Macedonia is one of the smallest insurance markets in the CEE, accounting for less than 0.5% of regional turnover. A small number of insurance companies operate in the country, and most are subsidiaries of the region’s important financial groups, such as SAVA, VARDAR, CROATIA, or of major European players like VIENNA Insurance Group, QBE, GRAWE or UNIQA.

The mid-2009 results showed a positive dynamic in the market, especially in the Life insurance segment. Although the full-2009 data are not yet available, figures published by Macedonian Ministry of Finance with regard to the first three quarters of 2009 indicate a relative slowdown. The recession worsened already difficult labour market problems, with the unemployment rate growing by almost 32%. In addition, at about EUR300 a month Macedonia has one of lowest average wage levels in the region and many workers have not received payment for several months. Consequently, although macroeconomic indicators seem to indicate that the country is starting an economic recovery, the purchasing power of the population will remain at a low level for quite some time.

After a 55% growth ratio recorded in 2008, the Life segment retained its upward trend in the first half of 2009, recording lower but still double-digit growth of about 13%. Looking at the third-quarter results leads us to anticipate that the Life insurance market will probably manage to preserve the 2008 level, with perhaps a very slight appreciation. Still, considering the absolute size of the market, only EUR4.34m in 2008, it is obvious that a little over EUR2 a year Life insurance density leaves a lot of space for growth.

The Non-life insurance market is also in its infancy. Only a small range of simple products is available. The MTPL insurance line dominates the market portfolio with a 47.8% share, followed by Motor Hull insurance, at almost 14% of overall business. Property insurance lines also hold a significant portion of the Macedonian insurance business. The Damages to property class, which includes crop and livestock insurance, represents almost 11% of the portfolio. Its development is supported by state subsidies granted to farmers with the specific purpose of insuring their production. The Ministry of Agriculture, for example, recently announced that in 2010 the insurance programme will continue with the state co-financing 60% of the insurance premium for certain types of crops.