NO EXTRA BENEFITS TO BUYERS OF THIRD PARTY LIABILITY INSURANCE
Insurers, insurance brokers, and insurance agents are not allowed to offer or provide any type of benefits when signing third party liability obligatory motor vehicle insurance in 2004. This is an explicit requirement of the new Regulation N18 on obligatory insurance, prepared by the Financial Supervision Commission and published in the Official Gazette, issue 105 from November 30, 2004. The regulation arranges the general conditions, minimum insurance amount, price, order and term for carrying out obligatory insurance of owners, users, holders and drivers of motor vehicles under the Third Party Liability insurance as well as of passengers in the public transport under the Accident insurance.Insurers are expected to prepare their own tariffs and start selling obligatory third party liability policies in ten days.For the first time the regulation stipulates a minimum obligatory risk premium which grows by coefficients depending on the peculiarities of the risk taken by the insured person. The risk is higher or lower depending on whether the driver has or has not caused road accidents in the past three years. The risk level also depends on whether he represents a legal entity or an individual, on his sex, age, and driving experience. It is of importance if the vehicle is used for personal needs or for production, trade, taxi services, transportation of dangerous loads, etc. The premium will also depend on the region where the vehicle is driven - the whole country, a regional town, a smaller town, or a village. How many people drive the same vehicle will be a significant indicator, too.The real price that drivers will pay for third party liability is formed by adding the acquisitional* and administration costs to the risk premium calculated by the insurer. Some insurance companies intend to introduce deferred payment of the instalment, but the regulation forbids this practice in case the insurance policy is valid up to six months. In case of deferred payment, the first instalment cannot amount to less than 25% of the annual gross insurance premium. The third party liability agreement cannot be signed for a period longer than 12 months as well as for a period shorter than one month. If the vehicle changes its owner, the insurance is terminated. So far, vehicles have been sold along with the acting insurance.Owners, users, holders and drivers of motor vehicles will be allowed to buy obligatory third party liability insurance when insurance interest arises, i.e. at the moment they start driving a motor vehicle. This is one of the innovations in the regulation. It means that when a temporarily stopped or newly-acquired vehicle is put in exploitation, an insurance is to be signed before the competent bodies in the Ministry of Interior register the vehicle.Next year, the existence of an insurance agreement will be certified by both an insurance policy and a special sign issued by the Guarantee Fund and exposed in the vehicle. This requirement will become valid on June 1, 2005. The sign will consist of the Guarantee Fund trade mark, a unique number and the insurance expiry date. It will be prepared in a way that guarantees it is used only once. If the sign is lost, stolen, or destroyed, the driver of the vehicle will have to ask the Guarantee Fund to issue a new one that will be valid until the insurance expires.According to Regulation N18, the Accident obligatory insurance will have as insurance subject the life and health of passengers in the public transport and people who stay closest to them.The minimum insurance amount on the Accident insurance for each passenger and each insurance event will be BGN20,000 in 2005.The minimum obligatory risk premium will depend on the type of the motor vehicle. It will be determined by the insurer as a percentage of the insurance amount.Carriers who use public transportation vehicles will sign Accident obligatory insurance when insurance interest arises, too (i.e. on the day public transportation permission is received) for a term not longer than 12 months and not shorter than one month.Another innovation of Regulation N18 is the introduction of tighter control through single numeration of the policies and a unique identification code. A single obligatory insurance reporting system is created for the first time. The system is administered by the Guarantee Fund and contains updated information about the number of issued and operating obligatory insurance policies as well as about the motor vehicles, subject to these policies.No later than the fifteenth day of each month, each insurer who signs obligatory insurance will present to the Guarantee Fund a list of the registered insurance policies for the previous month. The list must contain a number, validity starting and expiry date, type of the motor vehicle, number of the frame. A fund administrator will summarize the information about the insurance policies signed and will control the term of expiry of their coverage. In the end of each month the administrator will inform about the type of vehicles and the number of frame for which the insurance coverage has expired and no continuation has been requested. The data will be sent to the Ministry of Interior.