Direct settlement mechanisms and Independent claims adjusters

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• Direct settlement mechanisms and
  Independent claims adjusters
• The French experience

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Summary

• Direct settlement mechanisms
  and Independent claims adjusters
• Direct settlement genesis
• The IDA agreement
• Independent claims adjusters status

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1. Direct settlement genesis

• 1958 compulsory motor third party liability
  insurance
• Length of the property damages compensation
• Accident circumstances set by police forces
  difficulties to obtain the legal report
• No adjusters to evaluate the damages
• Heavy costs for claims handling
• Consequence
• Insured and insurers unsatisfied

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1. Direct settlement genesis

• Different steps for direct settlement agreements
• First steps the basis
• 1953 Scale on liability rules
• 1956 Advanced inclusive settlement for
  accidents between 2 vehicles
• 1960
• First standard form report
• Evaluation agreement by the direct insurer (the
  victims own MTPL insurer)
• 1968 Direct settlement agreement
• IDA Indemnisation Directe de lAssuré
• Extended to all motor insurers

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2. The IDA agreement

• General principles
• Scope accident between 2 vehicles
• Compensation of property damages by the victims
  own MTPL insurer
• Scale of liability rules according to the
  information given by the standard form report
• Penalties for the direct insurer who let the
  insured introduce a legal procedure against the
  liable MTPL insurer

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2. The IDA agreement

• A specific example
• The vehicle A does not stop on the red light
  and crashes into the vehicle B

B
The driver of vehicle  A  is liable
A
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2. The IDA agreement
B
A
Out of the agreement
IDA
Bs insurer compensates B
As insurer compensates B, after some legal
exchanges with Bs insurer
Bs insurer makes a recourse against As insurer
according to the scale of liability rules
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2. The IDA agreement

• Extension of the scope of the agreement
• 1974 for any kind of accident, no matter the
  number of vehicles involved
• 1977 possibility to make telematic recourse
  exchanges
• 1992 a compensation chamber
• 1993 compulsory telematic recourse exchanges in
  case of accident with property damages under 6
  500
• Fixed sum of recourse 1 204 (annual average
  of repair costs)
• 2003 IRSA

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2. The IDA agreement

• The net effects
• No disputes
• 1 600 000 recourses in IDA per year
• 150 cases submitted for arbitration
• Standard form report formalized
• No more police reports
• The legal forces only intervene in case of bodily
  injury accidents
• Improvement in the client service
• Turn over 12
• Actualization of the agreement by a technical
  Commission

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2. Independent claims adjusters' status

• The adjusters tasks
• Verifies if the damages is caused by the accident
• Evaluates with the repairman the extent and costs
  of the repairs
• Detects any frauds
• Certifies the vehicle is road worthy

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2. Independent claims adjusters' status

• The professional governance
• Diploma certified since 1973
• Compulsory exams
• National registry held by the Ministry of
  Transportation
• About 2 000 certified members registered on the
  list
• Disciplinary Commission
• Suspension or decertification of members

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2. Independent claims adjusters' status

• The relationship with insurers
• Each insurance company has it own motor experts
  network
• Contributes to make faster the settlement of
  claims
• When combined with the direct settlement
  agreement mechanisms
• But the adjusters are independent

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• Thanks for your attention