Transcript Insurance market organization of the ISA supervisory practice

MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Working Group for Chapter 9 – Financial Services
Bilateral screening: Chapter 9
PRESENTATION OF MONTENEGRO
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Brussels, 10-11 June 2013
Chapter 9:
Financial Services
Insurance Supervision Agency of
Montenegro – Institutional and
Administrative Capacities
Biljana Pantovic
Insurance Supervision Agency
[email protected]
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial services
Chapter 9:
Financial Services
CONTENT
1. Implemented sources of EU law
2. Montenegrin legislation in insurance – an overview
3. Insurance market characteristics
4. Insurance Supervision Agency – status, organization, functioning
5. Supervisory practice (20011-2012)
6. Supervisory measures
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
IMPLEMENTED SOURCES OF EUROPEAN LAW
•
Following group of directives:
a)
73/239/EEC and amending directives
b)
2002/83/EEC
c)
2002/92/EEC
d)
2005/68/EEC
e)
2007/44/EEC
implemented (to a significant extent) by the Insurance Law (OG of MNE, No.78/06,
19/07, 45/12)
•
Directive 2009/103/EEC implemented by the Law on Compulsory Insurance in
Transport (OG of MNE, no.44/12)
•
Directive 2001/17/EEC implemented by the Law on Bankruptcy and Liquidation of
Insurance Companies (OG of MNE, No.46/07)
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
Montenegrin legislation in insurance
– an overview
The Insurance Law (OJ of MNE nos. 78/07, 19/07 and 45/12) –
a basic legal act comprising most of elements defined by the Solvency I regime - licensing of
insurance market players, governance requirements, main features of insurance business (capital
requirements, technical provisions, risk management, etc.), reporting requirements, intermediation in
insurance, AND supervisory authority and its functioning, as well as powers and types of supervisory
decisions at disposal of this authority.
Other laws (partially applicable) – Company Law, Bankruptcy Law, Law on General Administrative
Procedure
Insurance Contracts – regulated by Law on Obligations
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MONTENEGRO
Chapter 9:
Financial Services
Financial Services
Chapter 9:
INSURANCE MARKET PARTICIPANTS
General indicators
2007
2008
2009
2010
2011
2012
Number of insurance companies
6
11
11
12
12
11
Number of companies for insurance agency
9
9
14
14
15
19
Number of companies for insurance
brokerage
3
3
3
3
5
6
386
639
643
703
814
786
Number of employees
In 2012, Montenegrin market had 11 insurance companies performing insurance
business, whereof 6 companies were in life insurance business and 5 companies in nonlife insurance business.
Insurance agency activities and insurance brokerage activities in 2012 were conducted
by 28 legal and natural entities (19 companies for agency activities, 6 brokerage
companies and 2 agents-entrepreneurs).
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
GROSS WRITTEN PREMIUM
2007
2008
2009
2010
2011
2012
Gross written premium (mil.€)
51.017
60.578
65.570
62.186
64.792
66.922
Gross written premium life (mil.€)
5.907
7.246
8.087
8.367
9.057
9.474
Gross written premium non-life (mil.€)
45.110
53.332
57.483
53.819
55.735
57.448
Slight growth tendency of gross written premium, which had started in 2011., continued
in 2012.
By the end of December 2012, insurance companies had total gross written premium in
the amount of 66,922 mil€, which is 3,29% higher than in 2011, when it amounted to
64,792 mil€.
In 2012 the market has characterized by growth of gross written premiums in life, for
4,62%, and non-life, for 3,07% insurance.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Economic and Monetary Policy
Chapter 17:
INSURANCE DENSITY AND SHARE IN GDP
2007
2008
2009
2010
2011
2012
Insurance density (€)
82,26
97,67
104,35
99,45
103,62
109,93
Insurance density life(€)
9,52
11,68
12,87
13,38
14,48
15,28
Insurance density non-life(€)
72,74
85,99
91,48
86,07
89,14
92,65
Share of GWP in GDP (%)
1,82
1,81
2,18
2,05
1,97
1,92
Share of GWP life in GDP (%)
0,21
0,22
0,27
0,27
0,27
0,27
Share of GWP non-life in GDP (%)
1,61
1,59
1,91
1,78
1,7
1,65
Share of gross written premium in GDP is one of main indicators for valuation of insurance market
development.
Since 2002, this indicator has recorded growth tendency, starting with 1,68%, as it was in 2002, to
2,18% in 2009. After a slight decline of this indicator in 2012 and 2011, caused by the impact of
economic-financial crisis, a slight growth was realized in 2012 when the share of gross written
premiums in GDP amounted to 1,92%.
In 2012, share of gross written premiums od non-life insurance amounted to 1,65%, while share of life
insurance premiums in GDP was at the same level and amounted to 0,27%.
In 2012, gross written premiums per capita in Montenegro amounted to 106,99€, which is still
significantly below the average of EU member states.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Financial Services
Chapter 9:
ASSETS AND TECHNICAL RESERVES
2007
2008
2009
2010
2011
2012
Values of assets (mil.€)
77.856
98.819
105.298
121.929
135.338
142.153
Amount of gross technical reserves(mil.€)
35.698
50.581
66.563
76.196
82.270
84.926
Value of assets at the market level shows constant growth since 2007. Value of assets at the level of
all insurance companies on the date 31 December 2012 amounted to 142,152,967€, which represents
a growth of 4,99 % to the 31 December 2011 when it amounted to 135,388,324€.
Gross technical reserves have shown growth since 2007, which since 2009 has been faster that
growth of gross written premiums, thereby indicating that companies are more reslistic in assestment
of technical reserves. Value of gross technical reserves at the level of all insurance companies on the
date 31 December 2012 amounted 84,925,685€. Which indicates a growth of GTR for 3,23% in
comparison to the end of 2011 when they amounted to 82,270 mil.€.
Gross technical reserves represent the biggest category in liabilities of insurance companies and their
share in total liabilities amount to 59,30%.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
OPERATING INDICATORS
2007
2008
2009
2010
2011
2012
Efficiency in processing claims (%)
86,93
85,56
94,31
89,14
91,66
Solvency (%)
Claim ratio (%)
Cost ratio (%)
Combined ratio
144
69,81
51,76
121,57
126,14
73,31
45,14
112,37
150,72
60,4
43,89
104,09
153,14
51,73
48,5
100,35
175,28
48,27
46,43
94,7
In 2012, insurance companies achieved high level of efficiency in processing claims with 91,66%.
Efficiency level in processing claims for life insurance companies amounted to 90,12% and for non-life
insurance amounted to 91,75%.
The gross claim ratio, in respect to the entire insurance sector of Montenegro, on the date 31
December 2012 amounted 48,27% and it is necessary to point out that it is lower than in 2011 when it
amounted to 51,73%.
Cost ratio at the level of insurance sector amounted to 46,43%, showing a decrease in comparison to
2011 when it amounted 48,50%.
Combined ratio at the sectorial level in 2012 amounted to 94,7%, which indicates that losses of
insurance companies on the basis of claims, costs for insurance implementation and other costs,
contributions and reservations arising from insurance operations, were lower for 5,3% than
applicable premiums.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
INSURANCE SUPERVISION AGENCY
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Established in January 2008, under the Insurance Law (O.G. of MNE, no.78/06)
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An independent organization with the legal personality, performing regulatory and
supervisory function.
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Primary goal - to protect interests of insured persons and other insurance
beneficiaries, provide stability and development on the insurance business, based on
sound competition and equal operating conditions.
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Carries out supervision over the implementation of the Insurance Law (O.G. of MNE,
no.78/06, 19/07 and 45/12) and Law on Compulsory Insurance in Transport (O.G. of
MNE, no. 44/12)
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First inspections started only three months upon establishment (march 2008)
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Within the first year (end of 2008), 90% of rules prescribed by the Law, defining the
manner of operation of insurance companies, were adopted and entered into force.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
INSURANCE SUPERVISION AGENCY – Organizational
structure
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
INSURANCE SUPERVISION AGENCY – Organizational
structure
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Council of the ISA: 3 members, nominated for period of five years by the Parliament of
Montenegro, with the possibility of re-election
Widest responsibilities, varying from adoption of the secondary legislation, to bringing
decisions upon requests of insurance market players, and decision-making regarding internal
organization of the ISA.
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Director of the ISA: appointed by the Council for period of four years.
Director represents the ISA, executes decisions of the Council, , proposes regular reports,
plans and other documents.
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Conditions for election for the Council and the Director: Art. 181 of the Insurance Law,
prohibition of conflict of interest as defined by Art.182
Conditions for dismissal: Ceasing to fulfil previous conditions, end of mandate..
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Financial Services
Chapter 9:
INSURANCE SUPERVISION AGENCY – Organizational
structure
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Internal organization of the ISA:
a) Dept. for insurance market supervision
b) Dept. for research, development and cooperation
c)
Dept. for regulation, licencing and general affairs
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
SUPERVISORY PRACTICE AND MEASURES
The ISA exercises supervision according to the Insurance Law and Core Principles for Efficient
Insurance Supervision.
Subjects of the supervision:
- Insurance/reinsurance companies established in Montenegro,
- Insurance brokerage companies,
- Insurance agency companies,
- Entrepreneurs-insurance agents,
- Ancillary insurance service providers
- National Association of Insurers
Manner of supervision:
• collecting, monitoring and analysing reports, data and notices that the insurance company is
obliged to submit to the regulatory authority by operation of law;
• on-site examination of the operations of the insurance company;
• follow-up of measures imposed in accordance with this Law and by bringing charges to
competent authorities in case of reasonable doubt in existence of a criminal offence,
commercial violation or minor offence.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 19
Financial Services
Financial Services
Chapter 9:
SUPERVISORY PRACTICE AND MEASURES
Mandate of supervisors
Inspectors shall have the right to:
1)
inspect general acts, business policies and procedures acts and business books of the
company, as well as to inspect all other acts, documentation and data relating to the company’s
operations;
2)
demand from members of the board of directors. internal auditor, authorised actuary
and person with special authorizations to give information and explanations within their scope of
work regarding operations of the company;
3)
temporarily revoke documents that indicate the existence of actions having the
characteristics of a criminal offence, commercial violation or minor offence.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
SUPERVISORY PRACTICE AND MEASURES
Inspections - generally performed according to annual Inspection plan, prepared at the begining
of each year containing:
- Identification of subject which will be inspected
- Indications of objectives of the planned inspections
- Inspection timing and
- Names of authorized inspectors for each inspection
Off site inspections – performed annualy and quarterly by analyzing reports, data and notices that
the insurance company is obliged to submit to regulatory authority
On–site inspections – performed by direct insight to books, contracts, internal statistics and other
documentation and data relating to the company’s operations:
- comprehensive (full scope inspections) – normally performed every three years
- targeted inspections – based on off-site findings
Exceptionally, inspections can also be performed in other cases, solo or with other
regulators/institutions.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Financial Services
Chapter 9:
SUPERVISORY PRACTICE AND MEASURES
Inspections conducted in 2011/2012
Insurance
undertakings
Insurance
agencies
Insurance brokers
2011
8
15
5
2012
7
4
1
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
SUPERVISORY PRACTICE AND MEASURES
Measures which are at disposal of the ISA in supervision process:
• Written warning to the insurance company with request for irregularities established in
operation to be corrected within a specified deadline;
• Decisions:
a) ordering measures to correct illegalities and irregularities;
b) ordering special measures against responsible persons in the company;
c) ordering transfer of insurance portfolio to the another insurance company;
d) introducing interim administration in the company;
e) revoking a license for pursuit of specific or all insurance activities.
(Possibility of conditional revoking of licence – if the company does not make a new breach which
could be a reason for license revocation in a period not shorter than six months nor longer than
one year)
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Chapter 9:
Financial Services
SUPERVISORY PRACTICE AND MEASURES
Examples of specific decisions that could be imposed:
• Prohibition to enter of new insurance contracts for specific or all classes of insurance;
• Ordering termination of insurance contract, insurance brokerage or insurance agency
contract;
• Limitation of risk level to be assumed by the company;
• Prohibition of execution of certain payments;
• Prohibition of transactions with specific shareholders, members of managing bodies of the
company, related parties or other legal persons;
• Ordering appointment of an adviser for segment of operations where illegalities and
irregularities are established;
• Ordering change of organisation of work;
• Ordering collection of receivables;
• Prohibition or limitation of temporarily disposal of assets;
• Other measures with aim of stabilization of the company`s operations.
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MONTENEGRO
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9:
Financial Services
Thank you for your attention!
QUESTIONS
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