Bozana SLJIVAR, Director, Insurance Agency of Republic of Srpska, Bosnia and Herzegovina
xprimm.com: How did the trends of the economy reflect in the insurance market activity (1H/2011)? Bozana SLJIVAR: Financial crisis has not had a significant impact on the insurance market in Republic of Srpska in the first half of 2011. Although the decline in economic activity is obvious in Republic of Srpska, the insurance sector recorded positive trends. These trends are reflected in the growth of total insurance premium, with above average growth of life insurance premiums. We should also mention that premiums gradually improve the structure (with the further domination of MTPL). In addition, there is a positive net financial result on the sector level, increased total assets, improved structure of assets covering technical reserves and increased number of employees in the insurance sector.
xprimm.com: What are the main reasons for which the crisis did not affect the insurance market? B.S.: The main reasons for which the financial crisis has not had a significant impact on the insurance sector of Republic of Srpska can be allocated as follows: the structure of premium is dominated by MTPL, lack of complex products on the market, conservative investment policies for assets covering technical reserves and low exposure to capital market. Therefore, insurance market in Republic of Srpska has achieved positive results thanks to the insurance premium growth, with the minimal impact of the financial crisis to the investment activities. In conclusion, reduced exposure of the insurance market to the crisis results from its underdevelopment.
xprimm.com: In short, how did the insurance market evolve in the first half of the year? B.S.: Total written premium of insurance companies registered in the Republic of Srpska in the first half of 2011 grew by 7.59%, compared to the same period last year. During the reference period, life insurance premium has achieved an above average growth of 18%.
xprimm.com: What are the characteristics of the market? B.S.: Characteristic for the insurance market of Republic of Srpska for the last five years is that the life insurance premium achieved a faster growth of non-life premiums, as a consequence of low participation of life insurance premium in the total premium (around 7%). On the other hand, MPTL premium, with the share in total premium of 67.22%, continues to dominate in the structure of total premium, which points to the underdevelopment of insurance markets, but also a potential for further growth of premiums of non-life insurance and optional insurance.
xprimm.com: In times of crisis, which were the most important changes in marketing strategies of insurance companies? B.S.: One of the changes in marketing strategies of insurance companies is moving toward more conservative investment strategies, like money markets and real estate.
xprimm.com: Were there significant changes (decisions/legislation) in the first half of 2011? B.S.: In the first half of 2011, Insurance Agency of Republic of Srpska continues to actively participate in Twinning Project BA 07 IB FI 01 "Support for Sustainable Capacity Building of the Insurance Agency of Bosnia and Herzegovina, the Insurance Supervisory Agency of the Federation of Bosnia and Herzegovina and the Insurance Agency of the Republic of Srpska". During the first half of the year, Agency has prepared an educational program and has successfully organized II Insurance Intermediaries Qualifying Examination. Also, numerous by-laws have been created and adopted with intention of improvement of insurance regulatory framework.
xprimm.com: What are your expectations for the end of 2011? B.S.: In the future we can expect further premium income growth, mostly driven by market penetration and insurance products development, with a special emphasis on life insurance. As a consequence of increased competition, mergers and acquisitions seem inevitable in insurance market of Republic of Srpska. Insurance Agency of Republic of Srpska will continue to carry out legislative changes in order to comply as much as possible with EU legisaltion and improve insurance industry.
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