The "Challenges and Practice of Insurance Supervision in South East Europe" Conference - Main conclusions

Insurance professionals from all over Europe gathered on Tuesday, 17 April, in Zagreb, Croatia, at the "Challenges and Practice of Insurance Supervision in South East Europe" conference. The event represents a unique forum for an open dialogue between insurance companies and insurance supervisory authorities of the SEE region.

The debates will focus on a few main themes, including the Insurance Distribution Directive (IDD), the Packaged Retail and Insurance-based Investment Products (PRIIPs), Product Oversight and Governance (POG), as well as Solvency II, and the current situation and trends in insurance supervision in the SEE region.

Ante ZIGMAN, HANFA - Croatian Financial Services Supervisory Agency, Croatia
  • Economic growth in Croatia was moderate, but a mild growth of the insurance industry was recorded.
  • GWP grew 4,4% accounting for more than 9 billion Kuna. Non-Life policies dominate the market and obtained a growth of more than 5%, while the life market stagnated. The share of life insurance fell under 1/3, so this shows that we need to educate the clients more.
  • There is an increasing presence of Unit-linked policies, given the low interest rates offered by the banks.
  • A lot of innovative products have emerged.
  • We will amend our national insurance act and implement the IDD, hence increasing the quality of the services offered to consumers and also help with the professionalisation of the distributors.

Stefano DE POLIS, IVASS, Italy
  • IDD and Solvency II are two faces of the same coin, as IDD complements SII by spotting risks involved in the conduct of business.
  • The Directive tries to align the interest of insurance companies with consumer needs.
  • Main causes for poor conduct of business: information asymmetry, product design and risk culture.
  • From the market players' perspective, the key success factors for IDD implementation are the ability to integrate processes and procedures and information flows and the ability to develop a culture of fair treatment of consumers.
  • We acknowledge the fact that it might not be easy for insurers to perform an in-depth review of processes/procedures/information in time.

Alexandru CIUNCAN, IRSG-Insurance and Reinsurance Stakeholder Group of EIOPA & APPA-The Association for Insurance Promotion, Romania
  • The IDD brings principles to the distribution of insurances and to the insurance value chain. It might also bring, some argue, too much red tape and make everything a little too complex and costly. However, the intention is definitely good here. But how have we come to that? Are the consumers to blame?
  • For the first time, thanks to the Product Oversight and Governance Requirements, which are a key part of the IDD, consumer protection is embedded in the insurance product itself. 
  • It is the first time when insurance manufacturers have to design, use and review processes for the approval of new products or for products that have been significantly altered.
  • The product approval process must specify the identified target market and also if the distribution strategy is consistent with this market.
  • Actually, POG is mostly about how insurance products meet the needs of the specific target market.

Michael BRANDSTETTER, VVO-Austrian Insurers' Association, Austria
  • Solvency II is an internal management project. IDD is external, with a lot of potential for legal consequences.
  • Austrian implementation Act was approved on 21 March in Parliament and published in April 2018 in the Official Journal.
  • Everyone is currently very busy to implement the IDD. But we also need to learn some lessons after the IDD implementation.
  • The number of disclosures has increased considerable.
  • The European Commissions' legislative proposal on the Review of the Motor Directive might come before the summer of 2018.

Michael THEILMEIER, GEN Re, Germany
  • Corporate governance includes all rules and regulations of a certain organisation. 
  • Compliance within corporate governance is more than just legal behaviour - it is as well about fair and ethical business conduct.
  • A regulation spiral is ongoing. "Regulation is eating the World"
  • Sanctions in the reinsurance world play a much bigger role than we might think at the moment.

Maja PARNARDZIEVA-ZMEJKOVA, ISA-Insurance Supervision Agency, Macedonia
  • Motor insurance represents over 46% from the total of GWP in Macedonia.
  • Life insurance is about to take over the Property segment, which is currently the second biggest type of business on the Macedonian insurance markets.
  • 57% of all non-life premiums are sold directly by insurance companies.
  • We are very confident and satisfied with the prudential indicators in Macedonia. We have 4 times more capital and reserves than required.

Calin RANGU, ASF-Authority for Financial Supervision, Romania
  • 2,33% was the ratio between total assets of insurance undertakings as percentage from the Romanian GDP.
  • GWP in 2017 was more than 2,12 billion EUR, up by 3.5% in comparison with 2016. 
  • The average MTPL premium decreased in 2017, reaching 152 EUR vs 180 EUR in 2016, as a consequence of the new dedicated MTPL Law. There are 4.5 million such policies in force.
  • All companies have good levels of MCR and SCR.

Gorazd CIBEJ, AZN-Insurance Supervision Agency, Slovenia
  • GWP reported in 2017 2,2 billion EUR (preliminary data)
  • Key risks of the market from regulatory perspective include macroeconomical risks, market and underwriting risks.
  • The IDD is in the transposition phase - as amendments of the Insurance act are being done. The time of adoption is still uncertain.
  • Despite initial concern about the IDD introduction, the industry has in general perceived it as positive - easier mitigation or risk. The industry is well prepared. But of course its implementation will pose some challenges on the industry and supervisory side.

Ermina JAHIC, Insurance Agency of Bosnia and Herzegovina
  • The basic problem we encounter is that the Ministry that has the obligation to submit draft legislation related to insurance failed to do so.
  • Laws are not passed at the same by different legal entities, in example.
  • The Draft Act on compulsory MTPL will be voted tomorrow in the top legislative body of the Federation, but this draft was not submitted to our Agency previously.
  • We are looking to harmonise our legislation with EU Acquis.

Biljana PANTOVIC, Insurance Supervision Agency of Montenegro
  • With respect to Montenegro, we had, overall, multiple challenges, as our insurance market is quite young. We have a new insurance supervisor and also a National Bureau, which is very important.
  • We have also become members of the IAIS and have partly implemented the Motor Insurance Directive.
  • Montenegro should enter the European Union in 2025.

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