ACTUAL STATE AND PERSPECTIVE OF MTPL INSURANCE MARKET IN BiH The International Insurance Forum...

ACTUAL STATE AND PERSPECTIVE OF MTPL INSURANCE MARKET IN BiH

The International Insurance Forum

Insurance Agency of Bosnia and Herzegovina

Samir Omerhodžić

3-4 March, 2013 Istanbul

2

BiH INSURANCE SECTOR

• Institutions:- Insurance Agency of BiH- FBiH and RS Insurance Supervisory Agencies- BiH Green Card Bureau- FBiH and RS Insurance Protection Funds- FBiH and RS Association of Insurance Companies- BiH Actuarial Association- Actuarial Association in RS

• 25 Insurance Companies - 14 with the seat in FBiH- 11 with the seat in RS

• 1 Reinsurance Company

• Insurance Intermediaries (agents and brokers)

MTPL INSURANCE MARKET IN BiH


3

REVIEW OF MACROECONOMIC INDICATORS IN BiH


Indicators Year

2008 2009 2010 2011

Nominal GDP (in EUR mln) 12.637 12.268 12.654 13.025

GDP per capita (in EUR) 3.290 3.193 3.293 3.392

Real GDP (growth rate in %) 5,42 -3,2 0,9 1,26

Retail prices growth rate (%) 15,72 15,28 3,1 3,7

Population (estimate in thousands) 3.842 3.843 3.843 3.840

Number of unemployed 493.405 510.534 522.080 536.728

Number of employed 694.416 686.044 683.399 687.917

Average gross salary (in EUR) 569 616 622 650

Average net salary (in EUR) 384 404 408 417

Import-Export Ratio (%) 41,2 44,71 52,1 52,96

Government Sector’s Foreign Debt (in EUR mln) 2.144 2.659 3.213 3.398

Foreign debt (as percentage of the GDP) 16,7 21,71 25,4 25,6

Macroeconomic indicators in BiH (in €)


4

STRUCTURE OF THE BiH FINANCIAL SERVICES SECTOR


Segments of the Financial Services Sector (financial institutions)

2009 2010 2011

Assets growth index 10/09

Assets growth index 11/10

Assets

Share (%)

Assets

Share (%)

Assets

Share (%) (in EUR

mln) (in EUR

mln) (in EUR

mln)

Banks 10.535 82,07 10.457 84,34 10.713 84,71 99,26 102,45

Investment funds 452 3,52 459 3,7 409 3,23 101,47 88,98

Insurance and re-insurance companies 477 3,72 479 3,86 552 4,37 100,32 115,38

Micro-credit organizations 556 4,33 438 3,53 385 3,04 78,75 87,97

Leasing companies 817 6,36 567 4,57 587 4,65 69,34 103,7

Total for the sector 12.838 100 12.399 100 12.646 100 96,58 102,00

0% 20% 40% 60% 80% 100%

2009

2010

2011Banks

Investment funds

Insurance and re-insurance companies

Micro-credit organizations

Leasing companies

Structure of the BiH Financial Services Sector (in €)


5

OWNERSHIP STRUCTURE


Ownership Non-life Life Life and non-life Re-insurance Total

Domestic 12 1 1 1 15

Foreign 1 1 8 0 10

TOTAL 13 2 9 1 25

Domestic

Non-life

Life

Life and Non-life

Re-insurance

Foreign

Non-life

Life

Life and Non-life

Re-insurance

Ownership structure and types of insurance operations of BiH insurance companies in 2012


6

TOTAL PREMIUM IN BIH AND THE ENTITIES


2009Share

(%) 2010

Share (%)

2011Share

(%) 2012

Share (%)

Premium growth Index

10/09 11/10 12/11

BiH 234.495.630 100 241.334.104 100 249.567.620 100 258.274.499 100 102,92 103,41 103,49

FBiH 173.150.649 73,84 178.645.592 74,02 182.415.829 73,09 186.834.271 73,09 103,17 102,11 102,42

RS 61.344.981 26,16 62.688.512 25,98 67.151.791 26,91 71.440.228 26,91 102,19 107,12 106,39

2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

RS

FBiH

Total premium in Bosnia and Herzegovina and the Entities (in €)


7

TOTAL PREMIUM IN LIFE AND NON LIFE INSURANCE IN BiH


2009Share

(%)2010

Share(%)

2011Share

(%)2012

Share(%)

Premium growth index

10/09 11/10 12/11

Non-life 198.990.447 84,86 203.219.732 84,21 208.633.911 83,60 214.221.108 82,94 100,53 102,12 102,68

Life 35.505.183 15,14 38.114.372 15,79 40.933.709 16,40 44.053.391 17,06 105,31 107,35 107,62

TOTAL 234.495.630 100 241.334.104 100 249.567.620 100 258.274.499 100 101,22 102,92 103,49

Total premium in life and nonlife insurance in Bosnia and Herzegovina (in €)

2009 2010 2011 20120

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

Life

Non-life

TOTAL


8

PREMIUMS PER INSURANCE TYPE IN BiH


No Insurance Type 2009Share(%)

2010Share(%)

2011Share(%)

2012Share(%)

1 Accident 16.920.195 7,22 17.510.698 7,26 18.639.737 7,47 18.217.736 7,05

2 Health 4.299.144 1,83 3.829.347 1,59 2.966.759 1,19 3.019.274 1,17

3 Motor Casco 30.709.323 13,10 29.965.353 12,42 30.266.413 12,13 29.476.383 11,41

4 Railway Rolling Stock Casco 180 0,00 113588 0,05 0 0,00 0 0,00

5 Aircraft Hull Damage 189.860 0,08 229.762 0,10 658.924 0,26 105.804 0,04

6 Sea, Lake and River Vessels Hull Damage 13.521 0,01 15.573 0,01 14.834 0,01 27.753 0,01

7 Goods in Transit 2.603.783 1,11 2.347.790 0,97 2.595.000 1,04 2.682.018 1,04

8 Fire and Other Natural Perils 13.783.709 5,88 14.914.380 6,18 15.175.046 6,08 14.127.259 5,47

9 Other Damage to Property 11.486.678 4,90 13.152.199 5,45 13.110.993 5,25 16.124.502 6,24

10 Motor TPL (Third-Party Liability) 115.700.881 49,34 117.855.005 48,83 121.362.359 48,63 125.175.868 48,47

11 Aviation TPL 253.696 0,11 336.846 0,14 368.305 0,15 143.466 0,06

12 Marine TPL 8.639 0,00 17.142 0,01 13.123 0,01 13.600 0,01

13 General Liability 2.045.439 0,87 2.043.650 0,85 2.619.946 1,05 2.807.430 1,09

14 Credit 142.186 0,06 122.529 0,05 180.803 0,07 1.689.188 0,65

15 Surety 50.724 0,02 76.692 0,03 77.514 0,03 37.624 0,01

16 Financial Loss 780.168 0,33 687.427 0,28 577.817 0,23 564.025 0,22

17 Legal Protection 0 0,00 0 0,00 2.876 0,00 3.077 0,00

18 Assistance – Other Insurance Types 2.320 0,00 1.752 0,00 3.461 0,00 6.101 0,00

Total Non - Life Insurance Types 198.990.447 84,86 203.219.732 84,21 208.633.911 83,60 214.221.108 82,94

19 Life (Life Insurance and Annuity Insurance) 35.153.634 14,99 37.719.878 15,63 40.483.856 16,22 40.801.910 15,80

Additional Insurance with Life Insurance 351.550 0,15 394.495 0,16 449.853 0,18 3.251.481 1,26

Total Life Insurance Types 35.505.183 15,14 38.114.372 15,79 40.933.709 16,40 44.053.391 17,06

Grand Total (Insurance Types 1-19) 234.495.630 100 241.334.104 100 249.567.621 100 258.274.499 100

Premiums per insurance type in BiH (in €)


9


Percentage of the various types of the insurance in total premium in BiH for 2009, 2010, 2011 and 2012

2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Other

Accident

Health

Motor Casco

Fire and Other Natural Perils

Other Damage to Property

Motor TPL (Third-Party Liability)

Life


10

PREMIUMS PER INSURANCE TYPE OF INSURANCE COMPANIES IN FBiH WITH BRANCHES IN RS


Premiums per insurance type of FBiH insurance companies‘ branches in RS (in €)


2012Share(%)

Index

1 Accident 481.963 4,24 530.820 3,83 110,14

2 Health 119.148 1,05 113.711 0,82 95,44

3 Motor Casco 1.823.225 16,06 1.816.652 13,10 99,64

4 Railway Rolling Stock Casco 0 0,00 0 0,00

5 Aircraft Hull Damage 0 0,00 0 0,00

6 Sea, Lake and River Vessels Hull Damage 5.671 0,05 3.988 0,03 70,32

7 Goods in Transit 226.327 1,99 331.972 2,39 146,68

8 Fire and Other Natural Perils 587.721 5,18 699.374 5,04 119,00

9 Other Damage to Property 311.627 2,74 580.609 4,19 186,32

10 Motor TPL (Third-Party Liability) 4.829.817 42,53 6.308.143 45,49 130,61

11 Aviation TPL 649 0,01 488 0,00 75,18

12 Marine TPL 621 0,01 1.500 0,01 241,40

13 General Liability 123.672 1,09 66.693 0,48 53,93

14 Credit 19.409 0,17 33.133 0,24 170,71

15 Surety 1.432 0,01 4.942 0,04 345,06

16 Financial Loss 11.803 0,10 14.658 0,11 124,19

17 Legal Protection 0 0,00 0,00

18 Assistance – Other Insurance Types 0 0,00 0,00

Total Non - Life Insurance Types 8.543.087 75,23 10.506.682 75,77 122,98

19 Life (Life Insurance and Annuity Insurance) 2.582.470 22,74 3.092.050 22,30 119,73

Additional Insurance with Life Insurance 229.791 2,02 267.490 1,93 116,41

Total Life Insurance Types 2.812.261 24,77 3.359.540 24,23 119,46

Grand Total (Insurance Types 1-19) 11.355.348 100,00 13.866.222 100,00 122,11


11

PREMIUMS PER INSURANCE TYPE OF INSURANCE COMPANIES IN RS WITH BRANCHES IN FBiH


Premiums per insurance type of RS insurance companies‘ branches in FBiH (in €)


2012Share(%)

Index

1 Accident 183.863 3,17 282.327 4,03 153,55

2 Health 29.570 0,51 49.716 0,71 168,13

3 Motor Casco 436.566 7,52 622.995 8,90 142,70

4 Railway Rolling Stock Casco 0 0,00 0 0,00


6 Sea, Lake and River Vessels Hull Damage 0 0,00 41 0,00

7 Goods in Transit 31.983 0,55 36.511 0,52 114,16

8 Fire and Other Natural Perils 61.410 1,06 91.236 1,30 148,57

9 Other Damage to Property 789.090 13,59 836.311 11,95 105,98

10 Motor TPL (Third-Party Liability) 4.265.842 73,47 5.068.946 72,43 118,83

11 Aviation TPL 0 0,00 0 0,00

12 Marine TPL 0 0,00 0 0,00

13 General Liability 7.597 0,13 5.675 0,08 74,70

14 Credit 0 0,00 0 0,00

15 Surety 0 0,00 0 0,00

16 Financial Loss 0 0,00 0 0,00

17 Legal Protection 0 0,00 0 0,00

18 Assistance – Other Insurance Types 0 0,00 0 0,00

Total Non - Life Insurance Types 5.805.922 100,00 6.993.758 99,93 120,46

19 Life (Life Insurance and Annuity Insurance) 4.536 0,06

Additional Insurance with Life Insurance 175 0,00

Total Life Insurance Types 0 0,00 4.711 0,07

Grand Total (Insurance Types 1-19) 5.805.922 6.998.469 100,00 120,54


12

SHARE OF PREMIUM IN BRANCHES IN PREMIUM OF ENTITIES


Share of premium in branches in premium of Entities (in €)

Insurance companies from one Entity with registered branches

in other Entity

2009 2010 2011 2012

Premium in branches

Share of premium in branches in

total premium in Entity

Premium in branches



Premium in branches



Premium in branches



Insurance companies from FBiH with registered branches in RS

5.034.018,81 8,21 9.507.513,43 15,17 11.355.347,86 16,91 13.866.222,08 19,41

Insurance companies from RS with registered branches in FBiH

478.933,75 0,28 3.203.485,48 5,11 5.805.922,29 3,18 6.998.469,45 3,75

7.58%

92.42%

Insurance companies from FBiH with registered branches in RS in 2009

Premium in branches

Total premium in Entity

0.28%

99.72%

Insurance companies from RS with registered branches in FBiH in 2009

Premium in branches


19%

81%

Insurance companies from FBiH with registered branches in RS in 2012

Premium in branches


4%

96%

Insurance companies from RS with registered branches in FBiH in 2012

Premium in branches



13

SHARE OF MTPL INSURANCE PER COUNTRIES IN CEE, SEE AND CIS


Albania

Bosnia

and

Her

zego

vina

Bulgar

ia

Croat

ia

Czech

Rep

ublic

Eston

ia

Latv

ia

Lithu

ania

Mac

edon

ia (F

YROM)

Mon

tene

gro

Poland

Roman

ia

Serbia

Slovak

ia

Sloven

ia

Greec

e

Turke

y

Armen

ia

Kazak

hsta

n

Mold

ova

Russia

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

Share of MTPL insurance per Countries in CEE, SEE and CIS in first half of 2012

Share of MTPL in-surance


14

SHARE OF LIFE AND NONLIFE INSURANCE PER COUNTRIES IN CEE, SEE AND CIS


Al

bani

a

Bosn

ia a

nd H

erze

govi

naBu

lgar

iaCr

oatia

Czec

h Re

publ

icEs

toni

aHu

ngar

yLa

tvia

Lith

uani

a

Mac

edon

ia (F

YRO

M)

Mon

tene

gro

Pola

ndRo

man

iaSe

rbia

Slov

akia

Slov

enia

Gre

ece

Turk

eyAz

erba

ijan

Bela

rus

Geo

rgia

Mol

dova

Russ

iaUk

rain

e

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of Life and Nonlife Insurance per Countries in CEE, SEE and CIS in first half of 2012

Nonlife

Life


15

COMPARISON OF INDICATORS OF SOME EUROPEAN COUNTRIES AND BiH


Country

2009 2010 2011

Premium(USD mln)

Premium as % of

GDP

Premium per capita (in USD)

Premium(USD mln)

Premiumas % of

GDP

Premiumper capita (in USD)

Premium(USD mln)

Premiumas % of

GDP

Premiumper capita (in USD)

Great Britain 309.241 12,9 4.579 310.022 12,4 4.497 319.553 11,8 4.535

Germany 238.366 7,0 2.878 239.817 7,2 2.904 245.162 6,8 2.967

Spain 82.775 5,7 1.802 76.082 5,4 1.650 79.987 5,4 1.729

Switzerland 48.470 9,8 6.258 52.118 9,9 6.634 63.576 10,0 8.012

Sweden 32.768 8,2 3.540 38.218 8,4 4.082 42.111 7,9 4.455

Austria 22.660 6 2.743 22.232 5,9 2.651 23.051 5,5 2.740

Russia 39.576 2,5 281 41.644 2,3 297 43.257 2,4 303

Poland 16.286 3,8 430 17.763 3,7 466 19.107 3,7 500

Turkey 7.853 1,3 105 9.220 1,3 122 10.051 1,3 136

Czech Republic 7.328 3,9 723 7.914 4,0 753 8.764 3,9 832

Ukraine 2.624 2,1 57 2.463 1,9 54 3.084 2,0 68

Slovenia 2.895 6 1.420 2.775 5,9 1.353 3.008 5,9 1.464

Croatia 1.781 2,9 402 1.682 2,8 379 1.711 2,7 389

Bulgaria 1.195 2,5 158 1.150 2,5 153 1.131 2,1 151

Serbia 792 1,8 108 727 1,8 100 781 1,7 107

BiH 336 1,91 87,5 320 1,91 83 323 1,92 84

Comparison of indicators of some European countries and BiH (in $)


16


0%

2%

4%

6%

8%

10%

12%

14%

Gre

at B

rita

in

Ger

man

y

Sp

ain

Sw

itze

rlan

d

Sw

eden

Au

stri

a

Ru

ssia

Po

lan

d

Tu

rkey

Cze

ch R

epu

bli

c

Uk

rain

e

Slo

ven

ia

Cro

atia

Bu

lgar

ia

Ser

bia

BiH

2009

2010

2011

Ratio of the amount of premium and GDP expressed in percents for some European countries and BiH for 2009, 2010 and 2011


17


Premiums per capita for some European countries and BiH

for 2009, 2010 and 2011

0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000

Great Britain

Germany

Spain

Switzerland

Sweden

Austria

Russia

Poland

Turkey

Czech Republic

Ukraine

Slovenia

Croatia

Bulgaria

Serbia

BiH

2011

2010

2009


18

CLAIMS PAID PER INSURANCE TYPE IN BiH



2012Share(%)

1 Accident 9.798.197 10,32 10.528.896 10,94

2 Health 1.017.355 1,07 705.719 0,73

3 Motor Casco 20.739.369 21,85 20.659.204 21,47

4 Railway Rolling Stock Casco 5.412 0,01 0 0,00


6 Sea, Lake and River Vessels Hull Damage 0 0,00 1.559 0,00

7 Goods in Transit 149.044 0,16 281.191 0,29

8 Fire and Other Natural Perils 3.639.319 3,83 3.208.427 3,34

9 Other Damage to Property 4.235.715 4,46 4.616.911 4,80

10 Motor TPL (Third-Party Liability) 45.119.238 47,54 44.726.743 46,49

11 Aviation TPL 0 0,00 0 0,00

12 Marine TPL 0 0,00 33.629 0,03

13 General Liability 406.906 0,43 488.151 0,51

14 Credit 151.991 0,16 317.290 0,33

15 Surety 107.061 0,11 6.484 0,01

16 Financial Loss 31.748 0,03 342.128 0,36

17 Legal Protection 0 0,00 0 0,00

18 Assistance – Other Insurance Types 907 0,00 594 0,00

Total Non - Life Insurance Types 85.402.262 89,98 85.916.925 89,31

19 Life (Life Insurance and Annuity Insurance) 8.703.472 9,17 9.430.645 9,80

Additional Insurance with Life Insurance 806.687 0,85 856.495 0,89

Total Life Insurance Types 9.510.159 10,02 10.287.140 10,69

Grand Total (Insurance Types 1-19) 94.912.421 100,00 96.204.065 100,00

Claims paid per insurance type in BiH (in €)


19


Accident11%

Health1%

Motor Casco21%

Fire and Other Natu-

ral Perils3%Other

Damage to Property

5%

Motor TPL (Third-

Party Lia-bility)46%

Life 11%

Other 2%

Claims paid per insurance type in BiH in 2012

Accident10%

Health1%

Motor Casco22%

Fire and Other Natural Perils

4%Other Damage

to Property4%

Motor TPL (Third-Party Li-

ability)48%

Life 10% Other

1%

Claims paid per insurance type in BiH in 2011


20


IMMATERIAL CLAIMS PAID IN BiH

2011 2012 Index

Insurance Companies 11.948.250 13.007.107 108,86

Protective Funds 671.069 899.380 134,02

TOTAL 12.619.319 13.906.487 110,20

2011 2012

Immaterial claims paid 11.948.250 13.007.107

MTPL Claims paid 45.119.238 44.726.743

Immaterial in MTPL Claims paid (Share) 26,48 29,08

Immaterial claims in BiH (in €)

Immaterial claims paid by insurance companies (in €)

2011 20120

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Insurance Com-panies

Protective Funds

2011 20120

5,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,00050,000,000

Immaterial claims paid

MTPL Claims paid


21

HHI INDEX FOR THE MARKET OF LIFE INSURANCE


HHI index for the market of life insurance in Bosnia and Herzegovina

2009 2010 2011 2012

Market share of the first four companies 79,89% 78,82% 80,35% 79,94%

HHI 1.838 1.786 1.817 1.790

2009 2010 2011 201270%

75%

80%

85%

90%

95%

1,600

1,650

1,700

1,750

1,800

1,850

1,900

79.89%78.82%

80.35% 79.94%

1,838

1,786

1,817

1,790

Market share of the first four companies HHI


22

HHI INDEX FOR THE MARKET OF NONLIFE INSURANCE


HHI index for the market of nonlife insurance in Bosnia and Herzegovina

2009 2010 2011 2012

Market share of the first four companies 41,90% 42,78% 41,24% 41,91%

HHI 711 728 718 723

2009 2010 2011 201235%

37%

39%

41%

43%

45%

47%

49%

51%

53%

55%

600

650

700

750

800

41.90%42.78%

41.24%41.91%

711

728718 723

Market share of the first four companies HHI


23

TWINNING PROJECT


• Twinning Project EU Suport for Sustainable Capacity Building of the Insurance Agency of Bosnia and Herzegovina and the FBiH and RS Insurance Supervisory Agencies implemented by Bulgarian Financial Supervision Commission from april 2010 to april 2012

• Proposal for framework of institutions for the purposes of obligatory Motor Third Party Liability insurance in Bosnia and Herzegovina in line with the prevailing best practice in EEA:▫ Single Compensation Body▫ Information Centre▫ Protection (Gurantee) Fund

at the BiH Green Card Bureau.


24

REASONS


• BiH Green Card Bureau is recognised as a representative one for BiH and is a member of the Council of Bureau - fulfils the requirements to be independent and self regulating.

• Cost efficiency – no financial resources will be needed to establish number of different institutions (units) at Entities and State level and to provide expenses for their administrative capacity.

• Single information system needs to be in place, respectively one project needs to be financed and upgraded.


25


LIBERALIZING MTPL INSURANCE MARKET

• FIRST Initiative,The World Bank

• The main objectives of the project are:

1) to assist the Insurance Supervisory Agency of Federation of BiH (ISAF) and the Insurance Agency of Republic of Srpska (ISRS) and Insurance Agency of BiH (IABiH) in the liberalization of the MTPL insurance market in Bosnia and Herzegovina;

2) to develop the regulatory framework and technical tools necessary for actuarially sound setting of premium rates and technical reserves for MTPL insurance;

3) to ensure that the proposed regulatory framework for the MTPL insurance market is in compliance with the EU MPTL insurance legislation, specifically with the commitments of Stabilization and Association Agreement with European Union and that it properly accounts for the best international practices in liberalizing the MTPL market.


26

THANK YOU FOR YOUR ATTENTION!



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