Nr. 22, dated 19.03.2010
“CREATION, CALCULATION, FINANCING, ADMINISTRATION OF THE GUARANTEE FUND AND PAYMENT OF CLAIMS”
(Approved by the Albanian Financial Supervisory Authority, with Board’s Decision Nr.22, dated 19.03.2010)
In compliance with Article 29, point 3 and Article 46, point 2 of the Law Nr. 10076, dated 12.02.2009 “Compulsory Insurance in the Transport Sector”, based on the proposal of the Albanian Insurance Bureau, the Albanian Financial Supervisory Authority:
This Regulation defines the rules related to the administration of the Guarantee Fund.
DEFINITION OF TERMS
All the terms of the field of compulsory insurance in the transport sector, used in this regulation, shall have the meaning attributed to them in the Law Nr.10 076, dated 12.02.2009 “Compulsory Insurance in the Transport Sector”
CREATION, CALCULATION AND FINANCING OF THE GUARANTEE FUND
- The purpose of the Guarantee Fund is the payment of material and nonmaterial claims, in compliance with the Articles 21, 29, 30, and 31 of the Law Nr.10 076, dated 12.02.2009 “Compulsory Insurance in the Transport Sector”, and is approved by the Albanian Financial Supervisory Authority, every year, with the proposal of the General Assembly of the Members of the Albanian Insurance Bureau.
- The Guarantee Fund is administered by the Bureau and it comprises of:
- Annual contribution of every insurance company ,member of the Albanian Insurance Bureau
- Other sources, predicted in the article 45, point 3 of the Law Nr.10 076, dated 12.02.2009 “Compulsory Insurance in the Transport Sector”
- The Guarantee Fund is calculated according to Annex Nr.1, herein attached.
- The annual contribution of every insurance company is calculated every year by the Bureau, commensurate with the gross written premiums of compulsory insurance, of the previous year.
- The basis of the data used for the calculation of the contribution of the insurance companies shall be the gross written premiums for third party liability compulsory insurance covering the motor vehicles inside the territory of the Republic of Albania, for the first 10 months of the previous year, officially provided by the Albanian Financial Supervisory Authority, and the prediction of the other two months, taken by every insurance company. The deadlines, procedure of financing and the adjusting of the Guarantee Fund shall be done in compliance with predictions of the AFSA Regulation “ Standards of reporting and supervising the Albanian Insurance Bureau”
- The Bureau, with decision of the General Assembly, within 30 November of every year, proposes to the Albanian Financial Supervisory Authority, the percentage of contribution for the Guarantee Fund for the next calendar year.
- Abiding the proposal of the General Assembly of members of the Bureau and the approval of AFSA, the Insurance Companies finance additional contribution to the Guarantee Fund, in case the predicted Guarantee Fund results to be insufficient to make the payments. The additional contribution of the Guarantee Fund is calculated in the same proportion, every member of the Bureau has for the current year.
- After the approval by AFSA of the amount of contribution to the Guarantee Fund, the Bureau informs the insurance companies to fulfill their respective obligations.
- The insurance companies shall open, in one of the second level banks, a specific purpose account for the Guarantee Fund. This account shall be named “name of the company- guarantee fund” and shall be used only for the payment of the claims of the Guarantee Fund. The insurance company shall use this account after it takes the document “Authorization for payment”, defined in point 4, article 6 of this regulation.
- Every insurance company, within day 15 of the first 3-month period shall have deposited to its purpose account of the guarantee fund, the amount it corresponds to its contribution in the guarantee fund for the respective 3-monthly period of the year in question, and deposits to the Bureau, within the same period of time the bank statement of the deposit of contribution and liquidity of the account of the guarantee fund.
THE RESERVE OF THE GUARANTEE FUND AND THE ADDITIONAL FUND
- The reserve of the Guarantee Fund is the reserve created by every insurance company to ensure the financing of the guarantee fund. It is calculated for the occurred but not reported claims payable by the guarantee fund (IBNR). This reserve is calculated by the Bureau. Regardless of the calculation of the reserve of the Guarantee Fund, in no occasion, shall the reserve be less than 100 million ALL, this amount split between the insurance companies, members of the bureau, according to their percentage in the Guarantee Fund.
- The Bureau calculates the reserve of the Guarantee Fund and informs in writing every insurance company about the value to be held as a reserve for the guarantee fund. After the notification of the bureau, every insurance company is obliged to create and keep the reserve of the guarantee fund on its financial accounts, by regularly reflecting it on the balance sheet.
- In case the predicted Guarantee Fund for the calendar year results to be insufficient to make the payments, the insurance companies shall finance additional guarantee fund. The additional contribution of the Guarantee Fund is calculated in the same proportion, every member of the Bureau has for the current year. The General Assembly of Members approves the sum of the additional contribution for every insurance company, member of the bureau and informs AFSA. All members shall finance this amount from the reserve of the guarantee fund.
ADMINISTRATION OF THE GUARANTEE FUND
- The insurance company, member of the bureau and authorized for the payment of claims, within day 10 of every month, must send to the bureau the analytical data concerning paid claims by the guarantee fund during the previous month, and the data concerning claims in process, divided in material and nonmaterial claims. On the other hand, the bureau within day 30 of every month sends all members analytical data concerning paid claims by every insurance company and also the data concerning claims in process, divided in material and nonmaterial claims.
- The bureau, every 3 months, makes the accordance between paid claims and corresponding obligation of every insurance company for the guarantee fund and informs the members about the administration, financing and liquidity of the fund at the end of the 3-month period and the need for additional fund, if needed.
- In case one of the guarantee fund accounts of the bureau is emptied, the insurance company which has consumed this account immediately informs the bureau for this usage. After the bureau is notified for this event, it suspends temporarily the handling of claims by this company, and authorizes the company which has the largest contribution in the guarantee fund to take over the handling of such claims.
- The bureau follows the procedures of reimbursement of the claims paid by the guarantee fund. The Executive Director of the bureau reports to the General Assembly of the Members for the cashing from regress claims, every 3 months. Cashing of regress claims is distributed to the members, in proportion with the percentage of the guarantee fund of every member in the year the payment was made.
PAYMENT OF CLAIMS BY THE GUARANTEE FUND
- The General Assembly of the Members of the Bureau delegates the handling and payment of claims arising from the guarantee fund, to the member insurance companies. The insurance companies are obliged to handle and pay the claims of the guarantee fund, for the cases predicted by article 29, point 2 of the Law 10 076, dated 12.02.2009. Since the insurance company handles and pays claims from the guarantee fund account that is financed by her, the company handles and pays claims up to the limit approved as guarantee fund for the calendar year.
- The insurance company must be careful when opening new claims, and shall take into consideration the claims in process and the liquidity of its guarantee fund account, from which the payment is made. In case the insurance company has more claims than the value of its guarantee fund account, it shall inform the bureau, which authorizes another insurance company that has not consumed its guarantee fund, to make the payment, according to a rotation system and beginning from the company which has the largest percentage in the insurance market.
- Claims object of the guarantee fund, after completion with the proper legal documentation, are sent for approval to the Claim Treatment Commission of the Bureau. Every claim must have the declaration of the responsible driver for the accident with the data of place of residence and the legal ability to act, or otherwise the file is taken to the competent authorities (Prosecution).
- After the approval of the claim by the Claim Treatment Commission, the Bureau within 5 calendar days sends to the insurance company the approval of the Commission, the photocopy of documentation the claim and the authorization for payment and the insurance company then within 10 calendar days from receiving the documentation, pays the claimant. The assessment of payment and the declaration of the claimant in which he accepts the amount paid, are sent back to the Bureau. The Bureau is obliged, within 30 calendar days from receiving the assessment of payment and the declaration of the claimant in which he accepts the amount paid, to initiate legal proceedings for reimbursement.
- The Bureau can authorize insurance companies to reimburse paid claims by agreement and not going to court.
- The insurance company member of the bureau, which reimburses paid claims from the guarantee fund gains 30% of the value of the reimbursed claim. Every insurance company that executes a reimbursement shall immediately inform the bureau and transfer to the guarantee fund account 70% of the reimbursed value. The Bureau distributes this amount to all member insurance companies in proportion with their contributions.
- Every insurance company gains a handling fee in the amount 10 000 ALL for every claim handled. This value is deducted from the Guarantee Fund.
- The payment of claims object of the Guarantee fund is made by the insurance company, in compliance with this regulation and the instructions approved by the General Assembly of the Members.
- The payment of the compensation from the guarantee fund is done solely for amounts, for which the claimant cannot be compensated by the social insurance services or by any other insurer, with which might have an insurance contract to gain compensation, and within the limits defined by the Law Nr.10 076, dated 12.02.2009.
- The Bureau, in cases when the damaged third party gaining compensation from the guarantee fund, is not a client of the insurance companies, is obliged to delegate for handling and payment the claim according to the rotation system, begging from the company which has the biggest percentage of the motor insurance market, and so on.
- In case one insurance company authorized for handling and payment of claims deriving from the guarantee fund does not make the payment according to the procedures and deadlines defined in point 4, article 6 of this regulation, the General Assembly of the Members of the Bureau revokes its right to handle and pay claims from the guarantee fund for a 3-year period.
VARIOUS ON THE GUARANTEE FUND AT THE END OF THE FINANCIAL YEAR
- At the end of the financial year (31st of December), there is compiled the balance sheet of the state of the guarantee fund and the reflecting sheet of its contributions and payments.
- At the end of the financial year (financial state as in 31st of December), the guarantee fund theoretically shall be zeroed. Remainders in the account of the guarantee fund on 31st of December of every year shall be reflected on the balance sheet of the bureau as financial obligations towards the insurance companies in proportion with the percentage they have contributed in the guarantee fund of the year in question. At the beginning of the following year the bureau shall authorize the recognition of these obligations as part of the contribution of the insurance companies in the guarantee fund of the following year, calculated in proportion with the percentage of the contribution that belongs to any insurance company for the financial year in question.
- The Bureau, within day 15.01 of every year sends to the insurance companies handling claims object of the guarantee fund, all approved unpaid claims until day 31.12. of every year end, altogether with the decision of the Claim Treatment Commission and the authorization for payment. The insurance company is obliged to make the payment, in favor of the damaged party, within the defined legal limits.
In case a member does not fulfill its predicted obligations in this regulation, the Bureau informs AFSA for the imposing of sanctions in compliance with the legislation in force.
ENTRY IN FORCE
This regulation enters in force on 19.03.2010, with the Board’s Decision Nr.22 of AFSA