In most countries, owning and driving a car is conditioned by the conclusion of an auto liability insurance. Although in other legislations this policy may have different forms and regulations, or even different rules of applicability, the basic principle or the reason for the existence of this institution remains the same everywhere. Specifically, it is about the need to effectively cover damage caused to third parties by the driver of a car that causes an accident.
Of course, in addition to the MTPL insurance – on motor third party liability – CASCO-type insurance can also be concluded as an option, offering complete protection in almost all scenarios of damages that a vehicle can be subject to, from partial destruction to total damage or even theft and vandalism.
However, unlike compulsory motor third party liability insurance, CASCO insurance is an optional tool that further protects the owner of the vehicle and is not primarily aimed at covering damages caused to others through his own fault, as is the case with the RCA.
For a better accountability of drivers in traffic, in a period with an upward trend of road events with unpleasant consequences for those involved in terms of material and even physical damage, legislators have taken some more flexible regulatory measures concerning the legislation on motor third party liability insurance. One of the relatively recent elements introduced is the bonus malus class about which you will find some notions and details in this article.
1. Bonus malus – a flexible system including rewards and penalties for all drivers
According to the definition provided by the primary legislation on MTPL insurance, bonus malus is considered a system in which the driver is included in a scale of different classes of bonus or penalties depending on his past behavior in traffic. More precisely, the system depends on the road events caused by the driver and which resulted in causing damage to other drivers, which led to the use of the RCA policy in force.
On the other hand, Bonus malus is also a way to strengthen financial discipline in the field of insurance companies that can no longer issue RCA policies at very low prices to those who already have a history of car accidents. It is also an instrument of protection for the insurer who assumes an additional risk when selling a compulsory liability insurance to a person with a history in the area of road events.
Keeping the proportions, the bonus malus system can be compared with the reporting system in the Credit Risk Center in the financial-banking field. Similarly, incidents of non-payment of a granted loan are recorded in the central CRC database where any credit financial institution can check the applicant for a new loan and make an informed decision on the risks involved. Likewise, insurance companies can have access to a national database.
Similar to the Credit Bureaus or CRC, the Romanian Motor Insurers Bureau (BAAR) has according to Law no.132/2017 and the Norm of the Financial Supervision Authority (ASF) no. 20/2017 the power to register, maintain and organize the development and administration of the database with all MTPL policies issued by insurance companies which, in turn, have the obligation to transmit by electronic means information on contracts concluded with drivers, in particular especially data on damages caused by the latter as insured persons.
2. What are the RCA bonus malus classes and how does the system work in terms of the relevant legal rules?
There are eight classes of bonus by which the driver will be rewarded from year to year if he was not involved in traffic events with damages in the previous year. The bonus steps gradually reduce the price of the RCA policy from a percentage of -5% (bonus class B1) in the first year after the one in which the driver first concluded a policy and up to a maximum of -50% in the one eighth year (class B8) provided that in all these years he has not caused an accident with damages that would involve the use of insurance.
|Class / year||B0||B1||B2||B3||B4||B5.||B6||B7||B8|
|Bonus – discount from the RCA price||0||-5%||-10%||-15%||-20%||-25%||-30||-40%||-50 %|
The malus (M) classes work similarly, except that instead of being bonused by reducing the price of the RCA policy, the driver will be penalized with paying more expensive insurances every year if he appears in the car accident database in the previous year. The penalty in the case of malus can even reach an increase of 80% of the tariff compared to the normal market price.
|Class / year||M1||M2||M3||M4||M5||M6||M7||M8|
|Penalty – RCA price increase||10%||20%||30%||40%||50%||65%||70%||80%|
It is worth mentioning that the bonus-malus system is not balanced in the equivalence of reward or penalty. Thus, the discounts on the bonus scale are obtained at a rather difficult pace, requiring 8 years of impeccable driving with zero incidents found and registration at BAAR to obtain a maximum discount of 50%.
Instead, at the time of an accident, wherever the driver is on the scale he will be demoted by two classes at once. Downgrade is cumulative, so if a driver is unlucky enough to cause two road accidents that result in the use of the RCA policy in one year, he will lose 4 positions or bonus-malus insurance classes.
Therefore, preventive driving and avoiding serious incidents that can lead to the use of MTPL policy are two essential directions in order to reduce the costs of compulsory insurance, but also to avoid inconvenience or possible human injuries.
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3. Questions and answers about bonus malus
How is the bonus class calculated in the case of cars owned by companies?
Legal entities that own vehicles do not benefit from an automatic bonus-malus calculation system. It is set separately for each car and the current class can be transferred when replacing the car. Companies with a large car fleet are recommended to use fleet management services which can also optimize this process.
- Who has the right to determine the bonus-malus class of a driver?
The bonus-malus classes are not established by employees of BAAR or insurance companies. These are established by the computer system of the insurance companies that issue RCA without them being able to modify in any way the resulting class.
- I own several cars. What will be the bonus malus class for each?
In the case of owners who own several vehicles, the bonus malus class will be the same for all cars. The downside is that if a driver causes an accident with one of the cars, the malus penalty will apply to all vehicles when he would pay the individual RCA policies. Similarly, the bonus class discount applies to the entire car fleet.