New terms of MTPL insurance indemnities to come into effect in Armenia in April 2017

ArmInfo. New terms of motor third party liability (MTPL) insurance indemnities will come into effect in Armenia in April 2017. Vahan Avetisyan, CEO of the Armenian Motor Insurers' Bureau, presented the upcoming changes in MTPL insurance during a press conference on November 9. He said that in 1-1.5 years the customers will be able to conclude contracts and receive indemnities via up-to-date means of communication without visiting insurance companies.  

Avetisyan pointed at introduction of a system of direct indemnities, which suggests that in case of an insurable event the aggrieved party gets the indemnity from his/own insurance company, which will further retrieve its funds from the insurance company, where the offending party's car is registered. So, throughout the validity period of the contract, the car owners will deal with their own insurance company only. This will allow enhancing the quality of insurance contracts servicing.

He noted that due to the process optimization, the period of expert examinations and MTPL indemnity payments has shrank almost 2-3-fold: starting from 1 April 2017, 6-17 days in case of facilitated indemnity (versus the current 9-81 days), and 10-41 days in case of standard indemnity (versus 16-119 days).

Avetisyan pointed out that the upper threshold of indemnity to all aggrieved parties in case of one insurable event has been raised from the current 10 mln AMD to 33 mln AMD starting from 1 April 2017, and the amount of compensation for the property damage to all aggrieved parties in case of one insurable event will be increased to 18 mln AMD from the current 1.8 mln AMD. In case of one insurable event the upper threshold of payment and the amount of property damage compensation for 1 aggrieved party are retained at 3 mln AMD and 1.8 mln AMD, respectively. Along with this, all MTPL documents are subject to standardization. This will allow the consumers to get full information regardless of the insurance company serving them.

He stressed that the abovementioned changes apply to both MTPL contracts concluded after 1 April 2017 and the current ones.

Avetisyan also presented the results of 8 months since the introduction of the system of independent registration of road accidents by the car owners (in September the damage compensation within the framework of independent registration of the road accident was increased to 100 thsd AMD from the previous 50 thsd AMD). From 4 March 2016 through October 2016, the number of applications for indemnities increased from 306 (March) to 2100 (October). Almost half of the insurable events is currently registered in the facilitated way and their share makes up 14-15% of all indemnities or 123.1 mln AMD in October versus 79.4 mln AMD in September (10% of all indemnities). The average indemnity amount grew to 66269 AMD in October from 43424 AMD in March. Avetisyan expects the number of applications within the framework of independent registration of the road accident to range within 45-48% of the total number of applications within the next few months. 

As of 1 Oct 2016, the total number of applications for MTPL indemnities has grown by 26% to 4336. The number of granted applications has risen by 25% to 4056, and the amount of payouts has increased by 13% to 786 mln AMD, with further growth to 852 mln AMD by November 1.

To note, there are 6 insurance companies in Armenia, which provide services in 17 out of 19 classes of insurance. As of 1 October 2016, the aggregate insurance premiums amounted to 23.2 bln AMD, and the aggregate payouts totaled 9.8 bln AMD. The share of MTPL in the total premiums and payouts is traditionally the biggest - 55.7% and 59.8%, respectively (13.2 bln AMD and 6.01 bln AMD). The leaders in terms of MTPL premiums and payouts are Rosgosstrakh Armenia and INGO Armenia.