WORKERS’ COMPENSATION INSURANCETOP-UP COVER ROMANIA

Victor Schultheiss, Thomas Rothärmel

FIAR 2011, 24th May 2011

Agenda

2

1. 1. Munich Re (Group)

2. 2. Center of Competence Workers’ Compensation

3. 3. Overview Workers’ Compensation Insurance

4. 4. Romanian Workers Compensation System

5. 5. Top-Up Coverage

1. MUNICH RE (GROUP)

4

Added value within the groupDiversified structure – more security

Munich Re (Group)*

Asset management

*This listing is incomplete and provides no precise indication of shareholdings.

1. Munich Re (Group)

Reinsurance Primary insuranceMunich Health

Belgium

ERGO: Germany-based and represented in over 30 countries

Offers a comprehensive range of insurance, benefit, and pension products and services

Leading expertise worldwide since nearly 130 years

Full range of products: from traditional reinsurance to alternative risk financing

Diversification as key success factor

Munich Re as only specialised health risk carrier with global scope

Flexible combination of business model and products as unique selling proposition

Reinsurance Primary insuranceMunich Health

Assetmanagement

Successful business model1. Munich Re (Group)

5

2. CENTER OF COMPETENCE WORKERS‘ COMPENSATION

6

Generate substantial reinsurance business for Munich Re

Concentrate and amplify expertise within the Munich Re Group

Provide advice and service on both insurance and reinsurance questions, from

legislative to operational

Observe and accompany private participation and reform processes

MR Workers’ Compensation unit was established in 1998 as Centre of Competence

Our Unit2. Centre of Competence Workers‘ Compensation

7

Underwriting

Research and Consultancy

Main activities

Our Unit2. Centre of Competence Workers‘ Compensation

8

CoC Workers‘ Compensation InsuranceUnderwriting - Markets with private participation

9Workers‘ Compensation Insurance

Possible Workers’ Compensation reform

Where we provide capacity

Where private/semi-privateparticipation is allowed

Overview

WCS private and public systems

Terrorism

Occupational diseases:

Are they insurable?

Economic incentives

Occ

upat

iona

l dis

ease

s

Rat

ing

syst

ems

Com

mut

ing

acci

dent

s

Ass

essi

ng d

isab

ility

Residual markets and

uninsured risks

Prevention and Insurance

Different publications from general to specific topics

Main activities – Research and consultancy

Our Unit2. Centre of Competence Workers‘ Compensation

10

11

Workers’ compensation symposium each two/three years

(2001, 2004, 2007, 2009)

Workshops with clients

Active involvement i.r.o. workers’ compensation reforms/systems

discussions (Brazil, China, Estonia, UK, Denmark, Colombia,

Norway, Germany, etc.)

Main activities – Research and consultancy

Our Unit2. Centre of Competence Workers‘ Compensation

3. OVERVIEW WORKERS‘ COMPENSATION INSURANCE

12

13

Workers‘ compensation systems provide coverage to help the insured and the

families to overcome the burden of an occupational injury or an occupational

disease

Provide benefits in cash (temporary incapacity, invalidity, pensions, lump sums)

and benefits in kind (prevention, health care, rehabilitation)

Major characteristics: no fault system, compulsory, highly regulated,

employer is responsible for taking/paying this insurance

Within social security regulations or strongly linked to them

Overview3. Overview Workers‘ Compensation Insurance

In terms of the International Labour Organisation ILO:

Workers suffer over 250 million accidents every year and 160 million

occupational diseases

Almost 2.000.000 die each year from their jobs (5,500/day)

The economic losses are equivalent to 4 per cent of the world's gross national

product

Social consequence for families and communities are incalculable

Workers’ Compensation Insurance 14

Overview3. Overview Workers‘ Compensation Insurance

4. ROMANIAN WORKERS‘ COMPENSATION SYSTEM

Country profile: RomaniaLaw 346 of 5 June 2002*

Scope of cover (public risk carrier- CNPAS)

Occupational accidents

Occupational diseases

Commuting accidents

Tariff

Pay-as-you-go basis

CNAPS (National House of Pensions and

other Social Insurance Rights) generally

calculates the tariff on a pay-as-you-go

basis. 0,5%-4,0% of the payroll

Benefits

Benefits in kind:

Medical costs until recovery and recuperation of work

ability

Costs of professional rehabilitation and reconversion

Aids and appliances

Benefits in cash :

Temporary work disability

o Indemnification of 80% - 100% of average salary

o Indemnification for temporary change of work

place

Permanent work disability

o Compensation for injuries of the bodily integrity

o Lumpsum and/ or pension payments for lost

income

Death

Survivors‘ pension, Funeral expenses

16*http://www.dreptonline.ro/legislatie/lege_asigurare_accidente_munca_boli_profesionale_346_2002_republicata_2009.php

4. Romanian Workers‘ Compensation System

5. TOP UP COVERAGE

Workers‘ Comp. (part of social security)

Other general Social Security Schemes

Disability level:Between 20-50%: Proportional lump sum max.12 times National average monthly salary

Disability levelMore than 50%:Pension until old age (plus lump sum max. 12 monthly salaries)

Statutory Workers‘ Compensation - Benefits covered

Statutory Coverage

80%-100% average salary of the last 6 months after the 3rd day

Temporary Disability Permanent Disability

Old age pension

5. Top Up Coverage

18

Max. 180 days

Workers‘ Compensation Top-Up-Product Benefits covered

Top-Up Product

Temporary Disability Permanent Disability

Old age pension

5. Top Up Coverage

19

Max. 180 days

Private Disability Cover:

•More than 50% disability: Guarantee of 90% - 100% monthly salary: (a) until pension age

(b) for life

Workers‘ Comp (part of social security)

Other general Social Security Schemes

Disability level:Between 20-50%: Proportional lump sum max.12 times National average monthly salary

Disability level:More than 50%:Pension until old age (plus lump sum max. 12 monthly salaries)

Statutory Workers‘ Compensation vs. Top-Up-Product Benefits covered

Top-Up Product

Statutory Coverage

80%-100% average salary of the last 6 months after the 3rd day

Temporary Disability Permanent Disability

Old age pension

5. Top Up Coverage

20

Max. 180 days

Private Disability Cover:

•More than 50% disability: Guarantee of 90% - 100% monthly salary: (a) until pension age

(b) for life

Example 1: Monthly salary 3.300 RON / 800 €; 20 y of contributions, 12 y before full pension age; 100% disability (2nd degree)

Disability Pension:1.060 RON / 250 €

Salary: 3.380 RON / 800 €

Gap: 2.320 RON / 550 € to be covered byTop-Up-Policy

Top-Up-Product: Private Disability Cover

Example 2: Monthly salary 5.064 RON / 1.200 €; 10 y of contributions, 22 y before full pension age; 100% disability (2nd degree)

Gap: 4.068 RON / 964 €

Salary: 5.064 RON / 1.200 €

Disability Pension:996 RON / 236 €

to be covered byTop-Up-Policy

Top-Up-Product: Private Disability Cover

THANK YOU VERY MUCH FOR YOUR ATTENTION!

HTTP://WWW.MUNICHRE.COM/DE/REINSURANCE/BUSINESS/NON-LIFE/WORKERS_COMPENSATION/DEFAULT.ASPX

23

Victor Schultheiss Head of CoC Workers' Compensation Tel.: +49 (89) 38 91-22 38vschultheiss@munichre.com

Dr. Thomas RothärmelSenior Underwriter Tel.: +49 (89) 38 91-99 27trothaermel@munichre.com