ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of March 17, 2008 No. 318

About approval of Methodology of calculation of basic insurance premium and adjusting factors for obligatory civil liability insurance for the damage caused by vehicles

For the purpose of providing the optimum mechanism of realization of obligatory civil liability insurance for the damage caused by vehicles and also in pursuance of provisions of parts (1) and (2) article 11 of the Law on obligatory civil liability insurance for the damage caused by vehicles, N 414-XVI of December 22, 2006. (The official monitor of the Republic of Moldova, 2007, N 32-35, Art. 112) DECIDES: the Government

1. Approve Methodology of calculation of basic insurance premium and adjusting factors for obligatory civil liability insurance for the damage caused by vehicles according to the appendix N 1.

2. The national commission on the financial market at least once a year to determine basic insurance premium and value of adjusting factors for obligatory internal and external car responsibility insurance according to the Methodology specified in Item 1 of this resolution.

3. Insurers shall store and systematize the statistical data necessary for application of this Methodology.

4. Determine that in the absence of necessary information for implementation of calculations according to the methodology specified in Item 1 of this Resolution experience of the countries of the International system of insurance "Green card" will be applied to accumulating of the necessary data allowing to perfrom exact calculation of value of insurance premiums.

5. The basic insurance premium and value of adjusting factors for obligatory internal and external car responsibility insurance are published by the National commission on the financial market in the Official monitor of the Republic of Moldova and in two mass periodicals.

6. For date of publication some orders of the Government according to the appendix N 2 are recognized the Official monitor of the Republic of Moldova of the resolution of the National commission on the financial market on approval of basic insurance premium and values of coefficients invalid.

Appendix No. 1

to the Order of the Government No. 318 of March 17, 2008

Methodology of calculation of basic insurance premium and adjusting factors on obligatory civil liability insurance for the damage caused by vehicles

I. General provisions

1. The methodology of calculation of basic insurance premium and adjusting factors on obligatory civil liability insurance for the damage caused by vehicles (in dalneyshemmetodologiya), is developed according to provisions of article 11 of the Law on obligatory civil liability insurance for the damage caused by vehicles, N 414-XVI of December 22, 2006. (The official monitor of the Republic of Moldova, 2007, N 32-35, Art. 112) also establishes procedure of payments of basic insurance premium and adjusting factors to basic insurance premium, and also procedure for application of these coefficients.

2. The national commission on the financial market establishes basic insurance premium and value of adjusting factors on the basis of this Methodology, using:

a) the single database, stipulated in Item b) parts 1 of article 5 of the Law on obligatory civil liability insurance for the damage caused by N 414-XVI vehicles of December 22, 2006;

b) The register of accounting of insurance contracts provided by part (2) article 38 of the Law on obligatory civil liability insurance for the damage caused by N 414-XVI vehicles of December 22, 2006;

c) The register of the insurer about accounting of insured events;

d) The state register of the road accidents approved by the Order of the Government N 693 of June 21, 2007;

e) The state register of drivers approved by the Order of the Government N 1058 of August 6, 2002;

f) The state register of transport approved by the Order of the Government N 1047 of November 8, 1999;

g) information provided to National bureaus of insurers of vehicles on the agreements of reinsurance signed in case of external car responsibility insurance.

3. The basic concepts used in this Methodology are:

net award - the award covering the cost of insurance risk without any expenses of the insurer and profit margin;

risk award - net award to which the risk margin increases;

basic insurance premium - the average annual bonus for one unit of transport calculated by the National commission on the financial market according to this Methodology;

insurance premium - the award calculated by the insurer and established in the insurance contract for transport unit;

adjusting factor - the coefficient determining risk degree depending on certain factor and which application, according to this Methodology, is obligatory when calculating insurance premium;

frequency of approach of insured events - number of the insured events falling on the one-year insurance policy;

risk exposure - the period of action (advanced in years) of the insurance policy within calendar year;

the average extent of damage - the average extent of damage represents the attitude of total amount of damage towards quantity of insured events for settlement period;

risk margin - the allowance to net award designed to compensate change of risk.

4. The basic insurance premium and value of adjusting factors are calculated the National commission on the financial market actuarial methods based on statistical information on all-in cost of the damage registered on compulsory third party car insurance, costs of the insurers belonging to this class of insurance in previous period (at least a year) and the forecast of damage and expenses on the period for which the basic insurance premium is established.

II. Calculation of basic insurance premium

5. The basic insurance premium is calculated by addition to risk award of expenses of the insurer, profit margin and obligatory payments.

1) the Net award is calculated as the work between the frequency of approach of insured events and the average extent of damage:

where:

Pp - net award;

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