Avis 2015 Annual Report Download - page 27

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return, vehicle availability, reliability, rental locations, product innovation and national or international distribution.
In addition, competition is also influenced strongly by advertising, marketing, loyalty programs and brand
reputation.
The use of technology has increased pricing transparency among vehicle rental companies by enabling cost-
conscious customers to more easily compare on the Internet and their mobile devices the rental rates available
from various vehicle rental companies for any given rental. This transparency has further increased the
prevalence and intensity of price competition in the industry.
Our vehicle rental and car sharing operations compete primarily with Enterprise Holdings, Inc., which operates the
Enterprise, National and Alamo car rental brands; Europcar Group; Hertz Global Holdings, Inc., which operates
the Hertz, Dollar and Thrifty brands; and Sixt AG. We also compete with smaller regional vehicle rental and car
sharing companies as well as truck rental companies such as U-Haul International, Inc., Penske Truck Leasing
Corporation, and Ryder Systems, Inc.
INSURANCE AND RISK MANAGEMENT
Our vehicle rental operations and corporate operations expose us to various types of claims for bodily injury,
death and property damage related to the use of our vehicles and/or properties, as well as general employment-
related matters stemming from our operations. We generally assume the risk of liability to third parties arising from
vehicle rental and car sharing services in the United States, Canada, Puerto Rico and the U.S. Virgin Islands, in
accordance with the minimum financial responsibility requirements (“MFRs”) and primacy of coverage laws of the
relevant jurisdiction. In certain cases, we assume liability above applicable MFRs, but to no more than $1 million
per occurrence, other than in cases involving a negligent act on the part of the Company, for which we purchase
insurance coverage for exposures beyond retained amounts from a combination of unaffiliated excess insurers.
In Europe, we insure the risk of liability to third parties arising from vehicle rental and car sharing services in
accordance with local regulatory requirements through a combination of insurance policies provided by
unaffiliated insurers and through reinsurance. We may retain a portion of the insured risk of liability, including
reinsuring certain risks through our captive insurance subsidiary AEGIS Motor Insurance Limited. We limit our
retained risk of liability through the unaffiliated insurers. We insure the risk of liability to third parties in Argentina,
Australia, Brazil and New Zealand through a combination of unaffiliated insurers and one of our affiliates. These
insurers provide insurance coverage supplemental to minimum local requirements.
We offer our U.S. customers a range of optional insurance products and coverages such as supplemental liability
insurance, personal accident insurance, personal effects protection, automobile towing protection and cargo
insurance, which create additional risk exposure for us. When a customer elects to purchase supplemental liability
insurance or other optional insurance related products, we typically retain economic exposure to loss, since the
insurance is provided by an unaffiliated insurer that is reinsuring its exposure through our captive insurance
subsidiary, Constellation Reinsurance Co., Ltd. Additional personal accident insurance offered to our customers in
Europe is underwritten by a third-party insurer, and reinsured by our Avis Budget Europe International
Reinsurance Limited subsidiary. We also maintain excess insurance coverage through unaffiliated carriers to help
mitigate our potential exposure to large liability losses. We otherwise bear these and other risks, except to the
extent that the risks are transferred through insurance or contractual arrangements.
OUR INTELLECTUAL PROPERTY
We rely primarily on a combination of trademark, trade secret and copyright laws, as well as contractual
provisions with employees and third parties, to establish and protect our intellectual property rights. The service
marks “Avis,” “Budget,” and “Zipcar” and related marks or designs incorporating such terms and related logos and
marks such as “We try harder,” and “wheels when you want them” are material to our vehicle rental and car
sharing businesses. Our subsidiaries and licensees actively use these marks. All of the material marks used by
Avis, Budget and Zipcar are registered (or have applications pending for registration) with the United States
Patent and Trademark Office as well as in foreign jurisdictions. Our subsidiaries own the marks and other
intellectual property, including the Wizard system, used in our business. We also own trademarks and logos
related to the “Apex Car Rentals” brand in Australia and New Zealand, the “Payless Car Rental” brand in the
United States and several other countries, and the “Maggiore” brand in Italy.