Yet the MTPL class is not only the main business generator, but also the theater of most challenges. One of the most difficult issues is related to the federative structure of the Bosnian market and the inconsistencies between the regulations governing the insurance markets of the two administrative entities: Republic of Srpska (RS) and the Federation of Bosnia and Herzegovina (FBiH). Emina JAHIC explained to us that "while the Law on Obligatory Traffic Insurance has been effective in RS from October 2015, FBiH has not yet adopted a new, similar law". Also, given that the market is not liberalized, MTPL prices are established based on the basic premium. Recently, the Insurance Agency of RS decided to lower the basic premium by 10%, "which will certainly cause market disturbances in both insurance company business operations and the equal market conditions for all participants, which is the main AZOBIH competence." The forthcoming tariffs liberalization process will for sure add to the market turbulence.
One should also note that, despite the high exposure of the country to extreme weather events, the property insurance business is declining. "This year's exceptionally rainy weather caused the producers and farmers to suffer huge losses. The economic situation in the country is not the best and citizens do not think insurance is a necessity, but a luxury. Since it is one of the riskiest forms of insurance, premiums are extremely high, premiums covering the risk of loss caused by weather issues remain unattainable for many in the population and farmers. On the other hand, the role of the state in creating a strategy for risk prevention from extreme weather conditions and the involvement of insurance companies in preventing large losses is still not recognized to the right degree," commented Emina JAHIC.
Access www.xprimm.com and download the 1H2018 Bosnia-Herzegovina insurance market statistics.