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Policyholders invested MKD 5 billion in policies, 15,6% more than last year

Investments in property insurance are growing at the same rate as compulsory motor third-party liability insurance – a trend that is very important for the development of the insurance market. In this period, the continuous growth of investments in private health insurance, which reached EUR 3.8 million and increased by 38% compared to the first half of 2020, is especially prominent.

Investments by policyholders in non-life insurance policies (gross written premium (GWP)) reached MKD 5 billion (EUR 81.2 million) in the first six months of this year. That is a 15.6 per cent increase compared to the same period in 2020, according to official data from the Insurance Supervision Agency (ISA).

The growth of investments in non-life insurance policies has been expected given that last year was extremely difficult due to the numerous restrictions imposed by the coronavirus pandemic. In half a year, 634,567 non-life insurance contracts were concluded, which is 16 per cent more than last year.

It is important to note that in the first half of this year, investments in non-life insurance have been higher by MKD 600 million (EUR 9.76 million) or 13.6 per cent, compared to 2019.

The highest growth of insurance investments has been recorded in private health insurance and property insurance. As travel restrictions started to ease, a significant increase in the sale of green cards and travel insurance has been recorded.

Property insurance reached a value of MKD 1.4 billion (EUR 22.7 million) for six months, which is MKD 210.3 million (EUR 3.4 million) more compared to the same period last year. Investments by companies, institutions and other legal entities in property insurance exceeded one billion MKD (EUR 17.3 million), which is 29 per cent more compared to the same period in 2020.

Private health insurance has been growing steadily since the expansion of the corona crisis. In the first six months, investments in this type of insurance exceeded MKD 232 million (EUR 3.8 million), which is one million euros or 38 per cent more than last year.

 GWP in the most common class of motor third-party liability insurance (which is mandatory by law and has a regulated price) brought revenue of MKD 1.74 billion (EUR 28.3 million) to the insurance companies for a period of six months. Investments in this insurance have increased by 14 per cent compared to the same period in 2020.

Sales of green cards reached MKD 409.4 million (EUR 6.6 million), which is an increase of 34 per cent, while travel insurance reached MKD 47.7 million (EUR 775,000) or 18 per cent more than last year.

“Triglav Osiguruvanje” had the largest market share in the first half of the year, ahead of “Eurolink Osiguruvanje”, “Halk Osiguruvanje”, ADOR “Makedonija” and “Unika”. They are followed by “Sava Osiguruvanje”, “Evroins Osiguruvanje”, “Wiener – VIG”, “Croatia Osiguruvanje – Non-Life”, “Osiguritelna Polisa” and “Grawe – Non-Life”.

All 11 non-life insurance companies recorded an increase in market share. “Halk Osiguruvanje”, “Unika”, “Croatia Non-Life”, and “Grawe Non-Life” had the highest growth in this period. The following are: “Sava Osiguruvanje”, “Wiener – VIG”, “Osiguritelna Polisa”, “Triglav Osiguruvanje”, ADOR “Makedonija”, and “Evroins Osiguruvanje”.

The Insurance Supervision Agency (ISA) is an independent regulatory body that regulates the insurance market, supervises the operation of insurance companies, takes care of the protection of the rights of the policyholders and contributes to the financial education of the population.

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Code of Good Practices for Financial Education adopted

The regulators of the financial market: The Insurance Supervision Agency (ISA), the National Bank, the Ministry of Finance, the Securities and Exchange Commission (SEC) and the Agency for Supervision of Fully Funded Pension Insurance – MAPAS have adopted Code of Good Practices for Financial Education that will provide effective, educational programs in behalf of the population. The Code was drafted by the Coordinative Body for Financial Education and Financial Inclusion consisted of members of the five regulatory bodies. This document derives from the Strategy for Financial Education and Inclusion which was adopted in July.

Taking into account the growing needs, the initiatives for financial education as well as the growth of the number of the entities involved in the public, private and civil sector, the need for clear definition of the basics occurred as well as of the manners for inclusion of these entities, coordination, as well as provision of effective educational programs in behalf of the population.

The Code establishes the principles that should be applied during the implementation of the financial education of the population in the country, by all the entities from public, private and civil sector that are to be involved in this process. It states the aims that are to be achieved, the principles that should be applied during implementation of the activities for financial education, the scope of the activities, the good practices regarding the contents and financial education trainers, as well as the manner of informing of the regulators and evaluation of the activities.

The Code is based on the best world experiences and recommendations by INFE-OECD and is aimed to provide promotion and realisation of high quality and impartial financial education by all entities involved. It will strengthen the coordinated approach for financial education thus contributing to better and faster results at national level.

Code of Good Practices for Financial Education adopted

In the modern conditions of dynamic financial system, the financial education becomes necessary for all ages and all social classes of the population. Having regard to the institutions and entities from private and civil sector that may contribute to this field, the financial education is becoming part of the social responsibility and significant aspect of building of their reputation.

Therefore, the coordinated approach of action will contribute to increased efficiency and effectiveness in work.

The financial regulators invite all the entities from the private and civil sector which have realized or are interested in realization of activities for financial education to get acquaint with the Code, available at the following link… and to join the initiative for coordinated approach.

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Policyholders reimbursed for 31.5 million EUR i.e. 20% more than last year.

Non-life insurance companies have paid 5.2 million EUR more for policyholders’ claims in the first half of this year as in comparison to the same period last year. There has been a growth in payments in three major classes: Property Insurance, Motor Vehicle Insurance and other classes of non-life insurance.

Citizens, companies and institutions have been reimbursed for 1.94 billion MKD (31.5 million EUR) for losses covered by non-life insurance policies during the first six months of this year, according to the official data from the Insurance Supervision Agency (ISA).

Compared to the same period last year, the amount of gross claims paid (GCP) that insurers paid to policyholders is higher by 319.5 million MKD (5.2 million EUR, respectively) or 20%.

The increase of the total mobility as well as the activities in all social spheres have a significant impact on the growth of the paid claims. They intensified after the lifting of measures and restrictions that in the same period last year were in force to prevent the global health pandemic caused by the COVID-19.

There has been a significant increase in the claims paid in Property Insurance. During the first six months of this year, 11 non-life insurance companies have paid 292 million MKD (4.75 million EUR) to their policyholders for insured property damages, which is 18.5% more than the same period last year.

In Auto Insurance (the most common insurance compulsory by law) the amount of claims paid is 1.04 billion MKD (17 million EUR). In comparison to the same period last year, the amount of claims paid increased by 21% or 182 million MKD (3 million EUR).

In the Voluntary Auto Insurance, i.e. Casco Insurance, the companies have paid claims in the amount of 224 million MKD (3.6 million EUR) for this period.

For the other classes of insurance, Insurance companies have paid 374 million MKD (6.1 million EUR) to their policyholders in the first half of this year. That is for 104.5 million MKD (1.7 million EUR) or 38% more compared to the same period last year.

Out of 11 non-life insurance companies in total, 10 have increased reimbursed amounts. The largest increase (in %) in this period is present in “Croatia Insurance – Non-Life” with 64%, “Halk Insurance” with 61%, “Uniqa” with 42%, “Euroins” and ADOR “Macedonia” with 22%, and “Sava Insurance” with 17%. “Wiener WIG” follows with 5% increase followed by ”Triglav Insurance”, “Eurolink Insurance” and “Grawe Non-Life” with a 4% increase in gross claims paid.

The largest share in the total amount of claims paid for the first half of the year belongs to: “Triglav Insurance” with 243 million MKD (3.95 million EUR) “Halk Insurance” and “Euroins” which have reimbursed 222 million MKD (3.6 million EUR). Then come “Sava Insurance” and “Uniqa” with 200 million MKD (3.25 million EUR), “Eurolink Insurance” with 191 million MKD (3.1 million EUR), ADOR “Macedonia” and “Wiener VIG” with 164 million MKD (2.67 million EUR). “Croatia Insurance – Life” has paid 138 million MKD (2.2 million EUR), “Osiguritelna Polisa” 127 million MKD (2.1 million EUR) and “Grawe Non-life” 65 million MKD (1.06 million EUR).

More detailed information on the following link https://aso.mk/preliminarni-podatoczi-bruto-polisirana-premija-bruto-isplateni-shteti/

The Insurance Supervision Agency (ISA) is an independent regulatory body that regulates the insurance market, supervises the operation of insurance companies, takes care of the protection of the rights of the policyholders and contributes to the financial education of the population.

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Memorandum NB – ISA: Improvement of the cooperation for further strengthening of the financial stability

The National Bank and the Insurance Supervision Agency (ISA) have concluded a new memorandum, which will contribute to strengthening and deepening the cooperation between the two institutions on several levels, and thus to further strengthening the financial stability. The Memorandum of Cooperation was signed by the Governor of the National Bank, Anita Angelovska Bezhoska and the President of the Council of Experts of the ISA, Krste Shajnoski.

The improvement of the cooperation between the National Bank and the ISA is of great importance, taking into account the intensified cooperation between the banking and the insurance sectors, primarily through the connection of banking and insurance products. The deepened cooperation between the two sectors of the financial system is a factor for closer coordination and cooperation of the two institutions in order to better manage the possible risks and maintain the stability of the financial sector.

The Memorandum contains three groups of activities for which the two institutions will coordinate and act together: cooperation in the preparation of the regulations, exchange of data and information and possibility for conducting joint controls, if necessary.

More specifically, the Memorandum also provides for cooperation between the two institutions in the preparation of the bylaws that refer to entities that are of common interest. It provides for exchange of opinions on draft-acts, as well as formation of joint working groups constituted of representatives of the National Bank and the ISA.

The document will also increase the coverage of data and information that will be exchanged by the two institutions for the purposes of financial stability analyses, as well as in the field of micro-prudential supervision. Also, the continuity of exchange of data for statistical purposes is maintained.

The provisions of the Memorandum more precisely provide for a possibility of organizing joint controls with respect to entities that are of common interest, which is an additional investment in maintaining the stability of both sectors, and thus the overall financial stability.

Financial stability is a common priority and obligation of financial regulators. The closer cooperation between regulators in the past period and the new format of the Financial Stability Committee established in April last year, which includes all financial regulators, contribute to the progress in achieving the common goal – maintaining financial stability. All this calls for further improvement of the mutual cooperation, in order to strengthen the stability and resilience of the financial system as a supporting pillar of the economy.

Also, the established cooperation in the segment of financial education, financial inclusion and consumer protection also contributes to the further development of the financial system and to the improvement of the well-being of the population.

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Number of complaints resolved in favor of discontented policyholders increased by 220%

During the first six months of this year, based on complaints received from discontented policyholders, the ISA has imposed four measures, two of which are fines on three Insurance Companies.

As of June 30, 2021, the Insurance Supervision Agency (ISA) received 82 complaints from policyholders who were dissatisfied with the insurance companies’ operation. In comparison to the same period last year, this year the number of submitted complaints has doubled.

Out of 82 complaints in total, during the first half of this year, 16 were resolved in favor of the appellants, i.e. policyholders who had reported to the ISA regarding their discontent with how the company resolved the reported loss. This is 220% more resolved complaints in favor of the policyholders compared to the same period last year.

The reason for the complaints was the amount of compensation offered by the Insurance Company to compensate the loss, in 21 cases. These complaints have not been processed since the ISA does not decide on the amount of compensation offered.

34 of all submitted complaints were resolved in favor of the companies. Seven complaints were found to be unfounded, two were withdrawn by the appellants, and for two more the proceedings are ongoing.

Regarding the type of insurance, most complaints – 33 were filed for losses incurred in Auto Insurance (the most common class of insurance which is compulsory by law). There were 19 complaints filed for claims for losses covered by Casualty Insurance, and nine were filed by discontented Property Insurance policyholders. Five complaints were for Life Insurance, two for Health Insurance, and one for each of the following: Crops and Fruit Insurance, Travel Insurance, Kasko Insurance, Financial Loss Insurance and General Liability Insurance. Two complaints were filed for other types of insurance.

In 29 cases, the reason for the claim had been the basis for loss payment, and in 21 cases the amount of compensation. Five appellants complained about the deadline within which the company should respond to the complaint. There are four complaints about the deadline for processing the loss and payment of compensation, and two about the amount of recourse. Ten more complaints have been filed on other grounds.

Most complaints in the first half of this year have been submitted for the operation of “Uniqa” i.e. 13. Nine complaints each have been filed for “Halk Insurance”, “Grawe Non-Life” and “Eurolink Insurance”. Eight for “Wiener”, five complaints each filed for the operation of “Croatia Life” and “Euroins”. Four complaints have been filed for “Sava Insurance”, “Triglav Insurance” and “Osiguritelna Polisa”. One complaint each for: ADOR “Macedonia”, “Croatia Insurance – Non-Life”, “Grawe”, the National Insurance Bureau and the Insurance Brokerage Company “SN Broker”. During this period, there have been no complaints filed for: “Wiener Life”, “Triglav Life” and “Uniqa Life”.

Of the total number of submitted complaints, 67 have been submitted by citizens (natural persons), and 15 by legal entities.

A complaint is submitted to the ISA if the insured is not satisfied with the insurance company’s response to the claim or has not received a response within 30 days. The ISA does not investigate anonymous complaints or cases which court or other proceedings are being conducted for.

The Insurance Supervision Agency (ISA) is an independent regulatory body that regulates the insurance market, supervises the operation of insurance entities, takes care of the protection of rights of the insured and contributes to financial education and inclusion of the population.

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The first national Strategy for Financial Education and Financial Inclusion was adopted

The COVID crisis leads to a time of transformation of traditional economies into smarter, more digitalized, inclusive and greener economies. In such conditions, when FinTech is becoming more present in our reality, the need for a higher level of financial literacy, as a prerequisite for financial inclusion, will be even more pronounced. But it also implies the need for greater activity for consumer protection. These challenges has not taken the financial regulators by surprise – several years ago already they started the process of preparation of the first national Strategy for Financial Education and Financial Inclusion, within the five-year project for financial education with the support of the Ministry of Finance of the Netherlands and the International Network for Financial Education at OECD (INFE-OECD). The Strategy was adopted and promoted today. It refers to the period 2021-2025 and exceeds the initial project goal, because it refers not only to financial education, but also to financial inclusion, taking into account their mutual causality and connection.

 

The event on the occasion of its adoption was addressed by representatives of all financial regulators – the Governor of the National Bank, Anita Angelovska Bezhoska, the Minister of Finance, Fatmir Besimi, the President of the Council of Experts of the Insurance Supervision Agency, Krste Shajnoski, the President of the Council of Experts of the Agency for Supervision of Fully Funded Pension Insurance (MAPAS), Maksud Ali and the Commissioner of the Securities and Exchange Commission (SEC), Kiril Jovanovski.

 

“Financial education is also at the core of financial stability, especially evident after the global financial crisis of 2008/9, which largely arouse from the cumulative risks due to poor financial decisions. But the process of financial education can not be conducted spontaneously. It requires information, guidance, advice, but above all, a systematic approach. Therefore, a coordinated approach at the national level is needed, i.e. a strategic framework that recognizes the importance of education, enables inclusion and coordination of all relevant parties and defines a roadmap of activities for effective achievement of goals. This brings us to the Strategy for Financial Education and Financial Inclusion, which we are adopting today. The strategic and systematic approach to the issue of financial education is even more important in this new age of fintech revolution “, said Governor  Angelovska Bezhoska at the beginning of her speech, after which she addressed certain activities envisaged in the Strategy.

 

She noted that for proper design of the Strategy, a key precondition was the assessment of the current level of financial literacy, due to which the first measurement of the level of financial literacy was initiated under the OECD methodology, according to which our population reached 56% of the maximum value, also confirmed by the second measurement within the project, which is comparable to the countries in the region, but compared to developed countries, it indicates a significant room for improvement.

 

The Minister of Finance Fatmir Besimi pointed out that the Strategy is important for two reasons: first, because financial education and inclusion are the basis for the stability of the financial system and second, in order to achieve significant results in this field, it is necessary to act SMART – that is, to set clear goals, good strategy and implementation plan.

 

“With a well-coordinated process of financial education, which will include institutions and private entities that can contribute, in the medium term can really achieve better results in terms of financial education of the population. This will improve the effectiveness of their participation in the financial sector, and at the same time, they will be protected as consumers who have more and better information. The utilization of the best practices for promoting the financial inclusion can facilitate the access to finance for multiple categories. “Increasing financial inclusion is of particular importance for the economy, because it provides access to capital, which entails investment and consumption, which in turn results in increased economic activity.” – said the Minister of Finance, Besimi.

 

The Minister pointed out that in terms of improving access to financial services, the Guarantee Fund will soon be launched through which the state guarantee scheme will be implemented, which will facilitate access to capital for small and medium-size enterprises. The Fund, on the one hand, will contribute to the offer of new products in the financial system with lower risk for banks and savings houses, and on the other hand will provide access to capital for those who have the most difficulty in obtaining loans, i.e. small and medium-size enterprises.

 

The President of the ASO Council of experts Krste Shajnoski, stated that the speeding up of the financial education and inclusion process is particularly important, given the underdevelopment of the insurance market within the financial system.

 

“By making the Strategy a formal document, we will be able to realize our common objectives, such as growth and development of the financial market, widespread and accessibility of the financial services to individuals, families, small and large businesses, state sector, and all of that at fair prices. All of this will be implemented only if we provide operation of sound financial institutions, managed and supervised by professionals that successfully balance the implementation of objectives led by the interest for profit on one hand, and providing quality of the offered financial services and fair treatment of financial services consumers on the other hand.” – stated Shajnoski.

 

“Led by the basic principle that financial education is a long-term investment in the society and the country, as it is for individuals that could easily and safely make sound financial decisions and have a better quality of life, I am convinced that, by accepting the Strategy as a comprehensive document, we provide wise and effective plan for our future activities and resources in the area of development of financial education and financial inclusion of the population in our country, with emphasis on the youngsters as a most important target group. This is why MAPAS considers that the engagement of non-governmental and private sector is of great importance in the implementation and realization of the Strategic objectives. Thus, we will provide overall financial education and increased financial inclusion of the population.”- stated Maksud Ali, President of the Council of experts.

 

“The wide range and accessibility of financial products under globalization, make the financial literacy one of the priorities for the policy makers in economy. Namely, we should point out that, the ability of processing multiple information grows with the increase of the level of understanding complex financial instruments. Our insistence that the participants in the financial system need to be precise and highly transparent should be accepted and accompanied by appropriate understanding by the ones that need to be transparent. Additionally, intensive financial education and inclusion will lead to increased financial sector contribution to the economic development. By taking all of this into consideration, the SECRNM points out that it will strive to raise the financial literacy with all its capacities, especially for issues related to securities market.” – pointed out Kiril Jovanovski, representing the SEC.

 

The Strategy, inter alia envisions development of special educational programs for various age groups, from youngest to the oldest, given the understanding of education as a process in a lifetime, and especially the financial dynamics nowadays.

 

Educational programs should be designed according to the financial education Core competencies, which is a document envisaged with the Strategy that is already in the process of preparation.  In order to create a framework for appropriate coordination of activities, exchange of information, as well as quality, fair and unbiased financial education from all potential providers, а Code of good practices for financial education is already under preparation, with the involvement of regulators, private financial institutions and civic associations. The process of monitoring the implementation of the projected activities is planned to be managed by a working group, involving representatives from regulators, private and civic sector, which will enhance the cooperation and provide optimal allocation of available resources towards the objectives.

 

In the period ahead, special attention will be given to activities related to consumer protection, in individual financial segments, which is also in favor of greater financial inclusion in future. Part of the projected activities in the area of consumer protection belong to regulators, and part of them to private financial sector, which again indicates the necessity for cooperation as a prerequisite to successful implementation of the projected activities. A consideration of the alternative dispute resolution mechanisms  is planned, on resolving possible disputes with consumers, including and considering the possibility of introducing an Ombudsman for the financial sector.

 

According to the Strategy, proper attention should be paid to the increase of transparency in operations and publishing financial services data by the private financial sector, including standardization of published data for the same type of service.

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For the first three months of this year, 36 complaints were submitted to the Insurance Supervision Agency (ISA) by insured persons who are not satisfied with the work of the insurance companies from which they purchased insurance policies.

According to the official data of the Insurance Supervision Agency (ISA) for the first three months of this year, the number of complaints filed by insured persons dissatisfied with the services of the companies from which they bought insurance policies has increased by 56 percent. According to the Law on Insurance Supervision, every insured person has the right to file a complaint to the ISA if he / she is dissatisfied with the work of the company from which he / she purchased the insurance policy.
For the period January – March, the insured filed a total of 36 complaints against insurance companies compared to 23 complaints filed in the same period last year. From the submitted complaints, the ISA in four cases decided in favor of the insured persons who were submitters of complaints, for 17 cases the procedure is ongoing, and for two complaints it was determined that they were submitted without grounds for action. In nine cases, the reason for the complaint was the amount of compensation offered to compensate the damage. These complaints are not processed because the ISA does not decide on the amount of compensation offered. Three of all submitted complaints have been resolved in favor of the companies.
In the first three months, 30 individuals and six legal entities filed complaints.
In terms of the type of insurance, most complaints – 13 were filed for auto liability damages (compulsory insurance). For claims for damages covered by accident insurance, 10 complaints were filed, and five related to dissatisfied insured persons with property insurance. Three complaints are for life insurance, and one each for travel insurance, hull insurance and agricultural insurance.
Most insured persons, a total of 13, complained about the grounds for payment of damages. Nine of the amount of the offered compensation, four reacted to the processing of the damage, one complaint each for the deadline for payment, response to the complaint and the amount of recourse. On other grounds, five complaints were submitted.
In the non-life insurance section, eight complaints were filed against Uniqa, seven complaints were filed against Wiener Life, five against Grave Life, two each against Hulk Insurance, Euroins and Eurolink. One complaint was received for: “Sava”, “Triglav”, “Croatia Lifeless”, “Insurance Policy” and the National Insurance Bureau. There are three complaints from life insurance companies about “Croatia Life Insurance”. In this period there are no complaints for “ADOR Macedonia”, “Grave life”, “Unika life”, “Triglav life” and “Wiener life”.

A complaint is submitted to the ISA if the insured is not satisfied with the company’s response to the claim or has not received a response within 30 days. The ISA does not investigate anonymous complaints or cases for which court or other proceedings are conducted.

The Insurance Supervision Agency (ISA) is an independent regulatory body that regulates the insurance market, supervises the work of insurance companies, takes care of the protection of the rights of the insured and contributes to the financial education of the population.

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Financial literacy is essential for the purpose of protecting consumers

The Insurance Supervision Agency (ISA), within its legal competencies and authorities, this year has designed and implemented a set of activities for financial education of the population.

Consumer protection, developing awareness about insurance and insurance supervision as well as financial education and inclusion are among the fundamental goals of ISA.

Our task, as an independent regulator of the insurance market is to continuously raise public awareness and perception of insurance as a public interest of the whole society.

That is why we chose May as the month of financial literacy!

For more details follow us on edukacija.aso.mk  and on social networks. (Facebook, Instagram, LinkedIn)

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Global Money Week 2021 begins

The Coordinating Body of Financial Regulators for Financial Education and Financial Inclusion, in cooperation with associations and institutions from the private sector and non-profit institutions active in the field of financial education, for the ninth year in a row marks the Global Money Week, which this year is in the period 22 – March 28. The theme of this year’s Global Money Week is: “Take care of yourself, take care of your money.”

Due to the coronavirus pandemic, the activities during the Global Money Week this year will mainly take place through e-lectures and postings of educational materials on the websites of the institutions and on social networks. The virtual educational lectures will be intended for students from primary and secondary schools in our country on topics from the areas covered by individual institutions, related to the functioning of the financial system.

The Insurance Supervision Agency (ISA) will take part in the Global Money Week through a number of activities on several levels: promoting useful content and giving advice to policyholders through an education portal with an emphasis on protecting their rights and interests, sharing useful and timely information through the website and social networks, educational questionnaires, surveys, organizing a quiz, educational online lectures, TV appearances, promotion of good practices in the field of financial education and financial inclusion, promoting the role of insurance companies and intermediaries in the financial education in order to become part of their good work in relation to their financial clients, encouraging the accountability and responsibility of insurance companies and insurance intermediaries, not only in providing information and advice on financial matters, but also in promoting the financial awareness of customers, especially for long-term liabilities and liabilities that form a significant portion of current and future income. More: Newsletter of activities

Globally, Global Money Week has been celebrated since 2012, with a single break in 2020 due to the pandemic, and since 2021 it has been organized by the OECD. This global initiative, which has so far been celebrated in more than 175 countries around the world, raises awareness among young people about financial education and increases their knowledge of money, savings, employment and entrepreneurship. Each year, young people discuss, read, and learn about economic and financial systems through a variety of activities carried out by government, financial, and educational institutions. The aim of Global Money Week is to encourage young people to invest in their future, emphasizing the importance of financial education, which will help them become aware of their financial rights, facilitate their access to financial services and develop their financial skills.

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INTERVIEW: Krste Shajnoski, President of the Council of Experts, Insurance Supervisory Agency of North Macedonia

XPRIMM: What is your view over how the insurance market has evolved during the first half of 2020?
Krste SHAJNOSKI: The changes imposed by the Coronavirus crisis forced insurance companies and other entities in the sector to reorganize in order to adapt to the new conditions. The effects of the adaptation are different, i.e. some of them coped better with the changes, and we even have several cases in which the insurance companies achieved a noticeable increase in their operations.
In 1H2020, gross written premium (GWP) totaled MKD 5.15 billion, which is a decrease of 2.01% compared to GWP realized in 2K2019. In life insurance, GWP totaled MKD 828.33 million, which is a decrease of 2.36%. In the non-life insurance part, GWP has reached the sum of MKD 4.32 billion, which is lower by of 1.95% compared to 2K2019, and in the total structure of GWP, it participates with 83.91%. If analyzed more deeply, the decline can mostly be seen in the classes conditioned by reduced mobility, such as green card, MTPL and travel insurance.I would like to emphasize that for me it is of high importance that in 1H2020 all companies, except for one insurance company, make a profit before tax from their operation. However, we should keep in mind that one of the measures adopted by the ISA (to widen the categories for impairment of the receivables for 60 days) contributed to this, but also the reduced dynamics of claims, especially in the above-mentioned classes conditioned by reduced mobility.

XPRIMM: What were the possible reasons for the 20.5% growth in property insurance premiums at the end of 1H2020? Are Macedonians more interested in these products lately? How many of them are protected in front of NatCat risks?

KS: An especially interesting fact is the one that there was an increase of 20.5% in property insurance. The trend is not universal, i.e. several insurance companies show an increase, while a few have a decline in GWP. When analyzing the statistics thoroughly, we notice that the increase is due to different categories, in different insurance companies, with household insurance, insurance of buildings and facilities and agricultural insurance being dominant. This leads us to the conclusion that the increase in 1H2020 is due to the synergy of the increased interest in property insurance and the good sales strategies of several insurance companies.

However, despite this positive trend of growth of property insurance in the scope of risks, there is no movement in terms of catastrophic risks. The coverage of catastrophic risks is still at a very low level within the concluded property insurance policies, and, additionally, the scope of property insurance is generally unsatisfactory. I believe that it is necessary to build a broader state strategy in order to increase the penetration of property insurance covering the main catastrophic risks (earthquake and flood), because we face an expressed systemic risk at this level.

XPRIMM: What changes determined by the Covid crisis in your market do you think will survive the crisis?

KS: Insurance companies and insurance intermediaries affected by the Coronavirus crisis have faced the fact that a successful reorganization depends mostly on the development of information technologies. Unfortunately, in our country, online sales are still marginally present. Only part of the insurance products are available to consumers online by a small number of insurers.

I think the lesson learned will be that there shouldn`t exist a delay in following and adapting to new trends and changes, which means that market participants will have to change and adapt their business models, adopt new technologies, apply digital tools and encourage a culture of change in its operations, not only in the conclusion of insurance contracts, but also in the receipt and claims processing procedures.

XPRIMM: Did the Macedonian market recently experience some relevant structural changes? (M&As, new entries on the market, exits etc.)

KS: 2019 was marked by changes in the capital structure of two non-life insurance companies. The non-life insurance company Nova Osiguruvanje AD Skopje was taken over by Halk Banka AD Skopje, part of the Turkish Financial Group that owns an insurance company in its portfolio, and operates under the new name Halk Insurance AD Skopje. The second acquisition was of the non-life insurance company Eurosig AD Skopje, by the Austrian Insurance Group GRAWE. We consider both acquisitions a recognition of the existence of a functional insurance market and, at the same time, as a positive trend, given that the domestic market is attracted by insurance groups with a long tradition, which means better insurance services for both the citizens and the economy.

XPRIMM: What are the current challenges of the Macedonian insurance market and how is the Insurance Supervision Agency tackling them?

KS: As a result of the Coronavirus crisis, the Insurance Supervision Agency (ISA) undertook a series of measures and activities in order to reduce the negative effects of the new situation on the functioning of the market. At the very beginning of the health crisis, measures were identified and taken, which included amendments to several rulebooks regarding the prudential rules and financial reporting of insurance companies, the on-site supervisions were also postponed, as well as the initiated misdemeanor proceedings, in order to enable entities to more easily deal with the crisis and maintain continuity in operations.

XPRIMM:What are your prospects about the short-term and medium-term evolution of the local insurance market?

KS: The accelerated technological development, the growth and development of the domestic insurance market, as well as the changes in the international markets and insurance standards, on the one hand, and the limited resources for conducting supervision, on the other hand, undoubtedly will require changes, both in the regulation and in the daily organization of the work of the supervisory body. The changes will most probably be in terms of establishing risk-based insurance supervision, that will anticipate the risks, will improve the focus of the supervision and will enable timely intervention in the insurance market, in order to neutralize or reduce the negative unwanted effects, and maintain the financial stability of the insurance companies, even in cases of crises and disasters.

ISA will use all legal powers, and will propose changes in the existing laws, in order to fundamentally change the course of insurance supervision, and to set it on new paths in terms of anticipating risks in the insurance sector and dealing with them in a timely manner.

Within its competencies, ISA will ensure full transparency of positive corporate practices and public recognition when the satisfaction of the insured, from the use of insurance service, is indisputable and without disturbing the financial situation and solvency. It will stimulate competition between market participants to better meet the interests of policyholders, and add value to the corporate image, through public recognition of their business policies. However, the ISA will do the same if it identifies the development of negative corporate practices, that disrupt the financial stability of the sector, provide incorrect and incomplete information about insurance services and affect the deterioration of the reputation of insurance services.

ISA will establish a new dialogue with all market participants. The idea is simple, you cannot develop the insurance market without the active involvement of all entities in it. In other words, the measures that the regulator will take will be strongly correlated with the business concepts and needs of all stakeholders. In certain segments, to a certain extent, some of the entities may be affected in the short term. But, the final outcome is important, in the long run, everyone gets what they want, the insured will benefit of a range of insurance instruments at the optimal price and quality service of the policy, and the insurance companies, brokerage companies and agents will enjoy increased revenues and profits. Only in this way can we expect an increase in the penetration of the insurance market in the total financial system, from the current 3.5%.

https://www.xprimm.com/INTERVIEW-Krste-Shajnoski-President-of-the-Council-of-Experts-Insurance-Supervisory-Agency-of-North-Macedonia-articol-120,121-15975.htm

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