XPRIMM: How would you comment on the market's results for 2012?
Klime POPOSKI: According to the data from the insurance undertakings reports, which are regularly submitted to the Insurance Supervisory Agency (ISA), the total realized GWP in 2012 was 7.01 billion MKD, a growth of 2.94% compared with the GWP realized in 2011 (6.81 billion MKD).

The positive trend has been present in both insurance groups. The GWP in the non-life insurance group was 6.41 billion MKD (2011: 6.31 billion MKD), or 91.47% of the total GWP of the insurance sector, which presents a growth of 1.56% relative to the previous year.

In the life insurance group, representing 8.53% of the total GWP of the insurance sector, the realized GWP was 598 million MKD (in 2011: 497 million MKD), i.e., a growth of 20.35%.

There are no significant changes in the total GWP structure of separate lines of business. As it happened previously, the most prevalent category was the compulsory MTPL insurance, with 46.76% (2011: 47.96%), then the voluntary motor vehicle insurance (Casco) with 10.87% (2011: 11.49%), the property insurance with 19.81% (2011: 18.30%) and the accident insurance with 7.41% (2011: 7.96%). In these categories, a slight change has appeared in the GWP of the compulsory MTPL insurance, whose amount was 3.27 billion MKD, a growth of 0.36% (2011: 3.26 billion MKD), while the GWP of the property insurance was 1.39 billion MKD, i.e., a growth of 11.37% (2011: 1.25 billion MKD).

The amount of the gross claims of the insurance undertakings paid in 2012 was 3.01 billion MKD. Compared with 2011, the gross paid claims saw a growth of 0.25% (2011: 3.00 billion MKD).

XPRIMM: What can you tell us about the insurer's profitability in 2012?
K.P.: At the end of 2012, out of 15 insurance undertakings on the Macedonian insurance market, 6 had a loss. In one of these 6 insurance undertakings, the loss is a result of the impairment of the accounts receivables and the financial investments while conducting due diligence.

If we eliminate the effect of these undertakings, the profitability level of the insurance undertakings is low, but within our expectations for 2012. Above all, the low profitability level is due to the increased expenses arising from the value adjustment of the receivables with regard to the insurance premiums, as a result of using the Rulebook on valuation of the balance sheet items. Therefore, we expect the insurance undertakings in 2013 to achieve a better financial result.

Also, a very important factor influencing the realization of the insurance undertaking loss and the low profitability level on the insurance market was the growth of the technical provisions level for fulfilment of the necessary technical provision level prescribed by the Law on Insurance Supervision.

XPRIMM: Did the insurance legislation in your country suffer any changes in 2012? If yes, please describe these changes shortly.
K.P.: In the legislation field no significant changes were made. During 2012, the Agency adopted 6 by-laws which established an additional regulation of the legislation in many areas. Thereby, the following by-laws were adopted:

• Rulebook on the manner, procedure and documentation necessary for obtaining consents from the Insurance Supervisory Agency in compliance with the Law on Insurance Supervision;
• Rulebook on the necessary documentation to be submitted along with the application for license obtaining;
• Rulebook on the form and content of the additional financial reports of the insurance undertakings/reinsurance companies;
• Rulebook on the content of the reports which the insurance undertakings/reinsurance companies regularly submit to the Insurance Supervisory Agency in accordance with the Law on Insurance Supervision;
• Rulebook on the minimum content of the records and the manner of registration, reservation and liquidation of claims by the insurance undertakings;
• Rulebook on the content of the reports which the insurance agencies, the insurance brokerage companies and the banks submit to the Insurance Supervisory Agency with deadlines and manner of submission.
  

By adopting these rulebooks, we expect to adjust the used standards within the operations of the insurance undertakings and intermediaries, to improve the quality and the content of the reports, as well as their uniformity.

XPRIMM: What can you tell us about the development of the distribution channels in 2012? How much of the premium production was intermediated by the insurance brokers? How much was realized through bank-assurance arrangements?
K.P.: In 2012, for the first time, one of the new insurance agencies is a commercial bank (Ohridska Banka AD Ohrid - a member of Societe General Group), which presents promotion of the bank-assurance as a new distribution channel in the country.

Relative to the structure of the distribution channels through which the sale of the insurance policies is conducted, there is no significant change in 2012 compared with 2011. In 2012, the biggest participation in the GWP was realized directly (51.93%), then, through insurance brokers (21.15%) and insurance agents (18.14%).

During 2012, the interest shown in the previous years continued by the establishment of 4 new insurance brokerage companies which sell policies on the insurance market. In the future, we expect growth in selling insurance policies for MTPL through this distribution channel. The reason is the increased establishment of new technical examination stations, and the one-stop-shop concept, the same establishers form insurance brokerage companies.

XPRIMM: Which were the most important factors that influenced the development of the market in 2012?
K.P.: In the non-life insurance segment there was a slight growth of 1.56% relative to the previous year. This is due, above all, to the minimal growth of only 0.36% in the MTPL insurance, as the most significant line of business in the Macedonian insurance market portfolio, and it is the main factor for its development. The slight growth in this line of business is a result of the economic crisis influence, which contributed to lowering the vehicles sale.

The most significant change in 2012 appeared in the property insurance (11.37%). There was an equal growth in the population segment and the corporative clients' sector. The factors contributing to the positive trends were: the introduction of new innovative products, the enlargement of the risk coverage, the development of alternative distribution channels and broader insurance awareness of the potential policy holders.

In the life insurance segment there was a growth of 20.35%, which continued the growing trend from the previous years.

XPRIMM: What are the insurance market prospects for 2013?
K.P.: In 2013 we expect stability on the Macedonian insurance market with indicators for its further development and improvement.

In the non-life insurance segment we expect a slight growth, while in the life-insurance one we expect the trend of two-digit growths to continue.

Also, as a result of the adoption of the Law on Voluntary Insurance in 2012 by the Ministry of Health, we expect a development of the health insurance market because the insurance undertakings will sell policies for the voluntary health insurance.

Relative to the prospects for the insurance market development in 2013, it is very important to mention the agricultural insurance because we expect a growth in this line of business due to the program adopted by the government of the Republic of Macedonia. This stipulates the subvention of 60% of the expenses on insurance premiums for claim reimbursement of primary agricultural production. Therefore, in the course of developing public awareness and financial literacy regarding the role of the insurance, ISA published a brochure for agricultural insurance whose goal is to promote the purchase of agricultural insurance policies as an effective way of agricultural produce protection from risks related to weather conditions, natural catastrophes, pests and diseases.