ROMANIAN INDEPENDENT MOTOR SERVICES ASSOCIATION____________________________

1. ROMANIAN INDEPENDENTMOTOR SERVICES ASSOCIATION____________________________

2. High incidence of traffic accidents ____________________________ Approximately 10% of the mandatory insurance clients in Romania are registering damages In 2012, the annual payment on mandatory insurance segment was of approximately 100 euro The average auto damage is of approximately 1100 euro

3. The insurance companies understate the cost of repairs granted to their clients ____________________________ A lot of insurance companies understate the cost of repairs granted to their clients . There are insurance companies in Romania, with important market share on mandatory insurance segment, which pay between 75-25% of the repair costs calculated by the auto service. The percentage granted as compensation is calculated freely by the insurance company, based on the service unit cost estimations.

4. Standard collaboration agreement between an insurance company and a service unit ____________________________ Dacia and all other brands, 0-4 years old, the components price is 75% of Audatex Dacia and all other brands, 4-8 years old, the components price is 50% of Audatex Dacia and all other brands, >8 years, The components price is 25% of Audatex

5. Abusive investigation of claim files ____________________________ 90 days is the term by which the insurance company is legally deferring payment of damages. How can one insurance company in Romania have an incidence of 50 to 60% cases of suspected fraud, while other insurance companies have an incidence of approx. 10%? Simple: this way, the insurance company is legally delaying compensation payments.

6. Reducing the repair costs ____________________________ No institution verifies if the claim inspectors of the insurance companies have: Technical studies in auto field Practical experience carried out in a service unit IMPORTANT! There is the pressure made by the insurance company management to reduce repair costs, under penalty of salary reduction of the employee, if these costs exceed an average value established by management. With how much objectivity and accuracy the compensation costs will be calculated?

7. Competition Council’s Report ____________________________ According to the report issued by the Competition Council, page 102: “Regarding the relationship with insurance companies on whether they were denied the payment of damages when they use a service unit that is not on its list of approved repairers, 41% say yes in case of mandatory insurance and 32% in case of optional insurance”. So, different situations, but a surprisingly large number of insurers that have had problems because they didn’t went to a car service unit recommended by the insurance company.

8. Service units position ____________________________ Service units have two options: They accept the situation and sign the agreement under the conditions imposed by the insurance company, even if the contract affects the interests of their client insured at that insurance company 10% of repair services do not accept the conditions imposed by the insurance company and this way ensure the quality of repairs, but will have decreased workload, and will often face the situation where they have to sue the client and / or insurance company for full payment or partial payment of their claims

9. The insurance market ____________________________ The insurance market in Romania is in an extremely difficult situation because: The entire insurance market has a greyreputation among insured’s, insurance companies losing their most precious element: CUSTOMER TRUST Next month will be founded a new institution to supervise the insurance market Auto Services have a bad reputation in Romania because of the increasingly low quality of the repairs

10. Consequences ____________________________ In Romania, the auto insurance market stagnated in 2012 after a strong contraction in the previous years. According to a report issued by the Competition Council in 2011, the share of counterfeit parts was estimated by the service unit at 35%, well above the European average, estimated at approx. 10%. Our estimation is that in 2012, the share of counterfeit parts increased to about 40%. The number of repair companies shuted down in the last two years is approx. 22% of the total repairing units. The satisfaction of the Romanian insured is continuing to drop, and the confirmation comes from the increasing number of complains (up by 65% in 2012 compared with 2011), registered by the Insurance Supervisory Commission. The current insurance supervisory institution - Insurance Supervisory Commission, will be replaced by a new one in April 2013 because of “problems found, especially lately, in the insurance market” – quote from the Romanian Government Ordinance no. 93/2012.

11. Conclusions ____________________________ Agreements between auto service units and insurance companies are affecting the customers regarding repairs quality. Romanian model of “ business in auto insurance “ is one that has proven to be totally wrong. In mid-April 2013, in Romania will be establish a new insurance supervisory institution - the Financial Supervisory Authority (FSA), because of “problems found, especially lately, in the insurance market” – quote from the Romanian Government Ordinance no. 93/2012.