1. National Insurance Bureau 2008, Macedonia Director, Jonce Popovski 1

2. Contents  Insurance companies  Description of the Insurance market  Financial indicators  Insurance legislation  Supervision bodies  Role of the Insurance Bureau  Difficulties in the market 2

3. I. Insurance companies There are 12 insurance companies operating in the insurance market in 2008, two of which dealing only with life insurance 3 Insurance Companies Qbe Vardar Evroins Sava Tabak Sigma Eurolink Insig Uniqa Osiguritelna Polisa Albsig Kroacia Insurance Grawe Broker Companies Euro Eksperts Euromak WIASS In-Broker VFP Fideliti Mobiliti Seda Agencies AMG Premium Magma Safe Invest Trend Aktiva - In 2008 Makosped Insurance Company merged into Euroins, Sigal was taken over by Uniqa, and some new broker companies and agencies were also open. - Two new insurance companies applied for membership, one of which started its operation on 1 st June this year. - Only Qbe Makedonija deals with reinsurance

4. 4 Competition : Recently established insurance companies Increased number of broker companies and agencies Increased number of licensed agents and brokers Increased availability to the population System of maximum fair conditions on the market The purchase of the domestic companies by foreign insurance companies increases the business quality in the insurance market The information for establishment and entrance of companies strengthens the existing competition New products and additional services used for keeping and taking over the clients (ex. mini –full insurance, pocket- full insurance, etc.) Disloyal competition appearance

5. The insurance policies sale in 2008 was carried out by insurance agents, broker companies and insurance representatives 5 Insurance companies Insurance Agents Broker companies Agencies End users Increased number of insurance companies, broker companies and agencies have significant influence over the insurance market II. Description of the insurance market Increased supply and diversification of new products from the insurance companies in the area of health insurance, travel insurance, full cover insurance, etc. Increased amount of life insurance as a positive trend in the insurance market

6. 6 Insurance Companies Insurance premium in 000 €Premium TotalLife InsuranceProperty InsuranceStructure Qbe 19,280 534 18,746 18.5 Vardar 22,247 - 21.3 Evroins 5,973 - 5.7 SavaTabak 16,320 - 15.6 Sigma 4,421 - 4.2 Eurolink 9,855 - 9.4 Insig 3,086 - 3 Uniqa 5,404 - 5.2 Osiguritelna Polisa 9,355 - 9 Albsig 4,671 - 4.5 Croatia 1,484 - 1.4 Grawe 2,318 - 2.2 Total 104,416 4,336 100,080100 Structure and changes in the market share Table.1

7. 7 Insurance Companies20072008ChangesMovement Qbe 21.4%18.5%Decrease Vardar 25.5%21.3%Decrease Evroins 4.5%5.7% Increase SavaTabak 14.3%15.6% Increase Sigma 5.3%4.2%Decrease Eurolink 8.6%9.4% Increase Insig 3.2%3.0%Decrease Uniqa 4.7%5.2% Increase Osiguritelna Polisa 9.3%9.0%Decrease Albsig 0.8%4.5% Increase Croatia 1.2%1.4% Increase Grawe 1.1%2.2% Increase Table.2

8. III. Financial indicators – Insurance 8 - Continued growth of the premium in the last 5 years - Participation of claims in the premium with 48.18% Table.3

9. 9 Insurance class year 2008 Stipulated gross premium Settled Claims Claims/ Premium 000 €Structure000 €Structure% Accident 8,984 8.60 6,253 12.4369.6% Health Insurance 488 0.47 13 0.032.8% Passenger vehicles (full coverage) 13,491 12.92 7,954 15.8159.0% Aircrafts (full coverage) 736 0.71 576 1.1578.2% Marine insurance (full coverage) 14 0.01 - -0.0% Transportation of goods (cargo) 1,215 1.16 74 0.156.1% Insurance of property against fire and natural disasters 6,372 6.10 1,944 3.8630.5% Remaining property Insurance 13,254 12.69 5,265 10.4739.7% Third party liability Insurance (vehicles) 51,536 49.36 26,161 52.0050.8% Third party liability Insurance (aircrafts) 423 0.41 - -0.0% Third party liability Insurance (marine) 3 0.02 - -0.0% General Insurance 841 0.81 80 0.169.5% Credit Insurance 21 0.02 42 0.08198.8% Guaranty Insurance 3 0.00 - -0.0% Financial losses Insurance 214 0.21 14 0.037.0% Tourist support Insurance 2,457 2.35 230 0.469.4% Life and Annuity Insurance 4,336 4.15 1,699 3.3839.2% Total Property Insurance 100,079 95.85 48,609 96.248.6% Life and Annuity Insurance total 4,336 4.15 1,699 3.3839.2% Total 104,415 100.0050,309100.0048.2%

10. Reinsurance Compared with 2007, there is a decrease in the allocated premium for 1.95 million euro or 15.82%. At the same time the share of the reinsures is increased for 0.5 million euro. 10 Year Allocated gross premium in 000 €Participation in settled claims 000 € Total Life InsuranceProperty Insurance Total Life InsuranceProperty Insurance 2002 16,247.09 - 10,931.85 - 2003 11,626.98 - 6,909.41 - 2004 11,147.84 - 4,514.93 - 2005 9,298.54 - 3,468.52 - 2006 9,796.44 - 1,273.56 - 2007 12,302.70 65.82 12,236.88 2,353.22 6.26 2,346.96 2008 10,356.17 130.31 10,225.86 2,893.17 18.15 2,875.02 Table.4

11. In the Republic of Macedonia, the insurance field is regulated by specific provisions: 1. Insurance Supervision Law – Official Gazette of R.M. 79/07, 88/08 2. Compulsory Traffic Insurance Law – Official Gazette of R.M. 88/05, 81/08 By means of the amendments and the appendices of the Compulsory Insurance Law, since July 2008, the number of the representatives from the National Insurance Bureau in the TPL insurance commission has been reduced and it is prescribed that the tariff for TPL has to be published in the Official Gazette in the Republic of Macedonia. Also, the National Insurance Bureau is limited by the legislator in respect of setting the green card price as an additional premium. Namely, the tariff for the green card is restricted by the previous agreement by the Ministry of finance. It is also know that by this Law the maintenance of the system for TPL policies and claims evidences is regulated. The NIB keeps statistical records and on the base of statistical data procession, observing the statistical insurance standards the same are quarterly announced published on its web – site. 11 IV.Legislation and supervision

12. The above mention law prescribes high and more severe penalties for offences cost by natural and legal entities, as well as for the insurance companies and the National Insurance Bureau, but for the time being it is not applied since the Agency for insurance supervision has not been established yet. Furthermore, some other positive rules are also applied in order to increase the regulation in the insurance market, such as the Obligatory Relations Law, Traffic Safety Law, Mediation Law, Vehicles Law of 2008 etc. Over 87% of the claims noticed for all classes of insurance are settled out of court. For establishing the level of some types of intangible claims by the Insurance companies, the Criteria for claim indemnification are applied ( the same were also obligatory for the courts, but these were abolished by the Constitutional Court in February this year). Consequently, it can be mentioned that significant problem are the court judgments where for almost the same injuries the damaged parties are awarded the amounts in the scale of 1:7 or even more. The supervision in the insurance market is made by the Ministry of Finance, but in final phase of its establishment is the Agency for insurance supervision. 12

13.  Commitments and roles of NBO NIB fulfills its obligations in accordance with the law regulations, as well as with the Council of Bureaux. The obligations of the Macedonian NIB are similar or same with the obligations that the other National Insurance Bureaux have. It is actual in the operation of the National Insurance Bureaux to function in compliance with the insurance market operation in the Republic of Macedonia. Special aim of NIB is, in near future, to reorganize itself in relation to its members and the directives of the Council of Bureaux. The communication between the National Insurance Bureau and the Government is correct and in accordance with the Law. There is no influence on the operation of the Bureau and its members, accordingly. 13 Osiguravajuće tržište – 2007 god.

14. The major problem is the large amount of uninsured vehicles False Green Card Unequal criteria for settlement of intangible claims Improper structure in the insurance (life and property) Recourse payment Influence of the world changes over the Reinsurance 14 Osiguravajuće tržište – 2007 god. VI.Difficulties in the Insurance market

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