The 21 st annual conference organised by the International Association for Insurance Law and the Association of Serbian Insurers entitled "Modern Aspects of the Legal and Regulatory Insurance Concept" was held at Hotel Sloboda in Šabac from September 25 to 27. This year about sixty participants from our country attended the conference, since the pandemic of coronavirus prevented the arrival of lecturers from abroad. However, they participated via Skype or by video presentations shown at the conference. Thus, attendees did not miss interesting lectures and valuable experiences from the EU countries, and on this occasion from China and the United States of America.
   Participants from various insurance companies, universities, the Association of Serbian Insurers and other institutions were greeted by Slobodan Jovanović, PhD, the President of the International Association for Insurance Law.
   ‒ This year's conference organised by the International Association for Insurance Law of Serbia is held in the circumstances of legal and regulatory dynamics in insurance law and adjustment to increasingly extensive legal framework that creates a greater number of obligations for participants in the insurance market. Regulations concerning protection of financial service consumers also affect the insurance business in terms of its relationship with insureds and other persons with legal interest in insurance. On the other hand, technical and technological development imposes the need to create new insurance services, which inevitably opens numerous questions regarding civil liability in general, and in insurance brings dilemmas regarding the manner and scope of coverage ‒ said professor Slobodan Jovanović, PhD.
   ‒ All of the above stated continuously affects the study of theoretical issues and practical effects of certain solutions in the supervisory and regulatory, and contractual domain of insurance business. In terms of the solution from the Preliminary Draft of the Civil Code of the RS presented in May 2019, it seems that the reform of the insurance contract law will ignore some useful proposals made by members of the International Association for Insurance Law regarding legal regulation of insurance contracts. Having in mind the insurance dynamics and the need for occasional improvement and modernization of the contractual insurance law, I believe that our initiatives from 2004 and 2005 should be considered so that the contractual insurance law becomes the subject of a special law on insurance contracts - said professor Jovanović and thanked the organisers, sponsors, friends of the Association, as well as everyone who took the time to attend and participate in the conference.
   Dragica Janković, PhD, a member of the Executive Board of Dunav Insurance Company, was honoured to open the Conference with an introductory speech on the topic "Current issues and trends in the Serbian insurance market". Firstly, she presented data on the situation and results on the Serbian insurance market, pointing to the growth of the premium of less than 4 percent, which was achieved in the first half of this year, despite the coronavirus pandemic. However, she emphasized that in order to reach the premium of one billion Euros, it is necessary to achieve growth of nearly 9 percent, which is a difficult goal to achieve this year, having in mind all the obstacles faced by the economy and individuals affected by the coronavirus pandemic.
   ‒ Situation on the insurance market has not changed for many years. With the share of a bit over 27 percent in the total premium, the leader is Dunav Insurance Company followed by Generali with 20.39 percent, then by DDOR "Novi Sad" with 12.24 percent and Wiener Städtische with 11.79 percent. Non-life insurance premium increased by 4.15 percent, while in 2019 the growth was 8.23 ​​percent compared to 2018. In non-life insurance, Dunav leads with the share of 31.5 percent, followed by Generali with 18.13 percent and DDOR "Novi Sad" with 13.51 percent. Growth of life insurance in relation to last year's first half of the year amounted to 3.38 percent, and in 2019, compared to the previous year, was 5.36 percent. Four companies have as much as 75.18 percent share in the total life insurance premium, and leaders are foreign- owned companies - Generali with 28.56 percent, Wiener Städtische with 21.39 percent and Grawe with 14.12 percent, while Dunav is slowly but surely progressing, reaching a share of 11.11 percent - said Dragica Janković, PhD.
   Dragica Janković, PhD, believes that the reason for such market schedule in life insurance was a broken trust of insureds in national companies at the time of hyperinflation.
   ‒ At the beginning of 1994, prices grew by an average of 62.2 percent per day, that is, 2 percent per hour, we had a banknote of 500 billion Dinars, and in one day as many as 16 zeros were erased. Life insurance premiums paid for several years disappeared. They disappeared for insureds who experienced it as theft, and in fact they also disappeared for the insurers. Insureds who used to insure their lives turned to foreign companies that emerged on the national market with new services and thus made a step forward that was difficult to achieve until recently - explained Dragica Janković, PhD.
   In the period from 2005 to 2019, since the National Bank of Serbia took over the supervision of the insurance market, life insurance had tendency to grow steadily. Starting with 38.58 million it reached 213.14 million Euros, i.e. five and a half time bigger than 15 years ago. Contrary to that, non-life insurance recorded ups and downs. From 2005 to 2008, non-life insurance was on the rise, and then global economic crisis affected the reduction of non-life insurance premium, which only in 2016 exceeded the level reached in 2008. In 15 years, non-life insurance increased only by 1.9 times.
   ‒ Despite that, what is particularly good and achieved in the mentioned fifteen-year period, is the strengthening of technical reserves, which were 264 million and reached the amount of one billion and six hundred million Euros, that is, they increased more than six times. Technical reserves of non-life insurance increased from 217.71 to 706.18 million Euros or over 3.2 times, while technical reserves of life insurance increased from 46.84 million to as much as 900.66 million Euros or 19.23 times, which is a consequence of different manner of calculating technical reserves for life and non-life insurance, but also the increase in life insurance - Dragica Janković, PhD, explained.
   Despite the reported growth, data from the report of the National Bank of Serbia indicate insufficient development of the Serbian insurance market compared to European countries. This is primarily evidenced by the premium share in gross domestic product, and premium per capita, where data have been unchanged for several years or have changed slightly. Nevertheless, the insurance sector in Serbia employs more than 10,000 people; 17 banks, 7 financial leasing providers, a public postal operator, 95 legal entities - brokerage and agency companies, 80 representatives – natural persons and entrepreneurs and 4,696 active authorised persons participate in the sale of insurance services, i.e. insurance representation or brokerage.
   Dragica Janković, PhD, then quoted Čedomilj Mijatović, a founder of the National Bank of Serbia, a diplomat and the Minister of Finance and Foreign Affairs of the Principality of Serbia and then the Kingdom of Serbia, the president of the Serbian Royal Academy, a man who named our current currency the Dinar, and who is credited with the establishment of the Insurance Department within the Belgrade Cooperative, which is considered the first Serbian insurance company. In his paper "Opinions on Insurance", published in the "Trade Gazette" exactly 123 years ago, he expressed hope that one day, in the 20 th century, everyone in Serbia would realise the importance of insurance and insure themselves, members of their family, their property. Dragica Janković, PhD, pointed out that hopes of Čedomilj Mijatović did not come true, not only because people did not understand the importance of insurance, but also because of numerous wars and socio-economic upheavals that left a deep mark on the living standard of our population.
   In addition to education that is important for raising awareness of the population about the importance of insurance, Dragica Janković, PhD, pointed out the importance of trust in insurance companies, which was shaken at the time of inflation. Apart from the collapse of the national currency, at the time, due to a very low initial capital, the number of insurance companies in our market grew uncontrollably. At the end of 1996, there were 82 companies with extremely poor financial and personnel potential. They collected the premium, soon after the incorporation they wound up and left insureds without the option to recover damages or with the option to recover damages with great complications.
   ‒ Gradual regulation of the market came with the adoption of the Law on Insurance of Property and Persons in 1996, and it continued in 2004, when the supervision of insurance companies was taken over by the National Bank of Serbia. Number of insurance companies has been reduced to 16 up to the present time - said Dragica Janković, PhD, pointing out that market regulation continued with the adoption of the Insurance Law in 2014, which entered into force in 2016 and which introduced elements of European regulations in our insurance.
   ‒ In 2018, guidelines on minimum standards of conduct and good practice of insurance market participants were adopted in connection with the Insurance Distribution Directive, which aimed to protect insureds, and the Law on Personal Data Protection passed in compliance with the General Data Protection Regulation of the European Union (GDPR - General Data Protection Regulation) is significant for insurance - said Dragica Janković, PhD.
   She also said that preparations for the implementation of the International Accounting Standard (IFRS 17) are being carried out in the EU, which should come into force in 2021. It is believed that it will start in a new era in the accounting practices of insurance companies.
   The National Bank of Serbia adopted a strategy for the implementation of the Solvency 2 Directive, which consists of three pillars - quantitative, qualitative and transparency. It conducted a GAP analysis that confirmed the readiness of insurance companies in our country to implement the Directive. Preparation for the first pillar of Solvency 2, which refers to technical reserves and capital adequacy, was carried out in 2016 and 2017 through two stress tests made in accordance with the EIOP methodology and the Solvency 2 Directive. They included a scenario of unmarketable investments, a retrocession scenario, an actuarial scenario, and natural catastrophe scenarios - earthquakes and floods. Results of stress tests showed that the insurance sector in Serbia is stable and that it would remain stable even in case of extreme and unlikely shocks that would not jeopardize capital adequacy. In 2018 and 2019 two quantitative impact studies were conducted, QIS 1 and QIS 2, and this year consolidated balance sheets of Dunav Insurance Company were planned to be done, and QIS 3 was prepared and planned to be conducted by the NBS, but due to the epidemic of Covid-19 everything was stopped. Quantitative studies are conducted to determine the solvency ratio under the Solvency 2 Directive and the weaknesses of insurance companies in order to address them during preparations for the introduction of the Directive, and to ensure an adequate ratio. These are rather complex actuarial calculations that should quantify the total risk for an insurance company as the sum of many risks and sub-risks, such as non-life insurance risks, life insurance risks, voluntary health insurance risks, all market risks, risk of counterparty default and many others. Based on that, the amount of capital an insurance company needs to provide in order to be able to bear the risk is calculated, i.e. solvency capital requirement is calculated. On the other hand, available adequate funds of a company are determined in order to cover the capital requirement. The ratio between these two quantities is the solvency ratio. In the EU, in 2018 the solvency ratio was 236%, Slovenia had 237%, while Germany with 337% had the maximum solvency ratio. The solvency ratio is a counterpart to the capital adequacy that we have in Serbia under the Solvency 1 Directive, which is 218% for life insurance and 263% for non-life insurance. QIS 2 showed that the solvency ratio of Dunav Insurance Company is at 60 percent in relation to the capital adequacy that is good - said Dragica Janković, PhD.
   Noting that due to requirements imposed by the Solvency 2 Directive, companies are forced to have bigger capital than needed if realistic scenario and projection models are taken into account, Dragica Janković concluded that there is never sufficient premium or sufficient technical reserves, and that the higher the level of solvency ratio of a company, the greater the possibilities for its development. Insureds are more certain that the company will be able to fulfil any obligations regardless of any unexpected scenario, i.e. realisation of risk.
   The company was also represented at the conference by Sarita Olević, a Master of Law, a Senior Advisor in the Property and Legal Relations Service and a member of the Supervisory Board of Dunav Insurance Company, who presented a paper on "Legal aspects of protection of financial service consumers and personal data protection in distance contracts". She presented and analysed provisions of current regulations governing these contracts through a number of current issues related to the need and importance of protection of financial service consumers in distance contracts, which are increasingly present in our daily lives,
   ‒ Legal framework of distance contracts in the Republic of Serbia is regulated by the Law on Protection of Financial Service Consumers in Distance Contracts, the Law on Consumer Protection, and bylaws passed by the NBS. Provisions of the Insurance Law, as well as the Law on Contracts and Torts, apply to insurance contracts concluded at a distance. These are contracts concluded without the direct presence of a provider and consumer of insurance services at the same place and at the same time. Directive 2002/65/EC defines distance contracts as contracts that are negotiated at a distance and involve the use of means of distance communication used as part of a distance sales or service-provision scheme not involving the simultaneous presence of the supplier and the consumer. Therefore, distance contracts are those the offer, negotiation and conclusion of which are carried out at a distance - said Sarita Olević, explaining that the Law on Consumer Protection prescribes stricter formal conditions for concluding distance contracts, which imply that the service consumer or user within a reasonable time, and at the latest at the time of service provision, must be handed the contract, the notice and the waiver form on a data carrier.
   Sarita Olević pointed out that the National Bank of Serbia, which supervises operations of insurance companies, based on the Insurance Law, passed a Decision on the manner of protecting the rights and interests of insurance service consumers. The decision prescribes the right of insureds to be informed, as well as that the NBS, in order to protect the rights and interests of insureds and other insurance beneficiaries, inter alia, mediates in resolving claims for damages to prevent disputes, acts on complaints of insurance service consumers and protects the rights and interests of such persons. Obligation to inform a service consumer implies that a service provider, i.e. an insurance company, before concluding a distance contract, is obliged to provide a consumer with information on a service provider, financial service, distance contract and the manner of resolving disputes, which are clear and understandable so that the insurance service consumer is not misled. The stated obligation was established in order to eliminate the danger of depriving a service consumer of insurance coverage due to insufficient information. Therefore, it is important that the information is understandable, precise and clear, and that it indicates the essential characteristics of a service from the offer.
   One of the basic measures of consumer protection is the right to waive a contract. A consumer or an insured has the right to change his mind and waive a contract without additional costs or penalties. In case of distance insurance contracts, a policyholder has the right to waiver within 14 days from the day of concluding the contract. If the subject of a distance contract is life insurance, the deadline for waiver is 30 days from the day of delivery of the notification on a concluded contract, which also applies to contracts on voluntary pension insurance - said Sarita Olević.
   She also added that legal theory and practice, taking into account the fact that insurance is a complex legal business, indicate that internet is not a suitable channel for selling all types of insurance services, but only some, and therefore it is less represented in insurance than other financial services. She particularly emphasised legal aspects of personal data protection and the obligation of insurance companies to inform the insured that they process personal data exclusively for the purpose of fulfilling contractual obligations, as well as that the company is not able to meet them without collecting and processing data. The company must keep the collected data as a business secret, and if it is established that the data processing was not legal, a service consumer has the right to revoke the consent to data processing that he gave when concluding the contract.
   The Conference included thematic round tables dedicated to insurance contracts, life insurance contracts, non-life insurance contracts, MTPL insurance contracts, insurance management and competition, sale of insurance services and consumer protection, which were followed by our experts from the Legal Affairs Function, the Function for Actuarial Science and Solvency Risks Management and the Insurance Sales and Indemnity Department.
   This year, members of the International Association for Insurance Law of Serbia and insurance experts gave their proposals for modernization and improvement of the legal framework of insurance through papers published in the Proceedings, which bore the same title as the general topic of this year's conference.

Lj. Lazarević Davidović
Translated by: Jelena Rajković