Julia CILLIKOVA, Director of the Regulation and Financial Analysis Department of the National Bank of Slovakia

26 June 2014 —
julia_cillikovaXPRIMM: How do you comment the evolution of the Slovak insurance market in 2013?
There were almost no changes of the basic indicators of the Slovak insurance market.
The life insurance market recorded only a slight increase in premiums (by 5.24%), to EUR 1.17 billion, while indemnities paid increased by only 1.81% and reached the amount of EUR 738 million.
The behavior of the basic non-life insurance indicators was very similar to that recorded for life insurance. The number of insurance contracts increased by only 2.84%, whiles the premium volume slightly decreased (by 1.35%) and stopped at the amount of EUR 912.5 million. Claims paid for non-life insurance contracts increased by 3.83% and reached the amount of EUR 469.5 million. The technical provisions also decreased by 3.71% and reached EUR 892.5 million by the end of 2013.

On the motor insurance side, despite the larger number of policies, the total premiums volume decreased, indicating a lowering in the average prices, mainly because of the tight competition. The combined ratio in car insurance (the so called "CASCO" insurance) recorded a significant change, reaching 109% at the end of the year 2013 and showing a lack of profitability of car insurance products.

The solvency of insurance companies slightly decreased in 2013. The solvency margin of life insurance companies was 2.918 while in 2012 it was 3.528. In case of the composite companies the solvency margin was 3.654 on 12.31.2013 while the previous year it was 3.802. The main reason for this decrease could be found in the value depreciation of the long-term securities, which affected the asset portfolios of insurance companies. The period of low interest rates has continued on the financial markets and it could have a significant impact for insurance companies as they guarantee the minimum yields in the classical life policies.

XPRIMM: What about the perspectives for the near future?
We do not expect any significant regulatory or legislative changes which could have an impact on the insurance industry. On January 1st 2016, the new regulations of the insurance market according to the Directive 2009/138/ES (Solvency II directive) will be effective. Companies have to prepare for big changes regarding their governance, written policies, as well as for many changes within their IT systems not only due to the new harmonized reporting, but also because of the improvement of their internal processes and the preparation for public disclosure. The whole process will have a huge impact on companies. This change in the regulations is already asking for a lot of effort now and it will determine an increase in costs. The National bank of Slovakia issued four recommendations last year. The recommendations are in line with EIOPA guidelines and should help companies to smoothen the changes in new requirements.

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