAGO)?
2. How can we make this statement true?

Most likely, those people who have had personal experience of dealing with an insurance company (hereinafter referred to as IC - editor's note) smiled skeptically at this point.

And this is absolutely natural. This is confirmed by the fact that, according to an official study by the Institute of Sociology of the National Academy of Sciences of Ukraine (2013), only 11% of respondents answered affirmatively to the question "Do you trust insurers?".

Why is that? The answer to this question takes into account a number of influencing factors. And the main one is obvious – in Ukraine, the quality of insurance companies for the most popular type of insurance – compulsory motor third-party liability insurance – to put it mildly, "leaves much to be desired."

Where does this opinion come from? From personal practical experience working in the insurance market. I've been helping people get money from insurance companies in one way or another since 2008, and during that time I've seen, if not everything, then a lot in this industry.

It's safe to say that, taken as a whole, insurers use two methods to increase their profitability when settling insurance claims:

• Minimize the payout amount
• Delay payment terms

Do all insurers act this way? No, not all. There are insurance companies that use one of these methods. There are also insurance companies that don't use such schemes at all and work 100% customer-focused on MTPL – honor and praise to them. But such companies, unfortunately, can currently be counted on the fingers of one hand in Ukraine. About 90% of MTPL companies use at least one of the profitability enhancement schemes.

To substantiate my claims, I will provide some specific statistics:

1. The graph shows the dynamics of MTPL payments in recent years in dollar equivalent at the average annual USD/UAH exchange rate. This gives a more objective picture than calculating in hryvnia – after all, car parts are most often imported from other countries.

2. Payment period:

2.1. Based on the report of the Motor (Transport) Insurance Bureau of Ukraine for the 2nd quarter of 2016, the average payment period in the MTPL market was 154 days (!!!). Imagine this figure – 5 months. And this, I emphasize, is the AVERAGE payment period (!!!).

2.2. Only 48.3% of insurance claims were paid within the maximum period established by the Law of Ukraine "On MTPL", namely up to 90 days.

Who benefits from this? The answer is obvious – insurance companies.

Therefore, an MTPL policy in Ukraine does not currently add peace of mind to motorists. But it does add a not always pleasant experience of dealing with the insurance company.

Question No. 2, the answer to which may be useful – "What to do?" "To answer it, I suggest we first look at examples of the TOP 5 tricks used by insurance companies to minimize damages and delay payment using the OSAGO calculator.

Trick #1: "Your own calculation instead of an independent assessment"

You go to the insurance company of the person at fault in an accident to file a claim. The insurance company employee gives you a claim form and asks you to fill it out. In one of the final sections of the form, you are asked to indicate the method of calculating insurance compensation, choosing from two options:

• "Insurance company expert"
• "Independent expert assessment"

The employee then says something like: "If you choose our expert, everything will be faster." In practice, these words are not very often confirmed. They will calculate less - that's true. That's their job. Collect more - pay less.
What to do in such a situation?

I recommend:

1. Require an independent assessment by an expert appraiser.
2. At the same time, additionally call "your" expert to the assessment - So that you understand that the expert called by the insurance company has adequately assessed the damage.

Trick #2: "Incorrect advice on documents"

You filed a claim for an insured event, it seems you have submitted all the documents, but there is still no payment. After some time, you call the insurance company and cannot get through to a specialist. You set aside time and come to the insurance company - it turns out that you did not provide, for example, a copy of the decision on the administrative case from the court or an application for payment. And therefore, the insurance company's deadline for payment has not yet started. Unfortunately, more often than not, it is not in the interests of the insurance company (the realities of Ukraine) to pay you quickly. Therefore, the first step is to collect and submit all the necessary documents to the insurance company.

What to do?

1. Read the Law of Ukraine "On Compulsory Motor Liability Insurance", namely Articles No. 33, No. 33-1, No. 34, No. 35, No. 36 and act in accordance with the Law.
2. When submitting any documents to the insurance company, be sure to take a copy of the document with the incoming number and date. To do this, simply notify the employee with whom you will be filing the accident case.
3. Strictly monitor the validity periods of the insurance company and take further steps in case of violation of the deadlines. In case of delays or refusal - go to the regulatory authorities or the court.

Trick No. 3: "Calculation at average prices"

After the accident, you filed a claim with the insurance company. An expert called you, you agreed to have an examination at the service station where you plan to have your car repaired. And this is a serious service station, not a "garage." The expert assessed everything and left. You receive an invoice from the service station for 50,000 UAH, for example. Two weeks pass, you call the insurance company, and for some reason they say the reimbursement amount is 30,000 UAH.

Why is that? Because the expert calculated the cost of spare parts and labor at the "average market" prices for the region. You probably understand what "average" means. It's like the joke. Two people have a temperature of 38 degrees, the other two have 35.5, the average in the ward is 36.6 - formally everyone is healthy. Same thing here.

What to do?

1. 1. Make an advance payment of several thousand hryvnias according to the invoice of the service station where you will be having your car repaired (agree on this with the station in advance).
2. 2. Provide the expert with the invoice from the service station where you will be having your car repaired + a receipt confirming that you made the advance payment.
3. 3. Demand that the cost of spare parts from the service station invoice and the cost of the standard hour of this service station be used in the calculations.

Trick #4: "Accelerated settlement payment"

The situation is as follows. After you have submitted all the documents to the insurance company and your damage has been assessed immediately on the spot, an insurance company employee tells you that you will receive payment, but only after 90 days, as this period is stipulated by law. And then he adds: “But there is an option for you to receive the money within 2 weeks,” and then offers you to sign an agreement which stipulates that you will receive from 50% to 80% of the calculated compensation amount (the figures vary depending on the insurance company), but faster.

What to do?

Since most often the money offered by the insurance company is not enough for high-quality repairs, I recommend 2 options:

1. If you don’t want to wait and want to start repairing the car as soon as possible - receive money, repair the car (if necessary - you can add your own money) - and then, after the repair, present the documents, demanding additional payment. The possibility of concluding this agreement is not provided for by either the Law of Ukraine “On Insurance” or the Law “On Compulsory Motor Liability Insurance” - Therefore, you can successfully challenge it with regulatory authorities and in court.
2. Refuse the offer and wait the required 90 days. Ultimately, it will still be more profitable in financial terms, taking into account the time value of money, than receiving the money immediately, but a maximum of 80% of the amount owed to you. You will not find hryvnia investments yielding more than 3% per month, and 20% for 3 months is 6.6% in one month.

Trick #5: "Concealment of the terms of the 20% VAT surcharge"

You submitted all the documents to the insurance company, had an examination carried out, and the resulting compensation amount suited you. You chose repairs at an official service station. Perhaps, you have even already repaired the car, investing your own money. But the payment comes in an amount that is approximately 20% less than what you saw in the expert assessment results.

And, naturally, no one calls you and explains what the matter is.

What should you do?

1. It is advisable to choose a service station that is a VAT payer.
2. In the application for payment, indicate the payment details of the selected service station, and not your bank account.
3. After the repair, show the car to the insurance company and provide documents from the service station that you repaired the car (a certificate of completion with the service station seal).

So, we have analyzed with you the most typical methods used by insurers in order to reduce or delay insurance payments and options for how to counteract this.

These options are suitable for resolving the issue with payment in most cases for those motorists who want to receive money from the insurance company and are ready to invest 20-30 hours of personal time in this process.

It is important to note that quite often there are situations in which insurers have calculated everything correctly (i.e., according to the law), but the compensation amounts are still not It's enough to cover high-quality car repairs due to depreciation. Since the Ukrainian car fleet is aging due to low new car sales over the past three years, in my experience, such payments "due to depreciation" currently account for over 60%.

Here, my recommendation is to collect the missing amount of money to cover the cost of car repairs from the party responsible for the accident, either pre-trial or in court.

Considering that only about 24.7% of people in Ukraine (2012 social survey, Franko University of Lviv) consider themselves legally literate, in most cases I recommend contacting specialized lawyers or companies that professionally collect monetary compensation from insurance companies and those at fault in accidents. I also recommend this to people who value their time and nerves.

At the same time, it is naturally important to choose lawyers who already have positive experience resolving such issues specifically in the insurance industry, because a simple lawyer may not know important nuances and therefore make a number of mistakes that can affect the final outcome of your case – the amount and timing of the compensation received.

It is extremely important to seek full monetary compensation from the insurance company, because the more people there are who let their problems slide, the worse insurers will pay their clients.

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