corruption risk in insurance, mandal insurance

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  • Risk, Legal, Ethics WG joint meeting


    Zaya Bolorbold, Chief Underwriter

    Mandal Insurance

  • Insurance industry at a glance

    Regulator: Financial Regulatory Commission /FRC/

    % of Gross written premium (GWP) within GDP: 0.52%

    Industry premium increased 10 times compared to 10 years ago - $57 mil as of 2015

    GWP per capita: $19

    Total assets of insurance companies increased by 80% in last 5 years: $79 mil

    Insurance: less than 1% of Mongolian financial sector compared to bankings 96%, NBFIs 2%, Securities & Brokers 0.6%


    77.3 76.2 80.8 86.8


    2011 2012 2013 2014 2015 2016Q2

    Total asset Equity

    Total asset and owners equity, in

    million USD


    56.7 56.6 57.6 57.1

    30.4 25.9

    40.8 39.9 38.4 34.9










    2011 2012 2013 2014 2015 2016Q2

    GWP Net premium

    Total gross written premium and net premium, in million USD

  • Insurance industry at a glance

    The insurance products available are almost entirely short-term non-life products

    Life insurance development is lagging. /99% of premium from non-life/

    The main 6 insurance products compose 92% of the total GWP

    Market is largely concentrated on auto coverage following the introduction of mandatory drivers liability coverage in 2012, which grew the insurance industry by 65%

    Mongolian insurers do underwriting and brokering at the same time.

    Top 5 insurers collect 85% of the total premium


    26% 12%



    8% 7%

    Bodi insurance

    Mongol insurance

    MIG insurance

    Mandal generalinsurance

    Practical insurance

    Tenger insurance

    Structure of total gross written premium/2016Q2/

  • Insurance legal environment at a glance

    In 2012, the FRC set the obligatory minimum capital 5 billion MNT /2.5 million USD/ for non-life insurance

    companies 6 billion MNT /3 million USD/ for life insurance companies Currently, only 2 companies /one of them Mandal/ meets the criteria

    Insurance activities in Mongolia are regulated by the Insurance Law of Mongolia approved in 1997 /amended in 2004 /

    The Law prohibits an individual or a legal entity residing in Mongolia from allowing its property and interests located within the territory of Mongolia to be insured directly by a foreign reinsurance company without mediating through a local insurance company.

  • Insurance intermediary

    According to the Law on Insurance Intermediary, insurance brokers, insurance agents and insurance loss adjusters are considered intermediaries in Mongolia.

    Insurance brokerage commission in 2015: $1.7 mil (48% earned by 8 commercial banks with brokerage license and 52% by other insurance brokers)

    Banks insurance broking activity composes 9.5% of the banking sector revenue.

    Motor insurance brokerage commission range between 10-30%, while mandatory drivers liability insurance commission is 20-30% of insurance premium.

    Some insurers have been known to offer similar commissions on large corporate insurance placement.

    In terms of corporate insurance, brokers acquire a set of corporate customers through relationship building and when placing their clients risk, brokers select insurance companies based on commission level offered and close relationship with insurance companies.

    Brokers clients barely receive any value-added services on par with international insurance brokers.

    Corporate insurance accounts for 75% of the total insurance industry GWP or $45 million

  • State involved insurance

    It is common practice that the insurance commission is shared with the decision makers as kickback when allocating publicly-funded insurance expenditure.

    State procurement regulations require tendering process of government expenditure, many instances of insurance procurement are made without public announcement, with no tenders, or vital information circulated only within close group of participants.

    In June 2015, FRC started requiring insurance companies to report whom it paid any commission when writing insurance of state agencies, state-owned company, publicly listed company, foreign-invested company, .

    Government expenditure for 2016 was $3.5 million, 2017 insurance

    budget is set at $3.8M or 0.5% of the total budget

    Aside from the budget above, on average 8% of the insurance industry annual gross written premium is composed by premiums from state-owned entities such as Mongolian Airlines, Civil Aviation Authority etc

  • Established in 2011

    In less than 6 years, included in top 3 insurers rank by premium, assets, reserve funds and reputation

    Gross written premium amount increased 15 times, which accounts for 200% annual growth rate

    Reserve fund has increased on average by 92% in last 3 years, which is a leading indicator in insurance industry

    7,271 8,823 9,375 9,797


    2012 2013 2014 2015 2016Q2

    Total Assets in million MNT


    7,298 8,035



    2012 2013 2014 2015 2016Q2

    Gross Written Premium in million MNT

  • Major milestone

    The first risk management forum

    Bankassurance in partnership with Khan Bank

    The opening of Darkhan branch

    Incorporated with Golomt Bank and became 100% Mongolian owned

    Mandal General Insurance was founded

    Audited by PWC

    The opening of Tsogt Tsetsii branch

    Launched customer service department

    Launched call center

  • Stance on ethical practice

    Audited by a globally recognized firm PwC

    No cash kickback policy

    Instead, Mandal offers: Risk assessments Risk seminars, educational events Loss reduction tools No claim bonus Loyalty program Credit earning system for premiums paid

    Employees: Tries to recruit non-insurance background sales force / clean slate sales practice

    The Mission Statement of Mandal makes our employees to think, to act and to execute differently from those at other insurers:

    WE, close-knit members of the Mandal family, take mutual responsibility for each others happiness in our journey to become a NOURISHING GROUND, by being the industry LEADER who introduces client-centered products and services while providing solutions for our insureds to secure their RHYTHM of LIFE, allowing all to contribute to the PROGRESSIVE DEVELOPMENT as a society.

  • Recognition for innovation

  • Reinvention of Insurance

    Implementing a strategy termed as Reinvention of Insurance in Mongolia Majority of the players in the industry has re-seller mentality, not investing in R&D

    and selling traditional products from reinsurers off-the-shelf policies.

    Mandal, on the other hand, believes that there is vast opportunity, if insurance companies truly understood clients needs, delivered services through a complete journey of customers expectation, and localized international know-how and practices, which at the end all translate to VALUE creation for clients.

    Mandal has held value creator approach in business, with a dedicated in-house R&D function within its Business Development Department.

    Affordable and flexible payment term pricing the leading company offering flexible payment term allowing clients to pay premiums in monthly installments.

    International standard practices learning from proven international practices and carefully localizing them to the needs of the local market is an important aspect of Mandals product development.

  • Reinvention of Insurance example: Jargalan Health Insurance

    Mandal launched Jargalan Health insurance on the following notion:

    Insufficiency and poor quality of state health insurance scheme

    Absence of a global standards and affordable health insurance in the market.

    Key product features are:

    Coverage that is relevant to the client


    Service infrastructure - Created network of hospitals for the first time in Mongolia enabling direct-billing from Hospitals to Mandal.

    Monthly premium installment available

    has its own Health Insurance Department that consists of professionals who are medical doctors.


    - Up to 50000000 MNT per year - Full electivity - Co-Insurance - Serious health conditions (Organ

    transplantation) - IP + OP + PREG + PRIV - Monthly payment 40000MNT - Network hospitals + All public


    - Up to 50000000 MNT + 250000$ per year - Full electivity - Co-Insurance - Mongolia + China (Mainland) + Thailand - Serious health conditions (Organ transplantation) - IP + OP + PREG + PRIV + Traveler's PA - IP cash benefit + Accompanying member cash allowance - Monthly payment 76000MNT - Mongolian+ Asian Network Hospitals + All public Hospitals


    Innovation by localizing

  • Efforts to improve Not just complain

    Insurance procurement seminar for government agencies Organized by Mandal with support from Ministry of Finance, Mongolian Insurers Association in November 2016

  • Vision

    To build the Mongolian brand of a Financial corporation competing on a global stage.

    Transparent & Ethical business practice workshop participated actively and gave comments from Insurance industry perspective in November 2016