Fic rEcommEndationS - Eurobank EFG

Obligatory priority of social components in health insurance
(no client can be denied services);
Conditions for participating in voluntary health insurance,
though one set of conditions has already been met
when the companies were granted licences for providing
such insurance services – this duality will constantly generate
confusion.
Pursuant to the provisions of the existing Insurance Law, an
insurance company is not permitted to engage in both life
and non-life insurance activities. Also, insurance companies
may engage in insurance or reinsurance activities only. An
adjustment period to split activities – until 31 December
2011 – is envisaged for existing composite insurance companies.
New companies must declare their field of activity at
the time of incorporation. The Government of the Republic of
Serbia proposed amendments to the Law on Insurance that
would limit existing inequalities between the companies
that have divided their insurance operations and the ones
that remained composite. There is high legal uncertainty, in
terms of what the final legal framework in this area will be.
insurance market overview
There are 27 insurance companies operating in Serbia, of which
23 perform only insurance activities and 4 perform only reinsurance
activities. New foreign insurers have been entering the
market both through acquisitions and Greenfield operations.
In 2011, based on first quarter data compared to the corresponding
period in 2010, the insurance market registered
a total increase of 1.
The structure of the market also shows signs of change. The
contribution of life insurance to total written premiums is
16.55%. This figure is encouraging but still low compared
to most European countries.
Regarding non-life lines of insurance, automobile insurance
is still the leading insurance product in 2011. Automobile
insurance is an important market segment, both
in terms of own damage (Casco) with 12.21% and mandatory
third-party liability (MTPL) insurance with 26.65%. The
long-awaited new MTPL Law has been adopted. In almost
a year of practice it has shown certain improvements, but
also weaknesses in the regulation of the MTPL sales frame,
which is one of the most sensitive topics on the market.
High concentration of the market is still present, as the
three largest insurers in Serbia still account for a combined
market share of slightly over 65%.
Significantly contributing to total premiums written in Serbia,
insurance companies with majority foreign ownership account
for the overwhelming majority of the life insurance market.
On the regulatory side, 2010 and the first half of 2011 witnessed
additional efforts to regulate the MTPL market by
NBS. NBS has continued developing a system for the protection
of consumer (insureds’) rights.
PoSitiVE dEVELoPmEntS
The insurance market preserved its financial stability.
rEmaininG iSSUES
Nothing has been done in line with FIC recommendations;
In 2010, the National Bank of Serbia enacted its Decision
on Specific Criteria and Manner of Calculating Mathematical
Reserves and Profit Share Reserves, a decision that has
certain elements that imply retroactivity in the legal system
and will negatively impact business of all insurance
companies providing life insurance. While limitations embedded
in the decision are consistent with the practices
of developed economies, this is not the case with the retroactive
implementation of those limitations on contracts
concluded years before the Decision has been enacted;
Regardless of whether the deadline for existing composite
insurance companies to split into life and non-life insurance
will be extended or whether that obligation will be
abolished altogether, there are no explicit regulations allowing
companies that have legally separated their business
lines to perform certain functions on a shared basis.
This status is unfavourable bearing in mind the amount of
costs arising from separated business operations on a regular
basis. The Government has proposed amendments to
the Law on Insurance, but the proposal has not been put
into parliamentary procedure for more than a year;
MTPL sales channels have not been reformed by the MTPL
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