Diapozitiv 1

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7th CEI Summit Economic Forum Round Table of
Insurance Regulators Portoro, 25 November
2004 Insurance legislation and insurance
market in Slovenia Jurij Goriek,
M.Sc. Insurance Supervision Agency Slovenia
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• Insurance legislation and insurance
  market in Slovenia
• I. Legislative framework
• Insurance Act (IA)
• Compulsory Motor Third-Party Liability Act
  (CMTPLA)
• Health Care and Health Insurance Act (HCHIA)
• Pension and Invalidity Insurance Act (PIIA-1)
• Overview of the insurance market
• Insurance Markets Overview from early 90ties..
• Todays Insurance Market Structure

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• I. Legislative framework Insurance Act (IA)
• 1. Insurance Act (IA)
• adopted in 2000 and amended in 2002 and 2004
• basic act regulating the establishment,
  operation, supervision and dissolution of
  insurance undertakings
• harmonised with EU Directives
• Specialities
• stricter reinsurance business regulation
• obligatory reinsurance business licence
• reinsurance companies are also entitled to follow
  the prescriptions on
• formation of technical provisions
• investments of assets covering technical
  provisions
• capital adequacy required minimum capital
  amount is
• the same as for life insurance companies 3
  million EUR
• Insurance Supervision Agencys supervision

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• I. Legislative framework Insurance Act
• stricter insurance undertakings minimum capital
  calculation
• stricter prescriptions on so-called solo basis
  capital calculation for insurance companies
  not being part of an insurance group or financial
  conglomerate
• ? reduction of capital for investments in
  financial organisations, for subordinated debt
  instruments and investments in other
  organisations
• General good provisions
• policy conditions and notifications to
  policyholders prescribed provisions of
  insurance contracts and obligatory usage of
  Slovene language
• terms and conditions for performing the activity
  of insurance intermediation services -
  obligatory authorisations acquisition

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• I. Legislative framework - CMTPL
• 2. Compulsory Motor ThirdParty Liability Act
  (CMTPL)
• adopted in 1994 and amended in 2002
• regulates the compulsory motor vehicle
  liability insurance or coverage of the owner of
  the vehicle for damages caused to third persons
• harmonised with EU Directives
• Specialities
• prescribes additional compulsory insurance
  classes
• accident insurance of passengers in public
  transport
• third party liability insurance of aircraft or
  other aviation device owners
• third party liability insurance of boat owners
• General good provisions
• obligation of acquiring Insurance Supervision
  Agencys consent to the general and special
  policy conditions
• membership in the Slovenian Insurance
  Association
• (Guarantee fund and Compensation body)

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• I. Legislative framework - HCHIA
• 3. Health Care and Health Insurance Act (HCHIA)
• adopted in 1992 and last amended in 2003
• sets the framework of the health care and health
  insurance system
• Specialities
• compulsory health insurance provider is Health
  Insurance Institute of the Republic of Slovenia
• supplementary health insurance business may be
  performed by insurance companies holding the
  corresponding authorisations
• General good provisions
• obligation of acquiring Insurance Supervision
  Agencys consent to the general and special
  policy conditions
• obligation of providing supplementary health
  insurance for all insured persons and treating
  them equally
• special regulative prescriptions about
  underwriting supplementary health insurance
  (formation of premium, organised as long-term
  insurance scheme, separate book-keeping,
  formation of technical insurance
  provisions/reservation for old- age, principle of
  inter-generation mutuality)

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• I. Legislative framework PIIA-1
• 4. Pension and Invalidity Insurance Act (PIIA-1)
• adopted in 1999, last amended in 2003
• regulates forms of voluntary pension and
  invalidity insurance of persons insured under the
  compulsory insurance
• pension system comprises of
• compulsory pension and invalidity insurance
• (pay as you go)
• supplementary pension and invalidity insurance on
  the basis of personal pension accounts
• Specialities
• insurance undertakings role in supplementary
  pension insurance
• pension scheme carriers and providers
• founders of open-end and close-end mutual pension
  funds
• potential managers of mutual pension funds

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• II. Overview of the insurance market Overview
  from early 90ies
• In early nineties the Slovene insurance industry
  was marked with a very negative financial
  heritage.
• Great changes in economic environment and
  financial system in recent 15 years.
• Permanently large influence on insurance
  industry and its performance.
• Under workers self management economy, until
  1991, 95 of the insurance market was dominated
  by a single composite, 90 years old insurance
  company.
• In early 90s, not regulated by realistic
  modern legislation, Slovene insurance industry
  has encountered harsh economic situation.
• More than 40 of total assets were written off.
• Claim and other provisioning and reserves were
  underestimated.

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• II. Overview of the insurance market Overview
  from early 90ies
• At the end of 1994 (the first) Insurance
  Companies Law was adopted.
• In March 1995 Insurance Supervisory Office at
  the Ministry of Finance was established.
• 1st task - rehabilitation and proper reserving
  in life insurance (mathematical reserves).
• Gradually rehabilitation was spread to
• non-life reserving,
• capital adequacy and
• investment portfolio mix and limits prescribed.
• Recoveries by 2 vehicles
• 28 rounds of free capital inflows by
  shareholders to almost all companies until 2003,
• internal positive technical and financial results
  of the companies in last 9 years.
• Predominantly well reserved now.

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• II. Overview of the insurance market Todays
  Insurance Market Structure
• The main characteristics of the today's insurance
  market structure in Slovenia.
• 15 insurance undertakings (of which 2 are
  reinsurance)
• 4 pension companies
• Nuclear pool
• Slovene Export Corporation
• Slovene Insurance Association - Guarantee Fund
• Pension Fund Management Company
• Insurance Supervision Agency as an independent
  supervisory authority
• As at 30 June 2004 foreign capital represents 22
  of Slovene insurance undertaking's capital
• 10 insurance undertakings with controlling
  domestic capital
• 4 insurance undertakings with a majority of
  foreign capital
• 1 insurance undertaking with a 50 of foreign
  capital.

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• II. Overview of the insurance market Todays
  Insurance Market Structure
• The majority of insurance undertakings perform
  both non-life and life insurance business
• Except 3 insurance undertakings which perform
  only non-life insurance operations and
• 1 insurance undertaking specialised in life
  assurance.
• Pension companies may be engaged in no other
  activities but voluntary supplementary pension
  insurance business.
• The insurance market is controlled by 3 insurance
  groups (Triglav Triglav RE Triglav Health,
  Sava Maribor, Slovenica Adriatic).
• The biggest insurance undertaking still
  maintained its market share above 42 (without
  health insurance even 50 ) as at the end of 2003
  
• Top 3 insurance undertakings represent 75 .

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• II. Overview of the insurance market Todays
  Insurance Market Structure
• The share of insurance premium in GDP increased
  by half between 1992 and the end of 2003 (in 2003
  reached good 5 of the GDP).
• The share of the insurance is slightly lagging
  behind the comparable shares of the EU Member
  States, mostly on account of the life insurance
  premium (in 2003, it represented only 1 of
  GDP). Still in the last four years has recorded
  an average annual increase of 18 .
• Overall structure of insurance business.
• 24.3 voluntary health insurance.
• 21.1 motor vehicle liability.
• 21.0 life assurance.
• 9.6 land motor vehicle casco.

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II. Overview of the insurance market Todays
Insurance Market Structure Premiums in of
GDP in 2003
Source Sigma No. 3/2004.

Legend 1 Excluding cross-border provisional
estimated.
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• II. Overview of the insurance market Todays
  Insurance Market Structure
• The share of investment of insurance undertakings
  (without reinsurance undertakings) in GDP
  increased from 4.9 to 8.3 of GDP between 2000
  and 2003.
• The domestic capital market cannot absorb the
  entire volume of investments (expected to be
  tripled in coming 6-7 years) and it should seek
  access to foreign capital markets. As at 30 June
  2004 investments of all technical provisions of
  insurance and reinsurance undertakings in foreign
  shares and bonds amounted to 10,2 ( 3,0 in
  Eurobonds of the Republic of Slovenia).

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II. Overview of the insurance market Todays
Insurance Market Structure Investments
structure of all technical provisions (as per 31
December 1995 and 30 June 2004)