"MTPL is the most complex product of the market, is providing social security and it is in the public interest," said Sergej SIMONITI, President, Insurance Supervisory Agency, Slovenia in Almaty.

He stressed out that the Slovenian Insurance Supervisory Agency is ready to assist Central Asian countries in order to improve, develop and increase the national penetration degree in insurance. SIMONITI has dedicated an important part of his speech to one of the most challenging operations that the supervisory body of an emerging insurance market may have to manage: the MTPL market's liberalization.

"The EU position is that there should be competition on MTPL market, and that it should be liberalized," he said, adding that to regulate or not regulate the MTPL market is a political decision.

SIMONITI explained that in Slovenia the MTPL market's liberalization was successfully enacted in 1997, thus being a good case study for any emerging market.

One of the main problems is that when deregulation is made the prices go high (in Slovenia at the beginning the average price went up by 40%). But after the MTPL liberalization, the number of accidents decreased, due to improved roads, quality of vehicles, high penalties imposed by police - which overall helped stopping this trend. Yet, "deregulation works only if it is replaced by competition - you should not liberalize the MTPL market if the players are not financially ready and stable," SIMONITI warned. Also, there are a serious number of threats related to MTPL liberalization: "lowering the premiums, reduced claims settlement standards, major solvency problems, decrease reputation, stagnating development."

According to Sergej SIMONITI, the main steps in order to liberalize the MTPL market are:

• Build-up (outsource) expertise
• Improve reserving standards
• Remove commissioning regulation
• Introduce transparency / improve reporting
• Audit data acquisition & processing
• Check:
• Actual profitability of MTPL
• Solvency positions
• Market structure (concentration, share of motor)
• Financial strength of qualified shareholders
• Liberalise MTPL at increased reporting depth/frequency
• Normalize reporting frequency