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I nsurance Market in the Republic of Macedonia Condition and Prospects. Mr. Klime Poposki. I . Republic of Macedonia basic economic indicators. Location. South-Eastern Europe, central part of the Balkan peninsula 2, 052 , 494 population Capital-Skopje GDP – € 6.4 bn (€ 1,044 per capita)
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Insurance Market in the Republic of Macedonia Condition and Prospects Mr. KlimePoposki
I.Republic of Macedoniabasic economic indicators • Location. South-Eastern Europe, central part of the Balkan peninsula • 2,052,494 population • Capital-Skopje • GDP – € 6.4 bn (€ 1,044per capita) • Currency, Macedonian denar (MKD) • Unemployment rate – 31.7 % • EU membership, Recommendation by EC for opening of negotiations for joining EU • Memberships in international organizations (WTO, CEFTA, IAIS…..) • Significant foreign investors (QBE (UK), SAVA (SI), Wiener (Austria), Triglav (SI), Grawe, Uniqa,Societe Generale (FR), EVN (Austria), T-COM (DE), Telecom (SI) • Corporate and income tax (flat rate), 10% • Tax on retained earnings, 0% • Country rating S&P, BB (stable)
Insurance Legislation in Macedonia • Law on Insurance Supervision • “Official Gazette of the Republic of Macedonia” No. 27/02, 84/02, 98/02, 33/04 ,79/07, 08/08 88/08and 56/09 • Law on Compulsory Insurance in Traffic “Official Gazette of the Republic of Macedonia” No. 88/05 and 81/08 Other Laws that complement the Insurance legislation • Law on Contracts and Torts • Company Law
Insurance Legislation in Macedonia • The Insurance Supervision Lawincorporates the insurance principles and standards of the International Association of Insurance Supervisors (IAIS) and the solvency requirements set by the three generation of non-life and life insurance EU Directives. • The legislation for insurance is mostly adopted to EU Directives: • establishing strict rules for risk management • strict fit and proper criterions • - there are no specific requirements for foreign shareholders (same treatment of national and foreign entities regarding to the right of establishment of an insurance undertaking on the Macedonian insurance market.
Insurance Legislation in Macedonia Motor third party liability insurance and other lines of compulsory insurance in traffic are regulated by theCompulsory Insurance in Traffic Law. Issues regulated by this Law: - greater protection of the interests of the damaged persons in traffic accidents by increasing the minimum amounts of insurance cover and their progressive harmonisation with the amounts of insurance cover adopted with the EU member countries, - deadlines for reporting and damage compensation by the insurance undertakings, - determination of the right to mediation, strict regulation of the competences of the Guarantee Fund, - changes in the manner of determining the premium tariffs by establishing of a Commission for Automobile Liability Insurance, as well as facilitation of the cross-border provision of insurance services by establishing requirements for claims representative, and establishment of a Service for Compensation of Damages (the last two solutions will become effective from the moment Republic of Macedonia becomes member of the EU).
Insurance Supervision LawGeneral Provisions • Conditions for performing life insurance operations, • Non-life insurance and reinsurance, • Insurance representation activities, • Insurance brokerage activities, • Establishment, operations, supervision and closure of insurance and reinsurance undertakings, • Insurance brokerage companies • Insurance agencies • Establishment and operations of the Insurance Supervision Agency
Establishment of Insurance Undertaking • Insurance undertakings shall be established as joint-stock companies seated in the Republic of Macedonia under the terms and conditions set in the Law and the Company Law • May be established as: • Insurance undertakings; • Reinsurance undertakings; • Insurance and reinsurance undertakings • Legal entities and individuals may establish insurance undertakings
Activities of Insurance Undertakings • Insurance undertakings may perform insurance and reinsurance activities within one or more classes of insurance: • non-life insurance activities • life insurance • Insurance undertakings performing activities which fall in the group of life insurance may also perform health insurance and insurance against consequences of accidents • Reinsurance undertakings may perform reinsurance activities of both types of insurance
Strengthening Legislative Structure of Insurance Sector • This goals are achieved by: • Establishing the Insurance Supervision Agency, • Implementing the approach of supervision on the basis of risk assessment and management and rules of financial adequacy of institutions operating in the market, • Supporting financial and administrative independence of the regulatory authority, • Achieving specialty of insurance activity by separating by life insurance from property insurance, • Increasing minimum issued capital, • Developing the accounting framework of insurance activity in line with international standards, • Developing rules and procedures regulating different services
Capital of the Insurance Undertaking • Guarantee Fund shall not be lower than one third of the required level of solvency margin • EUR 2,000,000 (in certain classes of non life; when the insurance undertaking covers risks from two or several classes of non-life the g.fund shall be taken the insurance class for which the amount of g. fund is the highest) • 3,000,000 (MTPL, Aircraft 3-th Party Liability, Vessel 3-th Party Liability, General Liability Insurance, Credit insurance and Insurance of guaranties) • EUR 3,000,000 in one or all insurance classes of life insurance • EUR 4,500,000 for reinsurance activities
Insurance Supervision Agency • Status of the Insurance Agency • Competences of the Insurance Agency • Agency Operating Plan • Agency Bodies • Protection of the confidential data • Agency Reserve Plan • Annual Account and Financial Plan • Insurance Market Status Reporting • Annual Reports
Competencies of the Agency • Operational goals • Continuity in the performance of the insurance supervision and issuing preventive measures in accordance to the Law • To raise the public awareness about the importance of the system of insurance and the role of the insurance supervision authority through organization of seminars, round tables, presentations, publishing brochures and active communication with media. • Cooperate with other responsible supervisory authorities on the financial market in the RM and abroad • To promote enforcement of the financial reporting requirements, standards of quality assurance in provision of auditing services, as well as the independence and good governance of the appointed certified actuaries. • To promote the system of protection of the insurance policyholders and beneficiaries. • To improve the communication with the governing bodies of the insurance industry, as well as with the national and international associations and other relevant institutions.
Basic Principles • Responsibility- The ISA shall react promptly and on a comprehensive manner, committed towards achievement of the mission and the strategic goals as a insurance supervision authority. • Competence - The ISA shall strive to perform its authorization in a manner that shall ensure efficient realization of its strategic goals in accordance to the highest standards of the profession and at rational costs. • Accountability - In performance of its activities the ISA shall implement the highest ethical standards in the communication and the cooperation with all the stakeholders in the insurance supervision process. • Transparency- The ISA shall regularly disclose all the relevant information about the insurance market and the insurance services offered in the Republic of Macedonia.
Insurance Market Overview, 2009 • 13 Insurance Undertakings are operating on the market, • 2 life insurance undertakings • Total Capital 2009: EUR 67 million, • Life. 7,6 million • The insurance industry employees 1283 people in Macedonia, • Decrease of Total Gross Written Premium 09/08: 3,7%, • Decrease in non life premium 4% • Increase in life premium 4,5% • 4,5% share of life premium in the Gross Written Premium (EU Countries from 16% to nearly 70%) • Share of the Gross Premium in GDP, 1,6% • O,1% share of life premium in GDP • Insurance Density: EUR 51 • Life: EUR 2 • Sold Policies in 2009: 1.018.722 • Life: 22.720
Structure of the Assets that cover Technical Provisions Non-life insurance Life assurance
Expectations and Challenges • Further capacity building of the insurance supervisors • Close cooperation and coordination with other supervisory bodies • Further strengthening of the corporate governance in the insurance entities • Extending the legal framework regarding IAIS principles and standards and EU directives
Expectations and Challenges • Great potential for life insurance development (favourable macroeconomic ambient, the development of the Macedonian financial market with wide range of different financial instruments), • Agriculture (government policy of premium subvention and initiative for further supporting this sector), • Development of bankinsurance (bank credit expansion of the householder sector is joining by property insurance), • Health insurance (besides the small part of mandatory insurance there is great potential for private health insurance), • Travel insurance (visa liberalization)
