Despite the fact that since October 2016 insurance companies have renewed their contributions to the OCTA Guarantee Fund, it has decreased to the historically smallest volume at the moment, which was last in April 2008, when its volume exceeded the 20 million euros stipulated in the law and there was no longer any need to make contributions.
The data of the Latvian Bureau of Vehicle Insurers (hereinafter LTAB), administering the Guarantee Fund, show that by August of this year the volume of the fund will decrease to 17 million euros.
Contributions to the Guarantee Fund are provided by regulatory enactments in the event that its volume is less than 20 million euros. In turn, if the volume of the fund falls to 17 million euros, insurers will need to make contributions in double volume. Taking into account the fact that the last decade is characterized by a slow rate of economic growth, an increase in the volume of average compensation for several consecutive years, as well as other factors, the Guarantee Fund decreased to 20 million euros in 2016 and, despite the contributions of insurers, its volume continues to decrease.
Also, an important reason for the reduction of the Guarantee Fund is the payment of compensation instead of the insolvent insurance company Balva (hereinafter – MAAS Balva). For four years, the Guarantee Fund paid 3.41 million euros instead of MAAS Balva. In turn, the total projected amount of payments that the fund still has to pay in lieu of the insolvent insurer is 2.1 million euros.
In 1997, the OCTA system was introduced in Latvia, the purpose of which was to protect the interests of third parties affected by road traffic both in Latvia and in the countries participating in the Green Card. To ensure the successful operation of the system, LTAB was created, which united insurance companies that had the right to carry out insurance of OCTA in Latvia – AAS Balta, AAS Baltijas Apdrošināšanas Nams, AAS BTA Baltic Insurance Company, Latvian branch of ADB Compensa Vienna Insurance Group, Latvian branch of SE ERGO Insurance, the Latvian branch of ADB Gjensidige, the Latvian branch of AS If P & C Insurance, the Latvian branch of AS Seesam Insurance and the Latvian branch of AS Swedbank P & C Insurance.
