Latvijas Transportlīdzekļu apdrošinātāju birojs - Procedure of Establishment, Accrual and Administration of the Guarantee Fund for the Compulsory Third Party Liability Insurance for Owners of Inland Motor Vehicles

Procedure of Establishment, Accrual and Administration of the Guarantee Fund for the Compulsory Third Party Liability Insurance for Owners of Inland Motor Vehicles

CABINET OF MINISTERS OF THE REPUBLIC OF LATVIA

Regulations No 195

Procedure of Establishment, Accrual and Administration of the Guarantee Fund for the Compulsory Third Party Liability Insurance for Owners of Inland Motor Vehicles



I. General Provisions
1. The Regulations shall determine the procedure of establishment, accrual, management and administration of the guarantee fund (hereinafter – fund) for the compulsory third party liability insurance for owners of inland motor vehicle.
2. The purpose of the Fund is to ensure payments of insurance indemnity and disbursements in cases stipulated by the Law on the Compulsory Third Party Liability Insurance for Owners of Inland Motor Vehicles.
3. The Fund shall consist of cash accrued in accordance with the procedure set in these Regulations.
4. The Fund shall not have a status of legal entity.
5. The cash of the Fund shall be kept in the account of the Motor Insurers’ Bureau. The accounts shall be managed by the Motor Insurers’ Bureau.
6. Resources of the Fund and of the Motor Insurers’ Bureau shall be separated.

II. Establishment and Accrual of the Fund
7. Insurers that have the right to perform the compulsory third party liability insurance for owners of inland motor vehicles shall be participants of the Fund.
8. The participants of the Fund shall make payments into the Fund in Lats. Cash for the damages incurred during the accident recovered by the Motor Insurers’ Bureau in form of regress as well as donations and grants may be paid into the Fund in foreign currency.
9. Insurers willing to obtain the right to perform the compulsory third party liability insurance for owners of inland motor vehicles shall at first pay a single premium into the Fund. The amount of the single premium shall be 5 000 LVL.
10. If the insurer is not conferred the right to perform the compulsory third party liability insurance for owners of inland motor vehicles, he shall submit an application on repayment of the single premium to the Motor Insurers’ Bureau. A decision issued by the Financial and Capital Market Commission on refusal to issue a licence for performance of the compulsory third party liability insurance for owners of inland motor vehicles. The Motor Insurers’ Bureau shall repay the amount paid in accordance with the Paragraph 9. of these Regulations from the resources of the Fund within five working days following receipt of the application lodged by the insurer.
11. Regular monthly deductions of the insurer from premiums of the compulsory third party liability insurance for owners of inland motor vehicles for a calendar year shall be formed by a specific amount of money for each insurance contract (Annex). The consumer price index officially set by the Central Statistical Bureau and the amount of insurance indemnities paid from the Fund shall be taken into account in calculation of this amount.
12. Within 15 days following the accounting period (one calendar month) insurance companies shall transfer funds to the account indicated by the Motor Insurers’ Bureau in accordance with the Paragraph 11 of these Regulations. If the mentioned deadline is missed, the insurer in addition to the payable amount shall pay 0.1 per cent of the respective amount for each day of overdue payment.
13. To ensure continuous solvency of the Fund, a minimum amount of resources of the Fund shall be 10 000 000 Lats. If the amount of resources of the Fund becomes less than 10 000 000 Lats and does not renew up to this amount within one month, insurers shall make single additional premiums in order to renew the minimum amount of resources of the Fund. The amount of single additional premium shall be calculated in accordance with the moment the reduction of resources of the Fund has taken place. The amount of single additional premium shall be calculated in proportion to the number of existing contracts signed by each insurer taking into duration of these contracts at the moment of reduction of resources of the Fund.
14. A share of the single premium (taking into account indemnities and resources recovered in a form of regress) shall be repaid to the insurer who in compliance with legal acts has lost the right to perform the compulsory third party liability insurance for owners of inland motor vehicles, if the respective insurer has fulfilled all obligations for possible claims in respect to the contracts of the compulsory third party liability insurance for owners of inland motor vehicle signed by it. The repayable share to the insurer shall not exceed the amount of the single premium.
15. The amount repayable to the insurer in accordance with the Paragraph 14 of these Regulations shall be repaid after three years from the date of expiration of the last contract of the compulsory third party liability insurance for owners of inland motor vehicles signed by the insurer.

III. Administration of the Fund
16. The Motor Insurers’ Bureau shall manage the Fund, decide on depositing the resources of the Fund and be responsible for spending.
17. The Motor Insurers’ Bureau shall have rights to spend resources of the Fund in accordance with objectives and cases stipulated in the Law on the Compulsory Third Party Liability Insurance for Owners of Inland Motor Vehicles.
18. The Chairperson of the Board of the Motor Insurers’ Bureau or his proxy shall have signatory powers on behalf of the manager of the Fund.
19. Supervision of the procedure of establishment, accrual and management shall be performed by the Financial and Capital Markets Commission, which implements control of the Fund not less than once a year. The Financial and Capital Markets Commission shall inform the Ministry of Finance and the Motor Insurers’ Bureau about the results of the control of the Fund.

IV. Final Provisions
20. The Cabinet of Minister Regulations of 13 March 1997 No 180 “Provisions of the guarantee (reserve) fund for the compulsory third party liability insurance for inland motor vehicle owners” (Latvijas Vēstnesis, 1997, No 121; 1998, No 289/290; 1999, No 48./49.; 2000, No 466/469; 2002, No 48; 2003, No 112; 2004, No 21) shall be repealed.
21. Income from investing the resources of the Fund, which takes places in accordance with provisions of the Paragraph 20 of these Regulations, shall be accrued in the accounts of the Motor Insurers’ Bureau.


On behalf of the Prime Minister — Minister of Children and Family Affairs A.Baštiks

On behalf of the Minister of Finance — Minister of Finance A.K.Kariņš


Annex

To the Cabinet of Ministers
Regulations of 22 March 2005 No 195

Deductions to the Guarantee Fund for the Compulsory Third Party Liability Insurance for Owners of Inland Motor Vehicles

1. Regular monthly deductions from premium of each contract of the compulsory third party liability insurance for owners of inland motor vehicle depending on the type of the kind of the vehicle and duration of the insurance contract (Y(ij)1) are summarised in the table.
Table

No	Kind of the vehicle	Deductions to the Fund (Lats) in accordance with the duration of the contract (Y(ij)1)
No	Kind of the vehicle	3 months j = 1	6 months j = 2	9 months j = 3	12 months j = 4
1.	Cars (i = 1)	0.33	0.46	0.55	0.65
2.	Trucks (i = 2)	0.65	1.14	1.30	1.46
3.	Busses (i = 3)	0.98	1.63	2.18	2.41
4.	Motorcycles (i = 4)	0.33	0.46	0.55	0.65
5.	Trailers (i = 5)	0.10	0.20	0.23	0.26
6.	Tractors (i = 6)	0.13	0.23	0.33	0.42
7.	Tractor trailers (i = 7)	0.07	0.10	0.13	0.16
8.	Trams, trolleybuses (i = 8)	0.65	1.14	1.30	1.46


Notes.
1. Index i — kind of the vehicle.
2. Index j — duration of the contract.
2. The amount of deductions for the next calendar year shall be calculated on the basis of the amount of deductions (Y(ij)1) set in the table given in this annex, which are multiplied by the multiplication of the inflation coefficients of previous years and correction coefficient using the following formula (index n – year of deductions):


2.1. Consumer Price Index (CPI) set by the Central Statistical Bureau every year, which is expressed in per cent. To obtain the inflation coefficient (Kinfl) used in the formula, CPI shall be transformed into a decimal fraction and 1 shall be added to it;
2.2. using the correction coefficient, changes in the amounts of indemnities paid from the Fund (in comparison with the previous year), not taking into account the paid share of indemnity, which in accordance with the Paragraph 13 of these Regulations is compensated by additional single premiums of the insurers. The correction coefficient in the year n shall be calculated using the following formula:

izm(n–1) K_{kor n}= ––––––––––– , kur I_izm(n–2)

I_{izm (n–1)} — the amount of the indemnities from the Fund in Lats in (n – 1) year, not taking into account the paid share of indemnity, which is compensated by additional single premiums of the insurers;
I_{izm (n–2)} — the amount of the indemnities from the Fund in Lats in (n – 2) year, not taking into account the paid share of indemnity, which is compensated by additional single premiums of the insurers:

2.2.1. if K_{kor n} >1, a numerical value K_{kor n} of this coefficient shall be used in calculations;
2.2.2. if K_{kor n} ≤1, a value of this coefficient K_{kor n} = 1 shall be used in calculations;
2.2.3. the correction coefficient in (n + 1) year and the following years shall be calculated in the following way:



On behalf of the Minister of Finance — Minister of Finance A.K.Kariņš

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