STATISTICS: SERBIA, FY 2014: Driven by the life insurance growth and slightly affected by the May floods' losses

The Serbian insurance market ended 2014 with a 8.4% increase in GWP, to RDS 69.4 billion. In European currency, given the about 6% depreciation of the Serbian Dinar, the market growth was of only 2.7%, to EUR 573.8 million. "Serbian insurance market continued exhibiting similar trends identified in the previous period," said Nikola RODIC, Head of Actuarial and Statistic Division, Insurance Supervision Department, National Bank of Serbia. "Overall stability of the insurance market was preserved, while insurance companies continue to face cost pressures in their operations."

"Premium growth was driven by developments in the life segment, which recorded a double digit growth rate of 13.8% (n.r. in RDS). Non-life premium recorded a more modest growth rate of 6.9%, mainly thanks to a significant increase of the MTPL premium. Balance sheet total also recorded an increase, with technical provisions reaching almost one billion euro thanks to a robust growth rate of 21.6% y-o-y. Overall stability of the insurance market was preserved, while insurance companies continue to face cost pressures in their operations," mentioned Nikola RODIC.

Life insurance, accounting for about 23% of the market portfolio, recorded a 7.85% growth rate (in EUR) in terms of premium, but indemnities paid for this segment also went up by ~18%. "Over the past ten years, life insurance in the Serbian market had a realistic growth based on traditional forms of insurance. This growth is now slowing down as contracts expire, including those involving mixed life insurance, which significantly reduces the result; an orientation toward products with one-time payments can be observed, but this has a limited range and cannot be implemented continuously. Therefore, it is necessary for the state to encourage the development of life insurance by undertaking economic measures," Branko KRSTONOSIC, CEO of Wiener Stadtische Insurance Belgrade told XPRIMM.

The non-life lines saw an overall stable situation, with an only 1.3% increase in GWP, in European currency. However, among the non-life lines' evolution there are significant differences, with the MTPL class performing best (9.95% growth y-o-y in terms of GWP and a 14% decrease of the paid claims).

According to NBS, "MTPL is still the dominant segment of the Serbian insurance market, accounting for 32.7% of total premium in 2014 and with more than 2 million policyholders. Premium increase in this segment had a major impact on the whole non-life portfolio, especially having in mind subdued growth recorded by other non-life lines which are not compulsory. Significant increase in the insured sum for MTPL based on implementation of new regulation in the second half of 2014 is expected to further improve the level of protection of injured third parties, and enhance it significantly."

However, from the business point of view, the MTPL need significant improvements, as Mr. KRSTONOSIC stated: "In Serbia MTPL prices are administered and there are no price wars as is usually the case in initial stages of liberalization - when the prices fall. What characterizes our market is the struggle in terms of cost: insurers attain premiums through intermediaries, who on behalf of clients choose an insurer, namely the one that offers the highest commission. Virtually, someone else always determines where every vehicle owner will purchase insurance, which is certainly not allowed in other sectors. Why do vehicle owners permit that? Because brokers offer various benefits - for instance, they often provide technical certificates for vehicles without factual determination or even free inspections. Vehicle owners have the illusion that they are receiving benefits; however, for the value of the premium the cost would be even lower. This is a systemic deformation in the liability insurance market - our company does not perceive this as a challenge, which we have proven with our market share in this area of ​​below 2%. In such a situation, this type of insurance cannot be profitable, regardless of the fact that profit may be observed in the balances of insurers who have a dominant share of liability insurance premiums. The quality of these balances should be addressed by whoever is competent in this area."

Finally, it should be remainded that in 2014 the most important insurance related event in Serbia was the dramatic floods episode during the summer. It affected the insurers' balance in a certain degree, but it certainly population and many businesses in a dramatic measure as due to the low insurance coverage, very little of the total losses was covered by the insurance sector." Property insurance is the second most important segment of the Serbian non-life insurance market, accounting for more than a fifth of total premium in 2014. Property insurances have recorded modest growth rates for years, and this tendency continued in 2014 with property insurance premium having a growth rate of 2.2% y-o-y (in RDS). Importance of property insurances was highlighted in Serbia thanks to the effects of devastating May floods. Estimated total economic losses of these floods came to staggering 1.5 billion euro, which represents 4.5% of Serbia's GDP. Low penetration of insurance was evident in the amount of insured losses that were less than 40 million euro. Majority of insured losses were recorded in the property lines, with reinsurance covering significant part of the losses."

The full versions of the interviews with Mr. Nikola RODIC, Head of Actuarial and Statistic Division, Insurance Supervision Department, National Bank of Serbia and Mr. Branko KRSTONOSIC, CEO of Wiener Stadtische Insurance j.s.i.c. Belgrade will be soon available on xprimm.com.

Access www.xprimm.com and download the FY2014 Serbian insurance market statistics.

Market portfolio (in EUR and RSD):
  • Gross written premiums
  • Paid claims
  • Growth rates
Market rankings (GWP/Claims/Market shares - in EUR and RSD):
  • Total market ranking
  • Life insurance ranking
  • Non-life insurance ranking

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