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ISTANBULMARCH 2012

ASSOCIATION OF SERBIAN INSURERSBackground

• Association of Serbian Insurers is the legal successor of the Association of Insurance Organizations of Yugoslavia, which was established by Insurance organizations, in February,1968.

• The Association of Serbian Insurers is a non-profit organization engaged in common interest affairs of the Association’s members and their promotion and representation, as well as development of the insurance business and education in that respect; It also conduct activites concerning public authorizations stipulated by the Law; The Association initiates enactment and amendment of the Laws and other Regulations from the area of insurance;

ASSOCIATION OF SERBIAN INSURERSBusiness activities

• Green card – within the public authorizations, the Association proscribes and prints Green Card forms, coordinates the work of Insurance companies relating to international MTPL and claims arising out of the use of motor vehicles in the country and abroad, guarantees third party claims settlement, handles the claims, etc.

• Guarantee Fund– establishes the level of contributions funded by Insurance organizations, assesses, handles and settles claims and recourses

• Representation of the Insurance organization before state authorities and other authorized bodies in the country and before international Insurance organizations

• Proposes and implements the Code of conduct in affairs concerning the Insurance industry

of Serbia

• In virtue of the Mandatory Traffic Insurance Act Information Centre is established with the Association of Serbian Insurers, intending to achieving the most efficient settlement of claims in case of damages arising out of the use of motor vehicles and application of the Bonus-Malus system.

ASSOCIATION OF SERBIAN INSURERSMembers

• On 31st December, 2011. there were 27 companies operating in Serbia, 23 of them being members of the Association of Serbian Insurers

SERBIAINSURANCE MARKET

Insurance companies

Number of companies by type of insurance business

year life and non-life non-life life total

2005 8 8 1 172006 7 6 1 142007 6 8 4 182008 6 9 6 212009 6 9 7 222010 6 9 7 222011 6 10 7 23

• On 31st December, 2012, 4 companies were engaged in reinsurance

Total gross insurance premium for the period from2005 to 2010

2005 2006 2007 2008 2009 20100

100000

200000

300000

400000

500000

600000

700000

TotalNon-lifeLife

( u 000 € )

Insurance premiums of the most frequent types ofinsurance for the period from 2005 to 2011

Share in total insurance premium of the most frequent insurance types for the period from 2005 to 2011

Concentration of insurance premiums for the period from 2005 to 2011

Code Type of insuranceTotal premium

(000 €)Share in total premium

01 Accident insurance 34,192 6.23%02 Voluntary health insurance 9,937 1.81%03 Motor insurance 73,897 13.47%04 Rail vehicle insurance 2,066 0.38%05 Aircraft insurance 1,218 0.22%06 Ship (vessel) insurance 868 0.16%07 Goods in transit insurance 8,427 1.54%

08Property insurance against fire and other perils

46,106 8.40%

09 Other property insurance 75,352 13.74%10 MTPL 182,604 33.28%11 Aircraft Liability Insurance 1,553 0.28%12 Vessels Liability Insurance 109 0.02%13 General liability insurance 10,112 1.84%14 Credit insurance 425 0.08%15 Warranty insurance 710 0.13%16 Financial loss insurance 1,269 0.23%17 Legal expenses insurance 114 0.02%18 Travel assistance insurance 8,852 1.61%19 Other non-life insurance 16 0.00%20 Life insurance 78,889 14.38%21 Annuity insurance 4,982 0.91%

22Supplementary insurance along with life insurance

6,862 1.25%

23 Voluntary pension insurance 0 0.00%24 Other types of life insurance 48 0.01%

  Total non-life insurance (from 1 to 19 ) 457,830 83.45%

  Total life insurance ( 20 to24 ) 90,780 16.55%  TOTAL 548,611

Insurance premiums by types of insurance in 2010

Premium share of the top five companies

TOTAL

DDOR

1. DELTA GEN. 25,55 25,24

2. WIENER ST. 24,20 25,20

3. GRAWE 19,34 21,28

4. DUNAV 8,20 7,47

5. UNIQA životno 7,64 7,50

2011 2010

84,92 86,69

1. DUNAV 32,00 29,59

2. DDOR 20,15 21,08

3. DELTA GEN. 17,45 17,18

4. UNIQA než. 6,19 5,87

5. WIENER 5,31 5,39

2011 2010

81,11 79,11

1. DUNAV 28,2425,93

2. DELTA GEN. 18,73 18,51

3. 17,88 18,50

4. WIENER ST. 8,30 8,67

5. UNIQA neživot 5,21 4,90

2011 2010

78,36 76,51

NON-LIFE LIFE

Motor Third Party Liability

Number of MTPL policies and total premium by companies in 2011

No. Company Number of MTPL policies

Total premium(000 €)

1 AMS 128.202 10.3672 AS 19.223 1.7883 Basler 2.914 2474 DDOR 295.991 26.9155 Delta Generali 394.630 35.4766 Dunav 482.305 43.7247 Milenijum 107.190 9.8938 Sava 94.166 8.6959 Takovo 225.332 19.858

10 Triglav 150.995 13.61211 Uniqa non-life 99.425 9.02912 Wiener 25.838 2.590  TOTAL 2.026.211 182.194

Share of MTPL premium by companies in 2011

CONCLUSIONSAs for the year 2011, one can conclude that the situation on insurance market and the trend of development were positive, although slightly slowed down.

(QIII 2010 – QIII2011)

• Balance sum in insurance sector was increased for 5,6%

• Capital was increased for 8,8%

• Technical reserves were increased for 4,2%, with the total coverage of technical reserves of Life and Non-

life insurance. Life insurance increased from 63% to 83%, and Non-life insurance increased from 21% to

27%, which is the result of investing into15-year bonds of the Republic of Serbia.

• Total insurance premium is 3% higher y-o-y

• With 84,2% of share in total premium, Non-life insurance is still dominant. The Motor vehicles liability

insurance premium and the Property insurance premium recorded growth, whereas Casco Motor vehicles

insurance premium recorded drop.

• Life insurance increased its share in total premium from 14,8% to 15,8%.

• Market concentration measured by Herfindahl Hirschman index is moderate.

ASSOCIATION OF SERBIAN INSURERS

GUARANTEE FUND

GUARANTEE FUND• GF was established in 1997, as an integral part of the Association of Insurance Organizations of Yugoslavia.• GF was formed with the purpose of offering economic protection to third parties that sustained damage

caused by uninsured and unknown vehicles, and vehicles bearing insurance issued by Insurance companies against which the bankruptcy proceedings was initiated.

• GF makes most of its incomes from regular contributions paid by Insurance companies and from collection of recourse receivables.

• Legal time frame for handling and settlement of the claim is 90 days from the day of claim submitting. In regular procedures, claims are being processed immediately, but the court case can remain in proceedings for more than several years, depending on the case complexity, value of dispute and the level of disagreement between the prosecutor and the defendant

GUARANTEE FUND• For the accidents that occurred in a period from 2005 to 2011, GF paid out:

Year TOTAL PAIDEUR

UNINSUREDEUR

% OF THE UNINSURED IN

TOTAL CLAIMS

UNKNOWN EUR

% OF THE UNKNOWN

IN TOTAL DAMAGE

BANKRUPTCY EUR

% SHARE OF BANKRUPTCY IN TOTAL DAMAGE

2005 5.377.293 1.536.993 28,58 353.844 6,58 3.486.456 64,84

2006 5.951.188 1.377.424 23,15 469.333 7,89 4.104.430 68,97

2007 5.303.973 1.573.675 29,67 502.359 9,47 3.227.940 60,86

2008 7.952.652 1.734.203 21,81 842.676 10,60 5.375.774 67,60

2009 10.352.408 2.191.455 21,17 1.049.704 10,14 7.111.248 68,69

2010 6.804.383 2.075.126 30,50 909.174 13,36 3.820.083 56,14

2011 6.758.419 2.319.555 34,32 959.083 14,19 3.479.781 51,49

INFORMATION CENTREOF THE

ASSOCIATION OF SERBIAN INSURERS

INFORMATION CENTRE

Information centre is organized in conformity with the Mandatory Traffic Insurance Act, with following key features: • Unification of all MTPL insurance data, for all licensed vehicles in Serbia

• It is a unique data base containing full set of information on issued insurance policies and registered claims with full control of the issued insurance policies;

• Facilitation of implementation of Bonus Malus system

• Web portal – customer service with an objective to offer prompter insight into the accident’s details and easier settling of the claim, as it offers information about vehicles registered in Serbia which were involved in car accidents on the territory of RS, as well as information relating to claimant and guilty party.

• It is planned to carry on with constant development of the IC e.g. developing of the module for fraud revealing in MTPL insurance and to integrate it into the similar EU systems

BONUS/MALUS SYSTEM• Applied since 1st September, 2011.• The system of the level of the premium for MTPL Insurance for vehicles, by applying of the appropriate

premium degree, • If there was no damage recorded in the previous year, the price of the insurance policy will be reduced for

5%, two years without the damage bears the bonus of 10%, and for three years the bonus reaches the maximum of 15%.

• Person that causes one car crash in a year, will pay 50% higher policy, 100% for two crashes, while three and more crashes increase the insurance for 150%.

Premium degree (i)

Coefficient of the premium degree (ki)

1 0,852 0,93 0,954 1basic5 1,156 1,37 1,58 1,79 1,9

10 2,111 2,312 2,5

Less than 3% of the drivers in Serbia gets malus!

PERIODIC MOTOR VEHICLE INSPECTION (PMVI)

MAJOR PROBLEM ON THE INSURANCE MARKET

MODEL OF MOTOR VEHICLE REGISTRATION IN SERBIA

PMVIINSURA

NCE POLICY

TAX PAYME

NT

OBTAINING OF REGISTRATION CERTIFICATE IN

THE POLICE

More than 85% of the MTPL insurance policies are sold via PMVI Agencies, hence the sale is practically relocated from Insurance companies

PMVI• The price of mandatory vehicle insurance in Serbia is unique, so there is no

competition among Insurance companies in that part.• Comissions went to even 30% and 40% of premium!• At the beginning of the year 2011, there were roughly 800 agencies, at the end of

September 1120, and on 31st December 2011, the figure went up to 1375, while the official estimations indicate that 2 million vehicles in Serbia require only up to 200 PMVI Agencies.

• The PMVI service itself is mainly free of charge although according to some calculations it should cost EUR 22. That brings the Government to the condition of sustaining a loss – starting from VAT loss which is almost EUR 10 million, all the way to the total loss that the Government sustains is several times higher, and more than 60 million eur are „drawn out“ of legal money flows.

• The second problem is the lack of control over PMVI procedures which are even performed illegally – without having the car actually driven to the PMVI facility. It causes poor conditioned cars to be driven with no limitation - almost one fifth of car accidents is caused by technical irregularity of the vehicle. In Serbia, during the last ten years, car accidents took the following toll:

dead ................................ 9.000 personssevere injuries ................ 180.000 persons2/3 ................................... remained

disabled• In 2010, 650 people lost their lives, and some 17.000 were injured. That makes 89

people out of million (European average is 78 casualties out of million, and on Malta, which is said to be „the safest“ , the number is 37)

POSSIBLE SOLUTIONS

• Change in car registration system – license plates should be issued each 7 years, and PMVI should be performed annually.

• More thorough and stricter control of PMVI agencies and their commissions.

• Introduction of mandatory minimal PMVI service price

• Enabling of personalization of registration (license) labels in the branch offices of Insurance companies.

PROBLEMS WITH PMVI SYSTEMHow Insurance Companies in Serbia lose up to 60 milions € in commissions

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Thank you for your attention