First-Ever “Serbian Insurance Days”

First-Ever “Serbian Insurance Days”

The Association of Serbian Insurers (ASI) organized a conference “Serbian Insurance Days”, bringing together some 200 participants, comprising domestic and international experts in the fields of insurance and reinsurance, representatives of regulatory authorities, state agencies and insurance companies. The gathering took place between November 28 and 30, 2017. During those two days, we managed to hold round tables on the Law on Compulsory Traffic Insurance and on agricultural insurance, involving 20 participants. The most current topics related to the Solvency II Directive, life insurance and bancassurance were addressed in ten presentations given by domestic, regional and international experts. This created an opportunity for Conference participants to be presented with an overview of the current state in the insurance sector in Serbia and compare it with standards applied in the region and EU member states, as well as to become familiar with amendments to insurance regulations and supervision in the insurance sector. In her introductory address, Governor of the National Bank of Serbia Jorgovanka Tabakovic stated that the biggest challenge at that moment was how to improve regulations governing compulsory traffic insurance. Governor Tabakovic noted that all market participants must reach a consensus about the most sensitive issues since that was the only way to ensure full application of the regulation. As she explained, the regulatory objective of the Serbian insurance sector and its supervision was to provide a framework for implementing the EU Directive Solvency 2. Jorgovanka Tabakovic added that certain elements of the Solvency II regulatory framework had already become integral part of the Insurance Law presently in force and that the goal was to ensure full implementation of the legal framework in question along with new regulations by 2020 or 2021. In particular, she expressed her support for the activities of the Association of Serbian Insurers designed to educate on and raise awareness of the importance of insurance. One of the topics discussed during day one of the gathering was implementation of the Solvency II Directive in the Serbian insurance market and the conclusion was that it would ensure greater protection and provide security to the insured. It would lead to harmonization of Serbian regulations with those of EU member states and improve financial stability as well. A note of caution was sounded that that would result in higher capital requirements on insurers and possibly to consolidation of the insurance market. What was also highlighted were the importance and share of motor third-party liability insurance in the domestic market of non-life insurance products. The message of the round table devoted to this topic was that the new Law on Compulsory Traffic Insurance, currently being drafted, had to provide solutions complying with the best European practice to ensure the stability of motor third-party liability insurance market, considering in particular stricter regulatory requirements imposed by the Solvency 2 Directive. As regards life insurance, the previous period has seen a shift from the traditional concept of life insurance products in which solely the insured determined the amount of funds they invested and the duration of contract to a modern concept. This new concept involves decision-taking by the insured on how those funds are to be placed and therefore taking risk for such decisions. A presentation on this issue emphasized that there was a lot of room for further development of the life insurance industry. Presentations concerning circumstances surrounding Serbian life insurance industry underlined that there was scope for further development reflected in a relatively small share of premiums in the national GDP compared to the majority of European countries. However, this future development could not take place without any obstacles - low consumer buying power and insufficiently developed awareness of insurance on the one hand and an overall fall in interest rates in the financial market on the other accounted for two main challenges faced by insurance companies. Day two focused on the issue of bancassurance and attention was drawn to the risks such financially valuable types of cooperation might pose to insurance companies, manifested primarily as intensive and long-term negative financial consequences due to strong competition and insufficient focus on the risk assessment process by insurance companies. Microinsurance was introduced as a path that might bring about a rise in insurance premiums, in particular in markets where the insurance sector is insufficiently developed. This raised the issue of whether or not it could be one of solutions for developing certain types of insurance in our market as well. Conclusion of the second round table was that there was no alternative to agricultural development, although management of numerous risks to which agriculture was exposed had to be implemented. Important parts in this process would be played by both the insurance industry and the state, which, as stressed using examples from almost all countries, in particular the developed ones, were inseparable factors in the process.

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