1. Motor Insurance Market in Europe

2. CEA’s Member Associations Source CEA 33 National Member Associations: 27 EU Member States + 6 Non-EU Markets Switzerland, Iceland, Norway, Turkey, Liechtenstein, Croatia 2 Observers RussiaUkraine 2

3. Content market overview cost analysis price of motor insurance key factors influencing claims frequency and cost conclusions

4. Market overview (1) Structural data

5. Market overview (2) Premium income data Motor insurance is the biggest class of non-life insurance business Decline of motor insurance premium is continuing in 50 % of the CEA member countries

6. Market overview (3) Premium income data Evolution of motor liability premium

7. Cost analysis (1) Claims incurred Representativeness: 98%

8. Cost analysis (2) Claims ratio *Claims incurred/premium

9. Cost analysis (3) Operating expenses

10. Cost analysis (4) Combined ratio

11. Cost analysis (5) Breakdown of costs Notes: For Italy, the breakdown of the claims is a rough estimate; For Germany, the claims expenditure includes the technical provisions; For Luxembourg, the figures correspond to 2004 data.

12. Cost analysis (6) Cost of a bodily injury claim Source: Insurance Supervisory Authority

13. Evolution of prices (1) Source: Eurostat Evolution of transport insurance price index (2005=100)

14. Evolution of prices (2)

15. How are motor insurance premiums set? (1) Decline of number of claims since 2004 Decrease of average claim frequency

16. How are motor insurance premiums set? (2) Average claim cost in 2005 €3 300 Large disparities in average claims cost between the countries : €5 000 in Finland above €4 000 in Italy less than €1 000 in Latvia and Slovakia.

17. How are motor insurance premiums set? (3) 1. Taxation 2. National legislation Minimum amount of coverage and general liability rules Rule of vulnerable road user in application in several countries Unlimited cover for third party liability imposed in some countries

18. Key factors influencing claims frequency 1.Road safety 2. Traffic conditions Road density Vehicle density Driving habits 3.Fraud and non-insurance Source: European Transport Safety Council (+CARE and national data)

19. Key factors influencing claims cost (1) Vehicle repair and spare parts prices, Medical care prices Legal costs Source: Eurostat

20. Key factors influencing claims cost (2)  Differences in the impact of road accidents  Differences in personal injury compensation *: 2004 data Source: “L’indemnisation du dommage corporel en Europe”, CEA, 2004

21. Conclusions (1) The motor insurance market around 1 000 insurance companies active in Europe premium income of €127.2 billion in 2006 (-1.1% as compared to the previous year) combined ratio: 97.5% in 2006 (+1.2% points as compared to 2005) the market is subject to a business cycle driven by the competitive forces

22. Conclusions (2) Pricing in Motor Third Party Liability Insurance standard approach is difficult average premium varies significantly from country to country due to:  Differences in claims frequency  Differences in average claims cost local factors such as price of repairs and medical care, traffic conditions, drivers’ habits, etc. influence costs and frequencies taxes and national legislation can also vary considerably according to the country

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