2. 1 ISTANBUL MARCH 2012

3. ASSOCIATION OF SERBIAN INSURERS Background 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;

4. ASSOCIATION OF SERBIAN INSURERS Business 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.

5. ASSOCIATION OF SERBIAN INSURERS Members On 31 st December, 2011. there were 27 companies operating in Serbia, 23 of them being members of the Association of Serbian Insurers

6. SERBIA INSURANCE MARKET

7. Insurance companies Number of companies by type of insurance business year life and non- life non-lifelifetotal 200588117 200676114 200768418 200869621 200969722 201069722 2011610723 On 31 st December, 2012, 4 companies were engaged in reinsurance

8. Total gross insurance premium for the period from 2005 to 2010

9. Insurance premiums of the most frequent types of insurance for the period from 2005 to 2011

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

11. Concentration of insurance premiums for the period from 2005 to 2011

12. CodeType of insurance Total premium (000 €) Share in total premium 01Accident insurance34,1926.23% 02Voluntary health insurance9,9371.81% 03Motor insurance73,89713.47% 04Rail vehicle insurance2,0660.38% 05Aircraft insurance1,2180.22% 06Ship (vessel) insurance8680.16% 07Goods in transit insurance8,4271.54% 08Property insurance against fire and other perils46,1068.40% 09Other property insurance75,35213.74% 10MTPL182,60433.28% 11Aircraft Liability Insurance1,5530.28% 12Vessels Liability Insurance1090.02% 13General liability insurance10,1121.84% 14Credit insurance4250.08% 15Warranty insurance7100.13% 16Financial loss insurance1,2690.23% 17Legal expenses insurance1140.02% 18Travel assistance insurance8,8521.61% 19Other non-life insurance160.00% 20Life insurance78,88914.38% 21Annuity insurance4,9820.91% 22Supplementary insurance along with life insurance6,8621.25% 23Voluntary pension insurance00.00% 24Other types of life insurance480.01% Total non-life insurance (from 1 to 19 )457,83083.45% Total life insurance ( 20 to24 )90,78016.55% TOTAL548,611 Insurance premiums by types of insurance in 2010

13. Premium share of the top five companies TOTAL DDOR 1. DELTA GEN. 25,5525,24 2. WIENER ST. 24,2025,20 3. GRAWE 19,3421,28 4. DUNAV 8,207,47 5. UNIQA životno 7,647,50 20112010 84,9286,69 1. DUNAV 32,0029,59 2. DDOR 20,1521,08 3. DELTA GEN. 17,4517,18 4. UNIQA než. 6,195,87 5. WIENER 5,315,39 20112010 81,1179,11 1. DUNAV 28,24 25,93 2. DELTA GEN. 18,7318,51 3.17,8818,50 4. WIENER ST. 8,308,67 5. UNIQA neživot 5,214,90 20112010 78,3676,51 NON-LIFELIFE

14. Motor Third Party Liability

15. Number of MTPL policies and total premium by companies in 2011 No.CompanyNumber of MTPL policies Total premium (000 €) 1AMS128.20210.367 2AS19.2231.788 3Basler2.914247 4DDOR295.99126.915 5Delta Generali394.63035.476 6Dunav482.30543.724 7Milenijum107.1909.893 8Sava94.1668.695 9Takovo225.33219.858 10Triglav150.99513.612 11Uniqa non-life99.4259.029 12Wiener25.8382.590 TOTAL2.026.211182.194

16. Share of MTPL premium by companies in 2011

17. CONCLUSIONS As 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.

18. ASSOCIATION OF SERBIAN INSURERS GUARANTEE FUND

19. 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

20. GUARANTEE FUND For the accidents that occurred in a period from 2005 to 2011, GF paid out: Year TOTAL PAID EUR UNINSURED EUR % OF THE UNINSURED IN TOTAL CLAIMS UNKNOWN EUR % OF THE UNKNOWN IN TOTAL DAMAGE BANKRUPTCY EUR % SHARE OF BANKRUPTCY IN TOTAL DAMAGE 20055.377.2931.536.99328,58353.8446,583.486.45664,84 20065.951.1881.377.42423,15469.3337,894.104.43068,97 20075.303.9731.573.67529,67502.3599,473.227.94060,86 20087.952.6521.734.20321,81842.67610,605.375.77467,60 200910.352.4082.191.45521,171.049.70410,147.111.24868,69 20106.804.3832.075.12630,50909.17413,363.820.08356,14 20116.758.4192.319.55534,32959.08314,193.479.78151,49

21. INFORMATION CENTRE OF THE ASSOCIATION OF SERBIAN INSURERS

22. 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

23. BONUS/MALUS SYSTEM Applied since 1 st 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 (k i ) 10,85 20,9 30,95 4 1 basic 51,15 61,3 71,5 81,7 91,9 102,1 112,3 122,5 Less than 3% of the drivers in Serbia gets malus!

24. PERIODIC MOTOR VEHICLE INSPECTION (PMVI) MAJOR PROBLEM ON THE INSURANCE MARKET

25. MODEL OF MOTOR VEHICLE REGISTRATION IN SERBIA PMVI INSURANCE POLICY TAX PAYMENT 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

26. 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 31 st 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 persons severe injuries................180.000 persons 2/3...................................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)

27. 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.

28. PROBLEMS WITH PMVI SYSTEM How Insurance Companies in Serbia lose up to 60 milions € in commissions

29. 28 Thank you for your attention