The current challenges for insurance markets and supervision in the Central, Eastern and South Eastern European region, debated in Vienna

Insurance professionals, as well as representatives of the local and regional authorities, gather on 12-13 October in Vienna, Austria, at the "Current Challenges for Insurance Markets and Supervision in the Central, Eastern and South Eastern European region" Conference.

The future of insurance business supervision after Solvency II, solutions for implementing a liberalized motor insurance market, Big Data and its possible uses for mitigating climate change, as well as consumer protection are just a few of the topics analyzed during the event.

Helmut ETTL, Executive Director, Austrian Financial Market Authority, Gabriel BERNARDINO, Chairperson, European Insurance and Occupational Pensions Authority, Othmar EDERER, President, Austrian Insurance Association, Helmut GRUNDL, Managing Director, International Center for Insurance Regulation, Klime POPOSKI, President of the Council of Experts, Insurance Supervision Agency of Macedonia, Nicoleta RADU-NEACSU, Director General, Insurance Pool against Natural Disasters (PAID) Romania, and Michael BRANDSTETTER, Austrian Insurance Association are just a few of the well-known speakers participating at the event.

Helmut ETTL, Executive Director, Austrian Financial Market Authority
  • Successful multilateral supervisory cooperation is important for us all - as this contributes to consumer protection and market confidence. This is one of the most important reasons for organizing this conference
  • Motor insurarances and catastrophic risks are amongst the major topics of interest for the region
  • The Austrian insurance market has had important foreign relations in Europe but in particular in the CESEE region. Half of GWP comes from foreign business.
  • Solvency II rates in Austria are quite robust and high-level. More than 50% have a Solvency ratio two times the required amount.
  • New technologies allow access to more information for consumer
Gabriel BERNARDINO, Chairperson, EIOPA-European Insurance and Occupational Pensions Authority
  • Regarding the evaluation of the implementation of Solvency II, we can say hat this was, overall, a big success.
  • This is also a period of unprecedented low-interest rates in Europe so we are happy to have introduced this risk-based regime smoothly.The industry is adequately capitalised.
  • EC would like to have insurers invest more in infrastructure, according to the Junker plan
  • We have a EU insurance industry that is much more stronger with Solvency II and much more efficient from a capital perspective, even though this is not a perfect regime. But there are no perfect regimes. Solvency II is complex because our business is complex. 
  • We need to focus, as supervisors on what can go wrong instead of what has already gone wrong. Supervisors have to be prepared and have a good dialogue with stakeholders.
  • 30% of GWP is coming from other jurisdictions while in Austria 40% is obtained from outside the country, from the Central, Eastern and South-Eastern European Region
  • The Austrian FMA has one of the supervisors in Europe that has really taken steps outside the country, so it is a positive example.
  • We at EIOPA we really believe in the internal market, but it is up to local supervisors to have convergence in terms of cross-border business
  • Digitalisation and consumer centricity are fundamental.
  • The insurance value chain is impacted by digitalisation: BigData, Cyber risks, Telematics, Automated Advice, BlockChain etc. We have an increasing amount of individual data about customers and this also means extra responsibilities. There is some potential for disruption from this perspective so we need to be attentive.
  • We need to have trust and confidence from consumers. Supervision has to keep up with the development of the society. We need new simpler products that are sold in a more efficient way and with the highest ethical standards. This is the future of the insurance market that I wish to have.
Peter BRAUMULLER, Managing Director for Insurance companies and Pension companies Supervision, FMA, Austria
  • Proportionality is often put in the wrong context, it is not about entries to a report but about the concrete risk model
Othmar EDERER, President, Austrian Insurance Association
  • Supervisors need to think about how to reduce complexity; Solvency II is a huge burden to small and medium-sized companies
Hrvoje PAUKOVIC, Managing Director, Croatian Insurance Bureau
  • Some years ago, Croatia 26-27 insurance companies but that number is steadily decreasing. What 2008 the country had controlled MTPL tariffs proposed by the industry and approved by the regulator. The average MTPL premium was 150-170 EUR. But then the law changed, in the sense that each individual insurance company had to send its tariffs to the regulator for approval. So all companies basically went for the same tariffs.
  • In 2013 we really build up our technical reserves, after which we became the most expensive country in terms of MTPL premiums. But we were killing the market with CASCO, which was offered almost for free by companies. However, after Croatia's EU accession, we managed to amend the legislation in the sense that the MTPL premiums have to be sustainable and based on actuarial practices. So combined ratio has to be over 100%.
  • Since than, the MTPL market has decreased by more than 32% from 2013 to 2016. The average MTPL premium also decreased 37% in the same timeframe.
Mimoza KACI, Deputy Executive Director, Albanian Financial Market Authority
  • The Albanian insurance market writes premium amounting to 112,4 million EUR. 62% of this amount comes from non-compulsory insurance, out which 77% represents domestic TPL and 16% Green Card insurances.
  • MTPL is the main business line, having 62% of all GWP. It was introduced in 1992 and liberalised since 2011 in terms of tariffs, which of course led to fierce competition. Worsened financial results followed the liberalisation process,
  • In the Albanian experience, risk pricing is the main challenge of liberalisation.
  • Currently, the domestic MTPL combined ratio is 101,15%.
Klime POPOSKI, President of the Council of Experts, Insurance Supervision Agency of Macedonia
  • We are witnessing the global warming. Economic costs of catastrophes increased from 25 billion USD in 1980 to 130 billion USD in 2013, according to SWISS Re becasuse of climate change, due to the increase in the CO2 levels, because of economic development and of the high concentration of people in exposed areas
  • The impact of climate change is not identical all over Europe. In example, SEE is significantly more vulnerable and exposed to natural disasters - over 80 billion EUR in the last 30 years. The slution in this case is having a disaster risk management strategy
  • Regarding Macedonia, the insurance market produced GWP in excess of 148 million EUR, while the insurance penetration is 1,45%. However, only 7,8% of residential belongings in Macedonia have household insurances while only 6,2% covers cat risks. The country's property insurance market is around 25 million EUR.
Nicoleta RADU, Director General, PAID-Insurance Pool against Natural Disasters, Romania
  • Romania is significantly exposed to natural disasters, especially earthquakes, landslides and floods. Due to climate change, risk of flooding will potentially increase, thus increasing the need for the mandatory policies offered by PAID.
  • The company is a project initiated by the World Bank with the support of Romanian insurance companies, in order to provide affordable insurance coverage to the population
  • Currently there are 1,7 million mandatory policies in force, representing a coverage of more than 20% of all residential dwellings in Romania
  • BigData is a threat but also an opportunity for PAID for increasing market penetration, in example. In this context, improve cat models and prediction capabilities represent an advantage to our company.
  • PAID can harvest BigData and utilise customer awareness of climate change impact to bridge the protection gap.
  • We want to change the way in which the law on which PAID is based on works. We also have to educate the population regarding the consequences of catastrophes.
Mehmet Akif EROGLU, TSB
  • There are discussions about extending the risks covered by the TCIP policies
  • The TCIP offers a simple compulsory product covering only the risk of earthquake for residential buildings. The product is accessible on all channels. There are only 3 pricing factors.
  • The annual average premium is around 33 USD/year. Operational costs are 2% although the TCIP achieved an above 90% brand and product recognition.

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