MTPL Insurance Market in Macedonia and the Respective

MTPL Insurance Market in Macedonia and the Respective Regulation Klime Poposki FOURTH INTERNATIONAL INSURANCE CONFERENCE Cumpulsory motor third-party liability insurance and the Guarantee fund 23-25 October 2012, OHRID hotel-Metropol Structure of the presentation 1. 2. 3. 4. Insurance legislation in Macedonia Insurance market - overview Motor insurance - overview MTPL

Gross written premium (development, share, .) Channel distribution Accidents and claims Claims paid and reserves indicators Expenses Uninsured vehicles Complaints Source: ISA National Insurance bureau Ministry of interior in RM MTPL Market Liberalization Project in Macedonia, World Bank Inception Report, May 2012 Axco Global Statistics/Industry Associations and Regulatory Bodies CEA Statistics N38 The European Motor Insurance Market,February 2010 12.02.20 2 Insurance Legislation in Macedonia Law on Insurance Supervision; Law on Compulsory Insurance in Traffic;

Rulebooks: Rulebook on chart of accounts for insurance and reinsurance undertakings; Rulebook on the form and the content of the balance schemes and detailed content of the Annual reports of the insurance and/or reinsurance undertakings; Rulebook on the statistical insurance standards of the insurance and/or reinsurance undertakings; Rulebook on minimum standards for calculation of technical provisions; Rulebook on calculation of the required level of solvency margin; Rulebook on types and description of items for calculation of the capital of the insurance and/or reinsurance undertakings; Rulebook on valuation of balance sheets items Other Laws that complement the Insurance legislation Law on Contracts and Torts Company Law 3

Insurance Legislation in Macedonia Law on Compulsory Insurance in Traffic: The establishment and the role of National Insurance Bureau; Establishment of the Guarantee Fund and maintenance of its minimum amount which is determined by this Law Printing of the Green Card form and allowing the insurance companies to issue GC Establishment of the MTPL Commission; MTPL Tariffs Minimum and maximum rate of technical premium; Minimum sums insured; 12.02.20 4 Insurance market in Macedonia 15 Insurance Undertakings

4 11 Life Insurance Undertakings Non-life Insurance Undertakings 9 21 Insurance agencies Insurance brokerage companies 683 Insurance agents 12.02.20 5 Structure of the Gross Written Premium 12.02.20 6 Motor Insurance

12.02.20 7 Gross Written Premium (share of MI in the total nonlife insurance) 100 Share of motor insurance in the total nonlife premium Share of the respective risk in the total motor insurance premium 12.02.20 8 Gross written premiums relative change, MI m EUR Europe m EUR Macedonia

70 60 50 40 30 20 10 0 19% 11.4% 12.6% 11.2% 10.8% 5.7% 6% 52 62 65 2006

2007 2008 Motor insurance premium Relative change of the number of contracts 7% -9% 59 2009 5% 63 66 2010 2011 25% 20% 15% 10% 5% 0% -5%

-10% -15% Relative change of the gross written premium 9 Claims ratio, MI Slovenia Macedonia Bulgaria Croatia Albania 2008 67,3% 60,5% 46,8% 70,5% 27,2% 2009 70,8% 61,5% 56,9% 62,5% 31,6%

2010 65,4% 58,1% 57,6% 56,0% 39,8% 2011 62,1% 57,4% 57,3% 49,8% 39,3% 10 Gross written premium and Number of contracts, MTPL Gross written premium Number of contracts concluded 2Q 2011 2Q 2012

Growth 261.448 271.112 3,7% 2Q 2011 2Q 2012 Growth 24.158 24.613 1,9% 11 Share of the MTPL premium in the total portfolio 2011 12

Share of companys MTPL premium in the total MTPL premium 13 Average GWP development, DMTPL EUR Change DMTPL Cars Trucks Buses Total 20072Q 2012 -25,16% -27,76% -28,74% -25,07% Change 20092Q 2012 -4,88% -8,68% -7,24% -8,11%

DMTPL 2009 - 2010 2010 - 2011 Cars Trucks Buses Total -3,65% -4,31% -7,31% -5,19% 0,47% -5,52% 0,44% -1,28% 14 Channel distribution, MTPL Insurance brokerage companies Insurance agencies MTPL commisson (weighted average) 12,7% 11,4% 15

Key factors influencing claims Claims frequency Road safety Traffic conditions Age and driving experience Claim costs Vehicle repair and spare part prices Medical care prices Personal injuries claims compensation Fraud Legal expenses costs Sum insured 16 Accidents The average increase of the number of accidents in the last 5 years is 10,47% The average increase of the accidents

with injured is 11% 17 Comparison between the growth of accidents and the number of accidents reported (MTPL) 18 Indexes Index of consumer (HICP) in EU 2011 cumulative Spare parts Maintenance and repair 2006 2,50% 3,70% 2007 3,20% 4,00% 2008

3,60% 4,60% 2009 2,90% 3,80% 2010 2,30% 2,60% Inflation in EU (17 states) 2,20% 2,10% 3,30% 0,30% 1,60% 9,84% 15,36% 20,14% source: www.cbi.eu; www.eurostat.com

Indexes in Macedonia Inflation in Macedonia 2006 3,00% 2007 2,30% 2008 8,30% 2009 -0,80% 2010 1,60% 2011 cumulative 3,90% 15,01% 9,22% 2,41% 3,42%

1,56% 1,04% 2007 2008 2009 0,89 2010 0,94 5,62% source: Central Bank of Macedonia Length of the local roads (asphalt and cubes) 17,48% source: State statistical offi ce Casemix index (CMI) Absolute values Relative change

2006 2011 cumulative 1,08 14,89% 21,35% source: Health insurance fund of Macedonia 19 Development of countrys minimum limits EUR Prior 2010 1-Jan-10 1-Jan-11 1-Jan-12 Change Personal injury Buses and trucks Other vehicles Vehicles carrying dangerous goods

200.000 100.000 300.000 300.000 150.000 450.000 450.000 225.000 675.000 675.000 337.500 1.012.500 238% 238% 238% 100.000 50.000 150.000 150.000 75.000 225.000 225.000

112.500 337.500 337.500 168.750 506.250 238% 238% 238% Material damage Buses and trucks Other vehicles Vehicles carrying dangerous goods 20 Brief summary So far, since 2008 -Minimum limits (by approx. 238%) -Number of contracts concluded (by approx. 31%)

-Average premium per contract for DMTPL (by approx. 25%) -Operational costs and inflation however. 21 Claims paid, MTPL 2008-2011 Change -12,32% 22 Claims settlement pattern, MTPL 23 The development of claims paid and reserves, MTPL Change 2008-2011 Claims paid -12,32%

29,68% Claims reserves 24 MTPL ratios 80% 70% 58.3% 59.1% 58.5% 60% 53.3% 54.8% 50% 49.1% 40% 30% 20%

30.2% 30.2% 2007 2008 39.6% 42.0% 2009 2010 10% 0% Claims ratio (MTPL) 2011 Cost ratio (MTPL) 25 MTPL combined ratio

110.0% 105.0% 103.9% 100.0% 95.0% 98.1% 95.3% 90.0% 85.0% 88.5% 89.3% 80.0% 2007 2008 2009 2010 2011

Combined ratio (MTPL) 26 Claims ratio, MTPL Avg 27 Technical provisions, MTPL 28 Claims in court procedure, MTPL Triglav Share of the claims rejected in the total number of claims settled 17,1% Ins.Policy 19,4% Uniqa 26,8%

Sava 5,0% Evroins 22,8% Albsig 31,0% Winner 10,4% Eurolink QBE 21,8% 13,0% Croatia n. Insig 3,2% 14,5% 29

Uninsured and unknown vehicles 2009 Number of claims reported to NIBM Number of claims accepted by NIBM Total number of claims reported MTPL Share Claims paid from the GF Claims paid MTPL Share 2010 2011 2Q 2012 878 733 21.824 3,25% 765 584 23.721 2,40% 950

720 26.898 2,61% 224 82 12509 0,65% 1.139.242 27.578.992 4,13% 1.059.658 24.077.935 4,40% 966.861 24.362.179 3,97% 96.696 11.155.024 0,87% 30 Complaints, MTPL

(01.01.2011 - 30.09.2012) Complaint Postively s reported settled Class of insurance MTPL MTPL, uninsured vehicles MTPL TOTAL Other TOTAL Share Without In Rejected grounds procedure for action European accident statement 41 20 17 4

Police statemnets 16 10 5 1 30 17 47 64% 2 24 18 42 57% 1 6 16 22 27% 3

60 53 113 53% 2 2 2 4 50% 31 Thank you for your attention Klime Poposki The President of the Council of Experts, Insurance Supervision Agency of the Republic of Macedonia Email: [email protected] www.aso.mk

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