MTPL INSURANCE RESULTS IN 2011

MTPL insurance is one of the most important non-life insurance classes which, due to its mandatory character, is legally regulated more than other classes, and justifiably so. Operating results achieved in 2011. indicate that, on the one hand, companies do not comply to the regulations imposing limitations on the loading for expenses of management and underwriting, including the acquisition fee and, on the other, positive operating results were achieved, regardless of the fact that the underwriting expenses were exceeded.
When the operating results are analysed in general, common premium system and minimum MTPL premium tariff are adequate to cover the claims for indemnity and other liabilities, in accordance with the law. However, if individual results are observed, there is a possibility that insurance companies will take different actions. The majority of companies may be inclined to keep the existing premium amount, whereas some may reduce it, and a number of such companies may resort to premium increase.
Achieved results and existing problems in the MTPL insurance market have indicated that the justifiability of minimum premium tariff should be reconsidered together with the shift to free formation of insurance prices. Until that happens, the majority of companies will expect to solve all their problems through the increase of minimum insurance price, regardless of the fact that they have neither reached consensus in this regard nor is that a permanent solution. Considerable differences in the amount of insurance premium are not to be expected even in the circumstances of the free market, however, the insurers have to adjust it drawing on their own experience and the experience of the other insurers in Serbia, which can have a positive impact on finding common solution in accordance with the law and Code of Conduct relating to the compulsory insurances in traffic. This would make companies more responsible for their operating risks in this insurance class, having in mind that the liberalization is one of the compulsory standards effective in the EU Member States.