The results of a stress test, conducted by Insurance Supervision Agency, indicate that Montenegrin non-life insurance companies have satisfactory resilience and capital stability in conditions of a hypothetical drop in third party liability insurance premiums of 5%, 10% and 15%.

Although all analyzed scenarios led to a decrease in the profitability of companies, expressed through a decrease in gross and net operating results, ROE (return on equity) and ROA (return on assets), as well as a moderate decrease in technical reserves and liquidity, the capital adequacy of insurers remained stable and above the minimum values established by law.

The stress test of Montenegrin non-life insurance companies, conducted by the regulator, focused on assessing the impact of a drop in the price of compulsory third party liability insurance for vehicle owners and users on the financial stability of non-life insurers, considering the importance of this LoB in the overall structure of their premium income.

The obtained results confirm that the non-life insurance market in Montenegro currently demonstrates resilience to market shocks in the MTPL segment, while maintaining stability of technical reserves and the sector’s overall solvency, the regulator said.

The full stress test report can be found here.