XPRIMM: How would you generally comment on the insurance market's evolution during the first part of 2017?
Klime POPOSKI: In conditions of political risks and corrections of the GDP growth, insurance companies successfully coped and marked a positive trend in the GWP. Non-life insurance companies realized GWP EUR 64.48 million, which is an increase of 1.23% over the previous year (62.7 million), while life insurance companies realized GWP pf EUR 10.47 million, an increase of 16.56% over the previous year (8.98 million).

XPRIMM: Are there any significant changes in your market's structure? (new players, in course or expected M&As, players leaving the market etc.)
Klime POPOSKI: As of the second quarter of 2017, we have 2 new insurance brokerage companies on the market (a total of 35), an unchanged number of insurance agencies (a total of 14), and already at the beginning of the third quarter the new insurance company Triglav Life started operating, which is the 5th life insurance company on the market (total 16, 11 non-life). Additionally, the interest for bank insurance continues, so in this period another bank received a license for performing insurance agency activities (a total of 4). Also, during this period, we have announcement for takeover of an insurance company.

XPRIMM: How did motor insurance lines perform in GWP terms? What can you tell us about the motor insurers' profitability? What are the main challenges experienced by this business segment in profitability terms?
Klime POPOSKI: MTPL line of business (LOB) realized EUR 30.98 million euros and grew by 5.77% over the previous year (29.29 million), while Motor Hull LOB realized EUR 6.29 million and recorded a slight drop of -0.29% (6.31 million).

MTPL LOB is profitable in this period measured through the combined ratio of 90.2% (loss ratio 46.7% + expense ratio 43.4%). Motor Hull LOB during this period recorded losses measured through the combined ratio of 117.6% (loss ratio 72.7% + expense ratio 45%). This result is also due to the consequences of a hail on the territory of Skopje in June 2017 that caused damages on many vehicles.

The MTPL most pronounced challenge is the trend of increase in the payment of intangible claims obtained in court proceedings. Otherwise, the overall motor insurance is characterized by high operating costs, including high costs for intermediation.

XPRIMM: How do you comment on the Nat Cat insurance covergae degree in your country? Is your government taking action to improve the Nat Cat protection?
Klime POPOSKI: Luckily, we didn't experience economic damages from heat. In our country, the most emphasized agriculture risks are early spring frosts, floods and hail. Unfortunately, due to the still low insurance rate, we illustrate the size of the damages from the previous two years, which are estimated by the state authorities. Namely, in the course of 2015, the floods in 44 municipalities in the country stroking the agricultural production, with damages estimated up to EUR 13.6 million. In the past 2016, damages are estimated at around EUR 27 million. We still do not have official information for 2017 damages, except for the information that early spring frosts caused damages in 32 municipalities to about 13,408 agricultural holdings. And as a result of heavy rain, electric discharges followed by a strong hail resulted in a complete destruction of agricultural crops in 4 municipalities in the country. The state has a program that partially supports the consequences of the elementary disasters.

The insurance against catastrophic risks is only marginally covered by voluntary insurance offered by insurance companies, including the products of Europe Re.

For this purpose, the Government of the Republic of Macedonia, in cooperation with the World Bank Project (SEEC CRIF), are considering options for introducing certain mandatory forms of insurance against catastrophic risks for households, as well as insurance of the state budget regarding the payments coming from the program supporting the consequences of the elementary disasters.

XPRIMM: Please describe in short the insurance brokers' business status in your country.
Klime POPOSKI: The life insurance companies' most important distribution channel is the insurance brokerage (IBC) with 50.16%, with the dominant participation of one IBC. However, there is a downward trend in the share of the IBC as a result of developing direct sales and increasing participation of the bank insurance. The non-life insurance dominates the direct sales channel with 56.91%, while the insurance brokerage companies participate with 21.12%, mostly in the MTPL business. The insurance agency companies participate with 10% and equally sale MTPL and property insurance.

XPRIMM: Considering the market results recorded in the first half of the year, what are your expectations for the year end?
Klime POPOSKI: I expect that the positive trend in the both life and non-life insurance will continue, with an emphasized trend of increasing the Unit-link life insurance and reducing the relative participation of IBC in the intermediation.