FOURTH INTERNATIONAL INSURANCE CONFERENCE

„Cumpulsory motor third-party liability insurance and the Guarantee fund”

23-25 October 2012, OHRID hotel-Metropol

MTPL Insurance Market in MacedoniaMTPL Insurance Market in Macedoniaand the Respective Regulationand the Respective Regulation

Klime Poposki

Structure of the presentation

22.04.23 2

1. Insurance legislation in Macedonia2. Insurance market - overview3. Motor insurance - overview4. MTPL

Gross written premium (development, share, ….) Channel distribution Accidents and claims Claims paid and reserves indicators Expenses Uninsured vehicles Complaints

Source: ISANational Insurance bureauMinistry of interior in RMMTPL Market Liberalization Project in Macedonia, World Bank

Inception Report, May 2012Axco Global Statistics/Industry Associations and Regulatory BodiesCEA Statistics N°38

The European Motor Insurance Market,February 2010

Insurance Legislation in Macedonia

3

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 sheet’s items…

Other Laws that complement the Insurance legislation

• Law on Contracts and Torts• Company Law

Insurance Legislation in Macedonia

22.04.23 4

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;

Insurance market in Macedonia

22.04.23 5

15 Insurance Undertakings

11 Non-life Insurance Undertakings

4Life Insurance Undertakings

21Insurance brokerage companies

9Insurance agencies

683Insurance agents

Structure of the Gross Written Premium

22.04.23 6

Motor Insurance

22.04.23 7

Gross Written Premium(share of MI in the total nonlife insurance)

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100

Share of motor insurance in the total nonlife premium

Share of the respective risk in the total motor insurance premium

Gross written premiums – relative change, MI

9

Europe

m EUR

Macedonia

52 62 6559

63 66

19%

6%-9%

7%5%

12.6%11.4%

5.7%

11.2% 10.8%

-15%-10%-5%0%5%10%15%20%25%

0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011

m EUR

Motor insurance premium Relative change of the gross written premium

Relative change of the number of contracts

Claims ratio, MI

10

2008 2009 2010 2011Slovenia 67,3% 70,8% 65,4% 62,1%Macedonia 60,5% 61,5% 58,1% 57,4%Bulgaria 46,8% 56,9% 57,6% 57,3%Croatia 70,5% 62,5% 56,0% 49,8%Albania 27,2% 31,6% 39,8% 39,3%

Gross written premium and Number of contracts, MTPL

11

2Q 2011 2Q 2012 Growth

261.448 271.112 3,7%

Number of contracts concluded

2Q 2011 2Q 2012 Growth

24.158 24.613 1,9%

Gross written

premium

Share of the MTPL premium in the total portfolio

12

2011

Share of company’s MTPL premium in the total MTPL premium

13

Average GWP development, DMTPL

14

2007- 2Q 2012

2009-2Q 2012

Cars -25,16% -4,88%Trucks -27,76% -8,68%Buses -28,74% -7,24%Total -25,07% -8,11%

Change

DMTPL 2009 - 2010 2010 - 2011

Cars -3,65% 0,47%Trucks -4,31% -5,52%Buses -7,31% 0,44%Total -5,19% -1,28%

DMTPL

Change

EUR

Channel distribution, MTPL

15

MTPL commisson (weighted average)

Insurance brokerage companies 12,7%Insurance agencies 11,4%

Key factors influencing claims

16

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

Accidents

17

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%

Comparison between the growth of accidents and the number of accidents reported (MTPL)

18

Indexes

19

2006 2007 2008 2009 2010 2011 cumulative

Spare parts 2,50% 3,20% 3,60% 2,90% 2,30% 15,36%Maintenance and repair 3,70% 4,00% 4,60% 3,80% 2,60% 20,14%

Inflation in EU (17 states) 2,20% 2,10% 3,30% 0,30% 1,60% 9,84%source: www.cbi.eu; www.eurostat.com

Index of consumer (HICP) in EU

2006 2007 2008 2009 2010 2011 cumulative

Inflation in Macedonia 3,00% 2,30% 8,30% -0,80% 1,60% 3,90% 15,01%

Length of the local roads(asphalt and cubes) 9,22% 2,41% 3,42% 1,56% 1,04% 17,48%

source: Central Bank of Macedonia

source: State statistical office

Indexes in Macedonia

Casemix index (CMI) 2006 2007 2008 2009 2010 2011 cumulative

Absolute values 0,89 0,94 1,08Relative change 5,62% 14,89% 21,35%source: Health insurance fund of Macedonia

Development of country’s minimum limits

20

EUR Prior 2010 1-Jan-10 1-Jan-11 1-Jan-12 Change

Buses and trucks 200.000 300.000 450.000 675.000 238%Other vehicles 100.000 150.000 225.000 337.500 238%Vehicles carrying dangerous goods 300.000 450.000 675.000 1.012.500 238%

Buses and trucks 100.000 150.000 225.000 337.500 238%Other vehicles 50.000 75.000 112.500 168.750 238%Vehicles carrying dangerous goods 150.000 225.000 337.500 506.250 238%

Personal injury

Material damage

Brief summary

21

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….

Claims paid, MTPL

22

2008-2011

Change -12,32%

Claims settlement pattern, MTPL

23

The development of claims paid and reserves, MTPL

24

Change2008-2011

Claims paid -12,32%Claims reserves 29,68%

MTPL ratios

25

58.3% 59.1% 58.5%53.3% 54.8%

30.2% 30.2%

39.6% 42.0%49.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2007 2008 2009 2010 2011

Claims ratio (MTPL) Cost ratio (MTPL)

MTPL combined ratio

26

88.5% 89.3%

98.1%95.3%

103.9%

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

2007 2008 2009 2010 2011

Combined ratio (MTPL)

Claims ratio, MTPL

27

Avg

Technical provisions, MTPL

28

Claims in court procedure, MTPL

29

Triglav Ins.Policy Uniqa Sava Evroins Albsig Winner Eurolink QBE Croatia n. Insig

Share of the claims rejected in the total number of claims settled

17,1% 19,4% 26,8% 5,0% 22,8% 31,0% 10,4% 21,8% 13,0% 3,2% 14,5%

Uninsured and unknown vehicles

30

2009 2010 2011 2Q 2012Number of claims reported to NIBM 878 765 950 224Number of claims accepted by NIBM 733 584 720 82Total number of claims reported MTPL 21.824 23.721 26.898 12509Share 3,25% 2,40% 2,61% 0,65%

Claims paid from the GF 1.139.242 1.059.658 966.861 96.696Claims paid MTPL 27.578.992 24.077.935 24.362.179 11.155.024Share 4,13% 4,40% 3,97% 0,87%

Complaints, MTPL

31

Complaints reported

Postively settled

RejectedWithout grounds

for action

In procedure

European accident statement

41 20 17 4 2

Police statemnets 16 10 5 1

3 2 160 30 24 6 253 17 18 16 2

113 47 42 22 453% 64% 57% 27% 50%Share

MTPL

MTPL, uninsured vehiclesMTPL TOTALOtherTOTAL

(01.01.2011 - 30.09.2012)

Class of insurance

Thank you for your attention

Klime PoposkiThe President of the Council of Experts,

Insurance Supervision Agency of the Republic of MacedoniaEmail: klime.poposki@aso.mk

www.aso.mk