The price of MTPL insurance in Serbia will rise by 45% as of July 1st. By approving this measure, the National bank of Serbia has accepted a long lasting requirement of insurers that have been asking for the price to increase because the tariff was not high enough to cover all the liabilities arising from claims and other expenses that insurance companies had to pay in accordance with the law.

The Serbian Law on Compulsory Traffic Insurance allows insurance companies to determine MTPL premiums on their own, but the minimum price, determined by the Association of Serbian Insurers, is subject to approval of the National Bank of Serbia.

The last price change of the MTPL was approved in 2008. Since then, the Dinar devalued against the Euro by more than 40%: from RSD 81 in June 2008 to 116 RSD for 1 euro in 2014. During that entire time span the price of MTPL policies remained unchanged. Depending on the power of the engine, the current price of MTPL policies range from RSD 5,300 to RSD 15,600, while their value in euro fell from EUR 65 - 193 EUR in 2008 to EUR 45 -135 in 2014.

The Association of Serbian Insurers stated some reasons for the MTPL pricing increase. The Bonus Malus system, applied in Serbia in 2011, was influenced by the total premiums for motor liability insurance which is reduced by 6%, as only 1% of drivers in Serbia have a "malus" or punishment for the offense, and the vast majority use bonus or cheaper policy.

Insurers now have to pay a fixed fee of 5% of the gross collected premiums to the Public Pension and Disability Fund. It also reduces the premiums directly.

In 2004 Serbia's government adopted the new Law on Insurance and shut down a large number of insurance companies. Receivables from the Guarantee Fund on this basis amount to billions of dinars: the amount that must be cover by insurance companies, which pay a part of the funds collected from MTPL premiums to the Guarantee Fund. This cost is quite a burden on them.

Insurers expect another change that will put an additional burden on them: although MTPL policies are paid in dinars, the minimum sum insured for one claim`s event is related to a foreign currency (at the moment - USD). Starting October this year, the implementation of the new provisions of the Insurance Act will begin, according to which the minimum sum insured increases up to 10 times. The minimum sum insured for claims to persons at one claim`s event will be EUR 1,000,000, and for claims to property, EUR 200,000. The sum insured, which now amounts to USD 200,000 is valid for buses and commercial vehicles, and USD 100,000 for the other motor vehicles. While the Association of Serbian Insurers does not emphasize out as a key argument, many insurers seriously ask how they will be able to meet their obligations when they start applying those provisions.

Arguments for the price increase are, apparently, on the side of insurers. From the standpoint of the insured it still looks different, especially if we take into consideration that the average net monthly salary in Serbia is less than 400 Euros. Maybe everything would not be perceived as so bleak if this decision had arrived later: floods have caused considerable damage to the citizens of Serbia, estimated at around EUR 1 billion.