xprimm: How would you characterize the Serbian insurance market evolution in the current year, mainly in terms of opportunities and challenges?
Vladan MANIC: Despite the economic crisis, the Serbian insurance market is stable and shows moderate, but positive trends of development. The total premium in the third quarter this year amounted to 440 million euros, an increase of 3% compared to the same period last year. This is a relatively modest growth, but we are satisfied, because the second-quarter growth continued and even slightly increased, and the achieved percentage is higher than the GDP growth.
Balance amount of insurance companies has been increased by 5.6% compared to the third quarter last year, and a capital increase of 8.8% has been achieved. In the field of legislation, more than 30 regulations have been adopted, through new laws or changes to the existing ones, which help us approach the European Union. All these are positive results.
The only thing we cannot be satisfied with is the fact that the structure is still dominated by non-life insurance, making up 84.2% of the total premium, while the share of life insurance has increased at a modest 15.8%.
It is faster development of life insurance that will be the biggest challenge for the next year. What we, as an Association and as someone who represents the entire industry advocate, is the introduction of tax incentives for life insurance and the introduction of collective life insurance, because currently the employer has no tax cuts, and no legal possibility for payments to employees, but each individual should buy a policy. We also advocate for the introduction of new compulsory insurance, for example insurance in agriculture, insurance to cover consequences of fires in residential buildings and insurance against natural disasters.

xprimm: The Serbian Government has recently adopted the Law on Amendments to Insurance Law. What are the main aspects of the insurance legislation amended by the new Law? What is the potential impact of this new regulation on the insurers' activity?
V.M.: The Serbian government has decided to extend until the end of 2012 the deadline for the separation of companies into those that deal with life insurance and those concerned with non-life insurance and forwarded the proposal to the Serbian Parliament for adoption in emergency procedure. We commend this decision and the announcement of moving the deadline, because currently it is not a good time to separate and it would bring more harm than good.
After all, adoption of a new Law on Insurance, which will make further harmonization with the EU, was also announced for the next year, so we hope that the issue of separation of life and non-life insurance will be resolved in a better way. Otherwise, Serbia currently has six composite companies engaged in both life and non-life insurance.

xprimm: Motor insurance is definitely playing a very important role in your market. Which developments do you see in the MTPL sector? Also, how do you think the Casco insurance will develop?
V.M.: Automobile liability insurance still has a leading position in the portfolio of property insurance with a share of total premium of 31.8%. Compulsory insurance, which by the end of 2008 recorded the most significant increase in share, last year decreased by 0.7% and in the third quarter of this year by 0.8% compared to the same period last year, but with a slight increase in premiums of 0.3%.
Such developments in the third quarter this year were influenced by reduced household spending and reduced purchase of cars, which automatically led to a decline in demand for insurance products, primarily the hull insurance. It is expected that the participation of this type of insurance in the total portfolio in the future also will depend primarily on the sale of vehicles and support of banks to the purchase through loans and leases.
The above-mentioned decrease is not drastic and I expect the share of these groups of insurance to maintain at last year's level. We can expect significant growth after reducing the effects of the global financial crisis and raising the purchasing power.
Possibly real decrease in the total portfolio would be possible only if the life insurance has developed significantly faster.

xprimm: How consistent is the presence of the foreign players in your market?
V.M.: The share of foreign insurance companies is significant and stable. Regarding the ownership structure, of the 27 insurance companies, who are currently operating in Serbia, 20 are foreign-owned. By entering the market and obtaining green field licenses (12 since 2005), the foreign-owned insurance companies in the third quarter of 2011 recorded, as before, the overwhelming share in the life insurance premium of 91.8%, non-life insurance premiums of 59.3%, total assets of 66.8%. Of the total number of employees in the insurance sector, 65.4% work in foreign-owned companies.

xprimm: Your association has recently become associate member of CEA. What are your most important objectives in this capacity?
V.M.: Joining the CEA is considered one of the major brake-throughs the Association of Serbian Insurers has made lately. It is rightfully attributed to the Association new management's strategic platform which is well supported by the entire local industry. It is in fact establishing of the high quality channel of communication with the very focal point of the insurance business in Europe. We now have access to the variety of CEA resources, which is making us much closer to achieving of some of our basic goals - promotion of Serbian insurance market in an international environment and training and education of the local staff in accordance with the highest standards available. Also, we are pleased to have the access to issues related to European legislation related to insurance, which gives us broader prospective when dealing with local legislation and adjustment of same to European one.

xprimm: Thank you.