Thursday, May 11 2017 17:39
Karine Melikyan

Vahan Avetisyan: To reach the goal,  we should clearly define the priorities

Vahan Avetisyan: To reach the goal,  we should clearly define the priorities

ArmInfoArmInfo IA interview with  Vahan  Avetisyan,  the Chief Executive of Armenian Bureau of Motor Insurers

What is your estimation of bonus-malus system performance?

Talking about the efficiency we assume being balanced, i.e. the amounts paid per bonuses are equal to those collected per maluses. Regarding the new system – i.e. transmission from drivers to vehicles owners, I think that an essential part of operational processes while signing the insurance contract and within insurance cases have essentially decreased, as well as the main part of fraud related risks are controlled.

How do you estimate the efficiency of losses management within the euro protocol? What are the main advantages and what omissions have been fetched out for the period of implementation and operation of the innovation mentioned?

Due to euro protocol – that was a necessary step, and it turned very efficient. Today the 50-60% of insurance cases – and in monthly view that makes 1500-2500 cases-are being registered within this system and clients get their reimbursements in a very short term, which forms 7 days in average. We have even cases when the reimbursement threshold exceeds a  bit  the  limit of AMD 100 000, let’s say for AMD 10-20 000, but clients use to choose this simplified tool and get reimbursements in the limits of AMD 100 000. 

And there were really no  problems?

The main problem is the low level of drivers’ aware by now. Particularly, today, in respect to 40-50% of cases, they don’t have the appropriate declarations to fill in and, due to an old habit, refer to their insurance companies. But we have found the solution of this problem – we deal with insurance companies and road police, to provide drivers with such declarations to fill in.

And how do you hold your struggle with fraudulent attempts to declare the old damages together with those got in given accident?

This is usually being fetched out by expertize, which clearly divides new damages and old ones. Besides, This year we are intended to launch a unified electronic platform for OSAGO/ TPL (third part liability insurance), where all the insurance cases and all the damages caused by any accident will be registered, which will allow to set a total control and to exclude any cases of fraud. We have already fixed several fraud cases from September up today, but for this moment those are not more than 20-30. He conducted an appropriate analysis, and due to some of those we applied to court and prosecutor’s office, and the initiators are put under criminal liability. Such facts are being highlighted at our website. It is obvious that such type of drivers will never expire, but let me assure you this is a very manageable process. Which point of view from? First, we do possess enough tools to define the level of fraud, and next, we could apply to such drivers pretty strict maluses. For today, the per cent of fraud among drivers, according to our expert estimates, is in the limits of 1-2%

How could the voluntary 9self) declaration in the cases of accidents could decrease the road  tie ups?

Of course, the self –declaration of accidents sharply decreased the number of tie ups on the highways, because the time of  accident registration has shortened thrice – in 10-20 minutes maximum the road is being cleared in light accidents cases, while in prior, before the implementation of self-declaration tool,  any given road had been blocked in average for 40 minutes-one hour, and in heavy accidents cases – for 1,5-2,5 hours, until the insurer visited the accident site and called road police upon the necessity. But we are not intended to stop on what we reached, and we   plan together with road police to automate the declaration process with the help of appropriate software tool. And, maybe, we will succeed with reducing the time of light accidents down to 5-7 minutes, and in heavy cases the registration of the cases could be organized in 15-25 minutes in average.

Why the automated option of accident declaration has not been set initially than?

Let’s say these changes are natural for the current stage of development. Initially, when the TPL was implemented first, the main task was the financial capsulation of the system and the growth pulse. Today this system is sustainable enough, the insurance companies are solvent and the tariffs are calculated properly, the reimbursement volume is set at forecastable range, but there are some unconformities – accident cases are driven out of shadow, and the relations of parties got more complicated. Accordingly, for us the second stage of OSAGO reformation is the improvement of quality and comfortability of the service for all the participants of the market, for drivers and consumers.

Why did we choose the direct TPL reimbursements option, and not the natural reimbursements tool, like it is ion Russia, for instance? What is the advantage of our mechanism?

The natural option of reimbursement  assumes the compensation in a form of the vehicle repair, i.e. the driver has to choose one of several maintenance stations, and the payment is to be implemented by a transfer directly to the motor service, passing by the driver. I think this is wrong. And that is why our direct reimbursement does not impose the driver any exact place where he should have his car repaired, and the insurer company proposes two options: one is when the reimbursement assets are being provided to the driver and he decides himself where exactly he will repair his car, and the second is that at least three service stations are proposed and he has to choose one to repair the vehicle. But in this case the assets are subject to be allocated to the motor service directly. For today, in the vast majority of cases drivers prefer to get the monetary compensation and to arrange their cars repair all by themselves. At this stage we consider our method of reimbursement as proper, and in the future we will see and act depending on the situation changes.

Could the implementation of direct reimbursement mechanism be viewed as a full transition to TPL and comprehensive insurance based package, considering that it assumes the regress-based compensation and that TPL will prevail in the package mentioned?

The motor insurers bureau is not eligible to join together the OSAGO/ TPL and Comprehensive insurance, but we could set the preconditions to join these two segments and to sell those in a joint package. Let us take the same direct reimbursement tool, which, in essence, is set directly to create a combination of these two products as one single package, and to get to complete motor insurance as TPL and Comprehensive. We will set such a precondition to support insurance companies to provide their clients a higher quality, and to organize their work in a proper manner starting with contract signing and finishing with payoffs so that clients should not have to visit the insurers twice. From April 1, 2017 within our new package of rules and direct reimbursement implementation we could set all the preconditions necessary to provide more qualified service by every insurer. And now insurance companies have to adjust their internal procedures and to provide consequent quality growth.

What were the main preconditions for TPL based direct reimbursements implementation? How will this direct reimbursement mechanism reflect the market?

Within the implementation of direct reimbursements systems we could recover the main thing – the competition at the insurance reimbursement markets, and the wish to provide a higher quality to the client. For example, in first three years of OSAGO/TPL implementation (2011-2013) the average level of losses reached from 55% up to 77%, because there was a strict competition between insurance companies in respect to reimbursements, but after the wish started to decrease, and the losses level decreased accordingly down to 53% in 2015, with non-significant growth up to 55% in 2016. In addition, from April 2017 the direct reimbursements system was launched, concentrating the attention of the insurance company on the clients. Already in January the disadvantageousness formed 72%, remaining at the same level in February as well. The year of 2017, up to my forecasts, we will complete with the level of disadvantageousness at 65-70% range.

Saying in other word, I define three main preconditions for implementation of direct reimbursements system:  first is to recover the basic stimuluses for healthy competition, second is the improvement of services quality, and the third is a creation of mechanism which would allow clients while buying the TPL package to deal with one insurance company, and that insurance company should be focused on the client.

What regulatory changes in respect to insurance market did take place in 2016, what – in 2017 and what is planned for 2018?

 In 2016 several groups of regulatory modifications have been implemented: the system of electronic notifications, self-declaration of traffic accidents, with a threshold of reimbursements increased from AMD 50 000 to AMD 100 000, the simplification of Armenian version of euro protocol, expertise procedures standardization, implementation of new simplified tool of bonus-malus etc. The main regulatory change of 2017, to be mentioned by me, is the implementation of direct reimbursement tool from the month of April, with the appropriate mechanism of mutual payments between insurance companies. By this, we completed another stage of OSAGO/TPL restructuration. Next year we plan to implement three more tasks: to continue the process of joining the Green Card system ( we initialized it in 2016), and to arrange all the necessary regulatory changes: to implement standard methodology and automated programs for damages and losses estimation, and to improve the bonus-malus system upon the appropriate need.

What do you think, are six insurance companies enough for Armenian market?

I think, for the volumes we have, 5-10 companies are quite enough. Our growth in respect to voluntary insurance is not satisfactory, and maybe the reason is in the TPL segments I stated, particularly I mean the absence of any preconditions for combined insurance products sales. The 2/3 of our insurance market is embraced by OSAGO/TPL, and this a pretty high motivation to create mutually connected insurance products.

Will the OSAGO/TPL prevail, or other forecasts  may have an existence?

 I think, within stage by stage implementation of compulsory medical insurance, which is being often discussed at the Government recently, the volumes of the market will increase and the domination of OSAGO/TPL will drop down. As the share of OSAGO/TPL grow lower, the system will act more qualified. Already today I see many pulses in respect to insurance companies being client-oriented, I see willingness to expand the range of combined products, and that means our steps will reach the target.


News
Economy Ministry announces launch of program to assist textile  industry in ArmeniaEconomy Ministry announces launch of program to assist textile  industry in Armenia
Government is preparing programs to support domestic producers in  view of lifting of embargo on Turkish importsGovernment is preparing programs to support domestic producers in  view of lifting of embargo on Turkish imports
Armenian NPP and Rusatom Overseas to sign Memorandum of UnderstandingArmenian NPP and Rusatom Overseas to sign Memorandum of Understanding
Vahagn Khachatryan to head Armenian-Bulgarian intergovernmental  commission on economic and scientific-technical cooperationVahagn Khachatryan to head Armenian-Bulgarian intergovernmental  commission on economic and scientific-technical cooperation
Minister of Health of Armenia will head intergovernmental commission  on trade and economic cooperation with LithuaniaMinister of Health of Armenia will head intergovernmental commission  on trade and economic cooperation with Lithuania
Ministry of Economy: Armenia intends to reach 7% economic growth in  2022Ministry of Economy: Armenia intends to reach 7% economic growth in  2022
Labor productivity in Armenia is lower than EAEU averageLabor productivity in Armenia is lower than EAEU average
Acba Bank Brings Apple Pay to Customers. A safer, more secure and private way to pay with iPhone and Apple WatchAcba Bank Brings Apple Pay to Customers. A safer, more secure and private way to pay with iPhone and Apple Watch
By the end of 2022, inflation in Armenia will decrease to 4 +/-1.5%:  Candidate for Deputy Governor of Central BankBy the end of 2022, inflation in Armenia will decrease to 4 +/-1.5%:  Candidate for Deputy Governor of Central Bank
 Converse Bank Brings Apple Pay to Customers  A safer, more secure and private way to pay with iPhone and Apple Watch Converse Bank Brings Apple Pay to Customers A safer, more secure and private way to pay with iPhone and Apple Watch
Armenia`s premier chairs discussion of wine industry development  prospects  Armenia`s premier chairs discussion of wine industry development  prospects  
Ardshinbank Brings Apple Pay to CustomersArdshinbank Brings Apple Pay to Customers
Cash circulation to be restricted in Armenia from July 1, 2020Cash circulation to be restricted in Armenia from July 1, 2020
Environmental protection ARMENAL`s priorityEnvironmental protection ARMENAL`s priority
Armenia`s Minister of Economy appointed Armenian-Moldavan Economic Cooperation Commission co- chairArmenia`s Minister of Economy appointed Armenian-Moldavan Economic Cooperation Commission co- chair
Armenia`s minister of economy appointed co-chair of Armenian-Kazakh Economic Cooperation  CommissionArmenia`s minister of economy appointed co-chair of Armenian-Kazakh Economic Cooperation  Commission
Armenia`s Minister of Economy appointed co-chair of Armenian-Kyrgyz Economic Cooperation  CommissionArmenia`s Minister of Economy appointed co-chair of Armenian-Kyrgyz Economic Cooperation  Commission
In 2021, the number of subvention programs in Armenia exceeded the  two-year figureIn 2021, the number of subvention programs in Armenia exceeded the  two-year figure
ANIF Fund will invest about USD 1.4 million in transport and cargo  transportation fieldANIF Fund will invest about USD 1.4 million in transport and cargo  transportation field
Food Safety Inspectorate of Armenia imposes restrictions on import of  number of goods from Kazakhstan, Russia, Czech Republic and PolandFood Safety Inspectorate of Armenia imposes restrictions on import of  number of goods from Kazakhstan, Russia, Czech Republic and Poland
Only 5.5% of the highway was built under North-South program in 12  yearsOnly 5.5% of the highway was built under North-South program in 12  years
President of Armenia at meeting with Executive Director of Mubadala  noted Armenia`s interest in investments from  UAEPresident of Armenia at meeting with Executive Director of Mubadala  noted Armenia`s interest in investments from  UAE
The influx of foreign investment in the Armenian economy grew by  October 2021 due to a jump in FDIThe influx of foreign investment in the Armenian economy grew by  October 2021 due to a jump in FDI
EDB analysts presented the first in this year macroeconomic review:  Economic activity in Armenia increased by 5.2%EDB analysts presented the first in this year macroeconomic review:  Economic activity in Armenia increased by 5.2%
Armenian president`s visit results: Wizz Air Abu Dhabi to start  flights to YerevanArmenian president`s visit results: Wizz Air Abu Dhabi to start  flights to Yerevan
Armenia`s president meets with Masdar company CEOArmenia`s president meets with Masdar company CEO
The price of gas at the border in 2022 was regulated by an additional  agreement to the contract of 2013 - Ministry of Territorial  Administration and InfrastructuresThe price of gas at the border in 2022 was regulated by an additional  agreement to the contract of 2013 - Ministry of Territorial  Administration and Infrastructures
Vahan Kerobyan will head Armenian-Belarusian intergovernmental  commission on economic cooperation from Armenian sideVahan Kerobyan will head Armenian-Belarusian intergovernmental  commission on economic cooperation from Armenian side
Fly Arna, Armenia s national airline plans to launch air flights at  the end of MayFly Arna, Armenia s national airline plans to launch air flights at  the end of May
Gnel Sanosyan to head the Armenian-Turkmen intergovernmental  commission on economic cooperation from the Armenian sideGnel Sanosyan to head the Armenian-Turkmen intergovernmental  commission on economic cooperation from the Armenian side
Pashinyan formed working group for effective implementation of work  on construction program of small- medium reservoirsPashinyan formed working group for effective implementation of work  on construction program of small- medium reservoirs
Export of goods up to one million drams in Armenia will be exempt  from customs dutiesExport of goods up to one million drams in Armenia will be exempt  from customs duties
Armenia`s government grants loan to Armenian NPP Armenia`s government grants loan to Armenian NPP 
FLYONE ARMENIA launches Yerevan-Istanbul-Yerevan flightsFLYONE ARMENIA launches Yerevan-Istanbul-Yerevan flights
Armenian government to increase funding for subvention programs in  border communitiesArmenian government to increase funding for subvention programs in  border communities
Armavir leader in land purchase-and-sale deals Armavir leader in land purchase-and-sale deals 
2-fold YoY increase in real estate business in Yerevan 2-fold YoY increase in real estate business in Yerevan 
Results of the review of regulatory framework for advancing “green finance” in Armenia presented to stakeholdersResults of the review of regulatory framework for advancing “green finance” in Armenia presented to stakeholders
Armenian banks` client base up by 3.8% by Nov. 2021 Armenian banks` client base up by 3.8% by Nov. 2021 
9.7% year-on-year rise in housing prices in Armenia`s regions by Dec.  2021 9.7% year-on-year rise in housing prices in Armenia`s regions by Dec.  2021 
WB GDP growth forecast unchanged for Armenia WB GDP growth forecast unchanged for Armenia 
Armenian government minimizes contacts between tax authority and  taxpayerArmenian government minimizes contacts between tax authority and  taxpayer
33 587 children were born in Armenia in 11 months33 587 children were born in Armenia in 11 months
Wheat importers used bankruptcy as a tax evasion: SRCWheat importers used bankruptcy as a tax evasion: SRC
Issue of introducing universal income declaration system for  individuals was discussed at meeting chaired by Nikol Pashinyan Issue of introducing universal income declaration system for  individuals was discussed at meeting chaired by Nikol Pashinyan 
Service sector of Armenia reached 7.3% growth by December 2021Service sector of Armenia reached 7.3% growth by December 2021
Trade sector in January-November increased turnover by 7.9% per annumTrade sector in January-November increased turnover by 7.9% per annum
Telecommunications revenue of Armenia increased by 4.5% in 11 monthsTelecommunications revenue of Armenia increased by 4.5% in 11 months
Air passenger traffic increased 2.7fold over 11 monthsAir passenger traffic increased 2.7fold over 11 months
Armenian textile industry continues to demonstrate progressive growth  ratesArmenian textile industry continues to demonstrate progressive growth  rates
Alcohol industry in Armenia has increased production volumesAlcohol industry in Armenia has increased production volumes
Armenia`s metallurgical industry accelerates y-o-y growth rate to  double digitsArmenia`s metallurgical industry accelerates y-o-y growth rate to  double digits
Electricity generation in Armenia decreased by 2% in 11 monthsElectricity generation in Armenia decreased by 2% in 11 months
NA Committee approved nomination of Hovhannes Khachatryan for post of  Deputy Chairman of Central Bank of Armenia NA Committee approved nomination of Hovhannes Khachatryan for post of  Deputy Chairman of Central Bank of Armenia 
Russia leads both in export and import in Armenia`s foreign trade  turnoverRussia leads both in export and import in Armenia`s foreign trade  turnover
Manufacturing industry in Armenia has grown in 11 monthsManufacturing industry in Armenia has grown in 11 months
Economic activity up by 5.2% in Armenia in Jan-Nov 2021Economic activity up by 5.2% in Armenia in Jan-Nov 2021
Turkish Pegasus Airline to carry out Yrevan-Istanbul-Yerevan flightsTurkish Pegasus Airline to carry out Yrevan-Istanbul-Yerevan flights
Construction of alternative roads to be fully completed in Syunik in  2022Construction of alternative roads to be fully completed in Syunik in  2022
Inflation in Armenia in 2021 rises to 7.7% from 3.7% in 2020Inflation in Armenia in 2021 rises to 7.7% from 3.7% in 2020
Read more


Exchange rates
18.01.2022
RUB6.28-0.02
USD481.520.03
EUR548.74-1.27
GBP656.02-2.61
CAD384.48-0.34
JPY42.00-0.06
CNY75.800.09
CHF526.42-0.78