Bearing in mind the ownership structure, plans and strategies of insurance companies operating in Serbia, and especially the high financial, professional and ethical standards they meet, no significant consolidation of the domestic market is expected in the medium term.
This is supported by developments in other insurance markets, which show that acquisitions are slowing down significantly since the second half of last year, because insurers rarely decide on such demanding processes and investments in times of crisis.
There are currently 20 insurance and reinsurance companies operating on the market of the Republic of Serbia. During the last ten years, their number decreased by eight companies, partly due to the acquisitions undertaken, but also due to voluntary and forced liquidation of companies.
The biggest change in the number of companies took place in 2014. At that time, the National Bank of Serbia revoked one company’s license to operate, and two companies merged with other insurance companies, which was indirectly related to the new regulation that was introduced in the field of insurance in the same year.
Bearing in mind that the number of companies in Serbia has not changed for a long time, their ownership structure, plans and strategies, and especially the high financial, professional and ethical standards they meet, no significant changes are expected in our insurance market in the medium term.
Namely, insurers very rarely decide on large investments in conditions when they primarily have to ensure business continuity and preserve results. Taking over another insurance company, in addition to large investments, also requires that it be restructured and adapted to the existing organization, in order to create additional value and quality.
The new regulation will make business more expensive
Therefore, we can expect the recovery of acquisitions on the insurance market only after the end of the geopolitical crisis, when it will be known which companies have better adapted to the new circumstances.
Bearing in mind the size of our market in the European framework, it is very certain that the fate of individual domestic companies will not depend on the success of their business in Serbia, but on the fate of their parent companies.
The introduction of the aforementioned regulation will definitely make business more expensive and increase the regulatory risk, so there is a possibility that some companies and their shareholders will judge that it is no longer profitable to stay on the market and redirect capital to other investments.
The role of the market regulator is also important in this process. The National Bank of Serbia, headed by Governor Jorgovanka Tabaković, is carefully considering and successfully directing the process of harmonization with developed insurance markets in Western countries.
Liberalization of the auto liability insurance market
As part of the upcoming regulatory changes, there may be another trigger for a change in the number of insurers in our country, namely the liberalization of the auto liability insurance market. This is particularly important, since there are several companies in Serbia that predominantly base their business on mandatory auto liability insurance, and for that reason are extremely sensitive to changes in this area of ​​insurance.
When it comes to users and other interested parties in the insurance market, the most important thing for them is that the future mergers that will inevitably occur will not harm their interests. It is a strictly controlled process, with a high degree of guarantee of acquired rights, whose ultimate goal is to increase the value on the market.
Domestic insurance companies continue to meet the prescribed requirements in terms of capital, the amount of insurance assets, their placements, solvency and liquidity, sufficiency of the premium and transparency of operations. In this way, they create a strong foundation that ensures continuity in their work and to satisfy the interests of all persons interested in their business.
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