1. ACTUAL STATE AND PERSPECTIVE OF MTPL INSURANCE MARKET IN BiH The International Insurance Forum Insurance Agency of Bosnia and Herzegovina Samir Omerhodžić 3-4 March, 2013 Istanbul

2. BiH INSURANCE SECTOR Institutions: -Insurance Agency of BiH -FBiH and RS Insurance Supervisory Agencies -BiH Green Card Bureau -FBiH and RS Insurance Protection Funds -FBiH and RS Association of Insurance Companies -BiH Actuarial Association -Actuarial Association in RS 25 Insurance Companies -14 with the seat in FBiH -11 with the seat in RS 1 Reinsurance Company Insurance Intermediaries (agents and brokers) 2 MTPL INSURANCE MARKET IN BiHThe International Insurance Forum

3. REVIEW OF MACROECONOMIC INDICATORS IN BiH 3 The International Insurance Forum Indicators Year 2008200920102011 Nominal GDP (in EUR mln)12.63712.26812.65413.025 GDP per capita (in EUR)3.2903.1933.2933.392 Real GDP (growth rate in %)5,42-3,20,91,26 Retail prices growth rate (%)15,7215,283,13,7 Population (estimate in thousands)3.8423.843 3.840 Number of unemployed493.405510.534522.080536.728 Number of employed694.416686.044683.399687.917 Average gross salary (in EUR)569616622650 Average net salary (in EUR)384404408417 Import-Export Ratio (%)41,244,7152,152,96 Government Sector’s Foreign Debt (in EUR mln)2.1442.6593.2133.398 Foreign debt (as percentage of the GDP)16,721,7125,425,6 Macroeconomic indicators in BiH (in €) MTPL INSURANCE MARKET IN BiH

4. STRUCTURE OF THE BiH FINANCIAL SERVICES SECTOR 4 The International Insurance Forum Segments of the Financial Services Sector (financial institutions) 200920102011 Assets growth index 10/09 Assets growth index 11/10 Assets Share (%) Assets Share (%) Assets Share (%) (in EUR mln) Banks10.53582,0710.45784,3410.71384,7199,26102,45 Investment funds4523,524593,74093,23101,4788,98 Insurance and re-insurance companies4773,724793,865524,37100,32115,38 Micro-credit organizations5564,334383,533853,0478,7587,97 Leasing companies8176,365674,575874,6569,34103,7 Total for the sector12.83810012.39910012.64610096,58102,00 Structure of the BiH Financial Services Sector (in €) MTPL INSURANCE MARKET IN BiH

5. OWNERSHIP STRUCTURE 5 The International Insurance Forum OwnershipNon-lifeLifeLife and non-lifeRe-insuranceTotal Domestic1211115 Foreign118010 TOTAL1329125 Ownership structure and types of insurance operations of BiH insurance companies in 2012 MTPL INSURANCE MARKET IN BiH

6. TOTAL PREMIUM IN BIH AND THE ENTITIES 6 The International Insurance Forum 2009 Share (%) 2010 Share (%) 2011 Share (%) 2012 Share (%) Premium growth Index 10/0911/1012/11 BiH234.495.630100241.334.104100249.567.620100258.274.499100102,92103,41103,49 FBiH173.150.64973,84178.645.59274,02182.415.82973,09186.834.27173,09103,17102,11102,42 RS61.344.98126,1662.688.51225,9867.151.79126,9171.440.22826,91102,19107,12106,39 Total premium in Bosnia and Herzegovina and the Entities (in €) MTPL INSURANCE MARKET IN BiH

7. TOTAL PREMIUM IN LIFE AND NON LIFE INSURANCE IN BiH 7 The International Insurance Forum 2009 Share (%) 2010 Share (%) 2011 Share (%) 2012 Share (%) Premium growth index 10/0911/1012/11 Non-life198.990.44784,86203.219.73284,21208.633.91183,60214.221.10882,94100,53102,12102,68 Life35.505.18315,1438.114.37215,7940.933.70916,4044.053.39117,06105,31107,35107,62 TOTAL234.495.630 100241.334.104100249.567.620100258.274.499100101,22102,92103,49 Total premium in life and nonlife insurance in Bosnia and Herzegovina (in €) MTPL INSURANCE MARKET IN BiH

8. PREMIUMS PER INSURANCE TYPE IN BiH 8 The International Insurance Forum NoInsurance Type2009 Share (%) 2010 Share (%) 2011 Share (%) 2012 Share (%) 1Accident16.920.1957,2217.510.6987,2618.639.7377,4718.217.7367,05 2Health4.299.1441,833.829.3471,592.966.7591,193.019.2741,17 3Motor Casco30.709.32313,1029.965.35312,4230.266.41312,1329.476.38311,41 4Railway Rolling Stock Casco1800,001135880,0500,000 5Aircraft Hull Damage189.8600,08229.7620,10658.9240,26105.8040,04 6Sea, Lake and River Vessels Hull Damage13.5210,0115.5730,0114.8340,0127.7530,01 7Goods in Transit2.603.7831,112.347.7900,972.595.0001,042.682.0181,04 8Fire and Other Natural Perils13.783.7095,8814.914.3806,1815.175.0466,0814.127.2595,47 9Other Damage to Property11.486.6784,9013.152.1995,4513.110.9935,2516.124.5026,24 10Motor TPL (Third-Party Liability)115.700.88149,34117.855.00548,83121.362.35948,63125.175.86848,47 11Aviation TPL253.6960,11336.8460,14368.3050,15143.4660,06 12Marine TPL8.6390,0017.1420,0113.1230,0113.6000,01 13General Liability2.045.4390,872.043.6500,852.619.9461,052.807.4301,09 14Credit142.1860,06122.5290,05180.8030,071.689.1880,65 15Surety50.7240,0276.6920,0377.5140,0337.6240,01 16Financial Loss780.1680,33687.4270,28577.8170,23564.0250,22 17Legal Protection00,000 2.8760,003.0770,00 18Assistance – Other Insurance Types2.3200,001.7520,003.4610,006.1010,00 Total Non - Life Insurance Types198.990.44784,86203.219.73284,21208.633.91183,60214.221.10882,94 19Life (Life Insurance and Annuity Insurance)35.153.63414,9937.719.87815,6340.483.85616,2240.801.91015,80 Additional Insurance with Life Insurance351.5500,15394.4950,16449.8530,183.251.4811,26 Total Life Insurance Types35.505.18315,1438.114.37215,7940.933.70916,4044.053.39117,06 Grand Total (Insurance Types 1-19)234.495.630100241.334.104100249.567.621100258.274.499100 Premiums per insurance type in BiH (in €) MTPL INSURANCE MARKET IN BiH

9. 9 The International Insurance Forum Percentage of the various types of the insurance in total premium in BiH for 2009, 2010, 2011 and 2012 MTPL INSURANCE MARKET IN BiH

10. PREMIUMS PER INSURANCE TYPE OF INSURANCE COMPANIES IN FBiH WITH BRANCHES IN RS 10 The International Insurance Forum Premiums per insurance type of FBiH insurance companies‘ branches in RS (in €) NoInsurance Type2011 Share (%) 2012 Share (%) Index 1Accident481.9634,24530.8203,83110,14 2Health119.1481,05113.7110,8295,44 3Motor Casco1.823.22516,061.816.65213,1099,64 4Railway Rolling Stock Casco00,000 5Aircraft Hull Damage00,000 6Sea, Lake and River Vessels Hull Damage5.6710,053.9880,0370,32 7Goods in Transit226.3271,99331.9722,39146,68 8Fire and Other Natural Perils587.7215,18699.3745,04119,00 9Other Damage to Property311.6272,74580.6094,19186,32 10Motor TPL (Third-Party Liability)4.829.81742,536.308.14345,49130,61 11Aviation TPL6490,014880,0075,18 12Marine TPL6210,011.5000,01241,40 13General Liability123.6721,0966.6930,4853,93 14Credit19.4090,1733.1330,24170,71 15Surety1.4320,014.9420,04345,06 16Financial Loss11.8030,1014.6580,11124,19 17Legal Protection00,00 18Assistance – Other Insurance Types00,00 Total Non - Life Insurance Types8.543.08775,2310.506.68275,77122,98 19Life (Life Insurance and Annuity Insurance)2.582.47022,743.092.05022,30119,73 Additional Insurance with Life Insurance229.7912,02267.4901,93116,41 Total Life Insurance Types2.812.26124,773.359.54024,23119,46 Grand Total (Insurance Types 1-19)11.355.348100,0013.866.222100,00122,11 MTPL INSURANCE MARKET IN BiH

11. PREMIUMS PER INSURANCE TYPE OF INSURANCE COMPANIES IN RS WITH BRANCHES IN FBiH 11 The International Insurance Forum Premiums per insurance type of RS insurance companies‘ branches in FBiH (in €) NoInsurance Type2011 Share (%) 2012 Share (%) Index 1Accident183.8633,17282.3274,03153,55 2Health29.5700,5149.7160,71168,13 3Motor Casco436.5667,52622.9958,90142,70 4Railway Rolling Stock Casco00,000 5Aircraft Hull Damage00,000 6Sea, Lake and River Vessels Hull Damage00,00410,00 7Goods in Transit31.9830,5536.5110,52114,16 8Fire and Other Natural Perils61.4101,0691.2361,30148,57 9Other Damage to Property789.09013,59836.31111,95105,98 10Motor TPL (Third-Party Liability)4.265.84273,475.068.94672,43118,83 11Aviation TPL00,000 12Marine TPL00,000 13General Liability7.5970,135.6750,0874,70 14Credit00,000 15Surety00,000 16Financial Loss00,000 17Legal Protection00,000 18Assistance – Other Insurance Types00,000 Total Non - Life Insurance Types5.805.922100,006.993.75899,93120,46 19Life (Life Insurance and Annuity Insurance) 4.5360,06 Additional Insurance with Life Insurance 1750,00 Total Life Insurance Types00,004.7110,07 Grand Total (Insurance Types 1-19)5.805.922 6.998.469100,00120,54 MTPL INSURANCE MARKET IN BiH

12. SHARE OF PREMIUM IN BRANCHES IN PREMIUM OF ENTITIES 12 The International Insurance Forum Share of premium in branches in premium of Entities (in €) Insurance companies from one Entity with registered branches in other Entity 2009201020112012 Premium in branches Share of premium in branches in total premium in Entity Premium in branches Share of premium in branches in total premium in Entity Premium in branches Share of premium in branches in total premium in Entity Premium in branches Share of premium in branches in total premium in Entity Insurance companies from FBiH with registered branches in RS 5.034.018,818,219.507.513,4315,1711.355.347,8616,9113.866.222,0819,41 Insurance companies from RS with registered branches in FBiH 478.933,750,283.203.485,485,115.805.922,293,186.998.469,453,75 MTPL INSURANCE MARKET IN BiH

13. SHARE OF MTPL INSURANCE PER COUNTRIES IN CEE, SEE AND CIS 13 The International Insurance ForumMTPL INSURANCE MARKET IN BiH

14. SHARE OF LIFE AND NONLIFE INSURANCE PER COUNTRIES IN CEE, SEE AND CIS 14 The International Insurance ForumMTPL INSURANCE MARKET IN BiH

15. COMPARISON OF INDICATORS OF SOME EUROPEAN COUNTRIES AND BiH 15 The International Insurance Forum Country 200920102011 Premium (USD mln) Premium as % of GDP Premium per capita (in USD) Premium (USD mln) Premium as % of GDP Premium per capita (in USD) Premium (USD mln) Premium as % of GDP Premium per capita (in USD) Great Britain309.24112,94.579310.02212,44.497319.55311,84.535 Germany238.3667,02.878239.8177,22.904245.1626,82.967 Spain82.7755,71.80276.0825,41.65079.9875,41.729 Switzerland48.4709,86.25852.1189,96.63463.57610,08.012 Sweden32.7688,23.54038.2188,44.08242.1117,94.455 Austria22.66062.74322.2325,92.65123.0515,52.740 Russia39.5762,528141.6442,329743.2572,4303 Poland16.2863,843017.7633,746619.1073,7500 Turkey7.8531,31059.2201,312210.0511,3136 Czech Republic7.3283,97237.9144,07538.7643,9832 Ukraine2.6242,1572.4631,9543.0842,068 Slovenia2.89561.4202.7755,91.3533.0085,91.464 Croatia1.7812,94021.6822,83791.7112,7389 Bulgaria1.1952,51581.1502,51531.1312,1151 Serbia7921,81087271,81007811,7107 BiH3361,9187,53201,91833231,9284 Comparison of indicators of some European countries and BiH (in $) MTPL INSURANCE MARKET IN BiH

16. 16 The International Insurance Forum Ratio of the amount of premium and GDP expressed in percents for some European countries and BiH for 2009, 2010 and 2011 MTPL INSURANCE MARKET IN BiH

17. 17 The International Insurance Forum Premiums per capita for some European countries and BiH for 2009, 2010 and 2011 MTPL INSURANCE MARKET IN BiH

18. CLAIMS PAID PER INSURANCE TYPE IN BiH 18 The International Insurance Forum NoInsurance Type2011 Share (%) 2012 Share (%) 1Accident9.798.19710,3210.528.89610,94 2Health1.017.3551,07705.7190,73 3Motor Casco20.739.36921,8520.659.20421,47 4Railway Rolling Stock Casco5.4120,0100,00 5Aircraft Hull Damage00,000 6Sea, Lake and River Vessels Hull Damage00,001.5590,00 7Goods in Transit149.0440,16281.1910,29 8Fire and Other Natural Perils3.639.3193,833.208.4273,34 9Other Damage to Property4.235.7154,464.616.9114,80 10Motor TPL (Third-Party Liability)45.119.23847,5444.726.74346,49 11Aviation TPL00,000 12Marine TPL00,0033.6290,03 13General Liability406.9060,43488.1510,51 14Credit151.9910,16317.2900,33 15Surety107.0610,116.4840,01 16Financial Loss31.7480,03342.1280,36 17Legal Protection00,000 18Assistance – Other Insurance Types9070,005940,00 Total Non - Life Insurance Types85.402.26289,9885.916.92589,31 19Life (Life Insurance and Annuity Insurance)8.703.4729,179.430.6459,80 Additional Insurance with Life Insurance806.6870,85856.4950,89 Total Life Insurance Types9.510.15910,0210.287.14010,69 Grand Total (Insurance Types 1-19)94.912.421100,0096.204.065100,00 Claims paid per insurance type in BiH (in €) MTPL INSURANCE MARKET IN BiH

19. 19 The International Insurance ForumMTPL INSURANCE MARKET IN BiH

20. 20 The International Insurance Forum IMMATERIAL CLAIMS PAID IN BiH 20112012Index Insurance Companies11.948.25013.007.107108,86 Protective Funds671.069899.380134,02 TOTAL12.619.31913.906.487110,20 20112012 Immaterial claims paid11.948.25013.007.107 MTPL Claims paid45.119.23844.726.743 Immaterial in MTPL Claims paid (Share)26,4829,08 Immaterial claims in BiH (in €) Immaterial claims paid by insurance companies (in €) MTPL INSURANCE MARKET IN BiH

21. HHI INDEX FOR THE MARKET OF LIFE INSURANCE 21 The International Insurance Forum HHI index for the market of life insurance in Bosnia and Herzegovina 2009201020112012 Market share of the first four companies79,89%78,82%80,35%79,94% HHI1.8381.7861.8171.790 MTPL INSURANCE MARKET IN BiH

22. HHI INDEX FOR THE MARKET OF NONLIFE INSURANCE 22 The International Insurance Forum HHI index for the market of nonlife insurance in Bosnia and Herzegovina 2009201020112012 Market share of the first four companies41,90%42,78%41,24%41,91% HHI711728718723 MTPL INSURANCE MARKET IN BiH

23. TWINNING PROJECT 23 The International Insurance Forum Twinning Project EU Suport for Sustainable Capacity Building of the Insurance Agency of Bosnia and Herzegovina and the FBiH and RS Insurance Supervisory Agencies implemented by Bulgarian Financial Supervision Commission from april 2010 to april 2012 Proposal for framework of institutions for the purposes of obligatory Motor Third Party Liability insurance in Bosnia and Herzegovina in line with the prevailing best practice in EEA: ▫ Single Compensation Body ▫ Information Centre ▫ Protection (Gurantee) Fund at the BiH Green Card Bureau. MTPL INSURANCE MARKET IN BiH

24. REASONS 24 The International Insurance Forum BiH Green Card Bureau is recognised as a representative one for BiH and is a member of the Council of Bureau - fulfils the requirements to be independent and self regulating. Cost efficiency – no financial resources will be needed to establish number of different institutions (units) at Entities and State level and to provide expenses for their administrative capacity. Single information system needs to be in place, respectively one project needs to be financed and upgraded. MTPL INSURANCE MARKET IN BiH

25. 25 The International Insurance Forum LIBERALIZING MTPL INSURANCE MARKET FIRST Initiative,The World Bank The main objectives of the project are: 1)to assist the Insurance Supervisory Agency of Federation of BiH (ISAF) and the Insurance Agency of Republic of Srpska (ISRS) and Insurance Agency of BiH (IABiH) in the liberalization of the MTPL insurance market in Bosnia and Herzegovina; 2)to develop the regulatory framework and technical tools necessary for actuarially sound setting of premium rates and technical reserves for MTPL insurance; 3)to ensure that the proposed regulatory framework for the MTPL insurance market is in compliance with the EU MPTL insurance legislation, specifically with the commitments of Stabilization and Association Agreement with European Union and that it properly accounts for the best international practices in liberalizing the MTPL market. MTPL INSURANCE MARKET IN BiH

26. THANK YOU FOR YOUR ATTENTION! 26 The International Insurance ForumMTPL INSURANCE MARKET IN BiH