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Document Sample
Sixth International Professional Meeting
of Leaders of the Actuarial Profession and Actuarial Educators
in Central and Eastern Europe
BUILDING A GLOBAL ACTUARIAL PROFESSION
22 - 24 April 2004, Dubrovnik, Croatia
Current situation of the actuarial profession and actuarial education
in the Republic of Macedonia
Facts on Macedonia (1998-2002)*
1998 1999 2000 2001 2002
GDP per capita (US$) 1,781 1,848 1,924 1,830 1,835
Total GDP (US$ million) 3,575 3,730 3,899 3,720 3,743
Real GDP growth (%) 3.4 4.3 4.5 -4.5 0.3
GDP total (Denar million) 194,979 209,010 236,389 233,841 238,890
Increase of retail prices (%) 0.8 -1.1 10.6 5.2 1.4
Unemployment rate - ILO definition (%) 34.5 32.4 32.2 30.5 31.9
Area (sq km) 25,713
Population (thousand) 2,015 2,017 2,031 2,039 2,049
Average life expectancy (1999-2001)
Men 70.68
Women 75.21
Total 73.05
*
Sources: State Statistical Office and Ministry of Finance
1
Actuarial profession in Macedonia
2 actuaries with Actuarial Diploma from former SFR Yugoslavia, out of
which only 1 certified actuary working in Insurance Company.
Several people working on actuarial positions, analysis and research
(Insurance Companies, Ministry of Finance, Pension and Disability
Insurance Fund of Macedonia, Agency for Supervision of Fully-funded
pension Insurance)
At the beginning of 2002, Mr. Chris Daykin and Mr. Graham Luffrum
were engaged my the Ministry of Finance to conduct Assessment of
actuarial profession, to develop a concept for accelerated and efficient
training of certain number of people to undertake actuarial activities, since
current number of actuaries is far away from the needed to satisfy the need
of insurance industry, pension insurance, health insurance, taking into
account future developments in Macedonia.
Insurance Market in the Republic of Macedonia
7 insurance companies operate on the insurance market in the Republic of
Macedonia:
o 6 have license for performing non-life insurance;
o 1 has license for performing life insurance, non-life insurance and re-
insurance
During 2003, as a result of the liberalization of the insurance market,
attracting foreign capital and competitiveness increase is expected.
Macedonian Insurance in the Period 1998-2002*
1998 1999 2000 2001 2002
Gross written premiums (Denar million) 5,607 5,975 5,836 5,906 5,390
Non-life insurance (Denar million) 5,546 5,898 5,748 5,814 5,281
(% of total) 98.91 98.72 98.48 98.45 97.98
Life insurance (Denar million) 61 77 88 92 109
(% of total) 1.09 1.28 1.52 1.55 2.02
Gross premium per capita (Denar) 2,783 2,962 2,874 2,894 2,631
Non-life insurance (Denar) 2,752 2,924 2,830 2,849 2,577
Life insurance (Denar) 30 38 44 45 53
Share of premiums in GDP (%) 2.88 2.86 2.48 2.41 2.26
Real gross premium growth (%) 7.74 -11.69 -3.80 -10.14
*
Sources: State Statistical Office and Ministry of Finance
2
Premiums by Lines of Business
Life
Accident 2,05%
12,23%
Goods in transit Property
2,48% 35,30%
Aircrafts
1,75%
5.390 mil. denars
Credits
Motor vehicles 0,71%
45,48%
Insurance Supervision Division
July 2000 - Insurance Supervision Division was established in within the
Department for Affairs Immediately Related to the Minister in the
Ministry of Finance.
Prior to the establishment of this Division, there was no special unit
responsible for control over the insurance companies, and the control
comprised of submission of financial statements by the companies.
Since its establishment, Insurance Supervision Division showed
continuous development regarding the professional staffing and expert
improvement of employees, to the end of more efficient supervision over
insurance companies. In addition to the on-site and off-site supervision as
basic activity, the Insurance Supervision Division is in charge of the
following: preparation of legislation referring to insurance activity,
licensing insurance companies and insurance brokerage companies,
licensing insurance brokers and actuaries etc.
Law on Insurance Supervision
Law on Insurance Supervision was adopted in April 2002.
The adoption of the Law is in direction of further harmonization of
domestic legislation in the area of insurance with the appropriate EU
legislation, particularly regarding the detailed regulation of criteria for
licensing insurance companies and insurance brokerage companies,
licensing insurance brokers and actuaries, giving consent for performing
the function member of management body in the insurance company,
giving consent for direct or indirect acquisition of shares in the insurance
3
companies the total amount of which is equal to or exceeds the level of
qualifying stakes, establishment of strict rules for risk management,
detailed regulation of manner and types of financial reporting of insurance
companies, as well as strengthening the measures for carrying out on-site
and off-site supervision of insurance companies. This Law also created
conditions for liberalization of insurance market, attraction of foreign
capital and strengthening the competition.
Previous Law on Insurance ceased to be valid after the adoption of this
Law, except for the section 5, which refers to compulsory insurance.
In addition to the Law on Insurance Supervision, the following bylaws that
derive from this Law were adopted in 2002:
- Rulebook on the conditions for implementation of professional exam
for acquiring license for certified actuary;
- Decree on the chart of accounts of insurance companies;
- Rulebook on amendments to the Rulebook on the form and contents of
balance sheets of insurance and reinsurance companies;
- Rulebook on the manner of implementation of exam for insurance
broker.
According to the Law actuarial activities should be performed by certified
actuaries.
The Ministry of Finance shall authorize a body or legal entities that shall
issue certificates for certified actuary.
Authorized actuaries must meet the following requirements:
o high education (University degree)
o no record of commercial criminal activities
o the applicant has passed a professional examination which test the
expertise required to perform the tasks of certified actuary
o min 3 years of experience in the insurance industry
Pension reform - ongoing transition from PAYG mono-pillar system towards
multi-pillar pension system
1995 - Government commitment for the reform (World Bank assistance
throughout the process)
o Pension Steering Committee established
o Actuarial Unit established in the public Pension and Disability
Insurance Fund of Macedonia
2000 - Parametric changes of the PAYG system and framework for multi-
pillar system adopted
o Gradual transition towards multi-pillar system
Mandatory entrance for new entrants into the labor force
4
Voluntary entrance for current workers
o Contribution flow for switchers:
2/3 of contributions → the first pillar
1/3 of contributions → second pillar
o Centralized contribution collection
o Two Pension Companies for Pension Fund Management shall be
elected on a public Tender
2002 - Law on Fully Funded Pension Insurance adopted
2002 - Agency for Supervision of Fully-Funded Pension Insurance
established
o The Agency’s mission - to protect the interests of Fund Members and
enhance the development of the Fully Funded Pension insurance in the
Republic of Macedonia.
o The Agency most important duties and functions:
operate or procure the operation of the tender processes, grant,
withdraw and cancel licenses for incorporation and approval for
Pension Fund management;
supervise the operation of Pension Companies and their
Pension Funds - and ensure compliance with this Law and other
applicable legislation;
promote, organize and enhance the development of the Fully
Funded pension insurance in the Republic of Macedonia, in co-
operation with the Ministry of Labor and social policy in this
regard;
issue regulations pursuant to this Law; etc.
2005 - Actual split up of contributions for first and second pillar should
start
Role of the Actuarial Unit in the Pension Reform
The Unit has capacity to prepare long term projections of the pension
system developments, taken into consideration demography and economy,
under different assumptions for the policy of pensions.
With the assistance of foreign actuarial consultants, the Unit has develop
actuarial models for short-term and long-term for the public sector and for
fully funded second pillar in the pension system.
The Unit had continuous on-job training and study tours on the basics of
actuarial methods and techniques in life-insurance and pension schemes
and model development.
Results of the scenarios important for decision making process in the
pension reform.
5
Future tendencies in Insurance area
Future development of insurance industry in general
Ongoing pension reform
Reform of health insurance
Needed for actuaries expected to increase in near future (in the following 5
years 30-50 licensed actuaries needed according to the Assessment of
actuarial profession 2002 - Chris Daykin, Graham Luffrum)
Actuarial education
Non-existence of actuarial studies (graduate, post graduate) except one or
two modules at the Faculty of Economics
Ministry of Finance in cooperation with FSVC set the program for Basic
and Advanced course for actuarial mathematic and insurance, consisting of
total 16 modules, under recommendation of IAA for qualification of
education of actuaries with teachers from Croatia and Macedonia.
Basic course
Module 1 Introduction into Actuarial Mathematics
Module 2 Statistics and Probability
Module 3 Mathematics for Life Insurance
Module 4 Mathematics for Non-Life Insurance
Module 5 Financial markets and Investment
Module 6 Social Security and Pension Funds
Module 7 Principles and practice of Life Insurance
Module 7 Principles and practice of Non-Life Insurance
Advanced course
Module 1 Demography
Module 2 Advanced Actuarial Mathematics
Module 3 Investment and Asset/Liability Management
Module 4 Actuarial Management of Life Insurance
Module 5 Actuarial Management of Non-Life Insurance
Module 6 Actuarial Management of Health Insurance and Health
Care Financing
Module 7 Principles of Accounting in Macedonia
Module 8 Principles of Law in Macedonia
Participant at the Courses
Basic Course – 9 participants successfully finished it
6
Advanced Course - 9 participants attend (coming from Ministry of
Finance, QBE Insurance Company, Pension and Disability
Insurance Fund of Macedonia, Agency for Supervision of Fully
Funded Pension Insurance Faculty of Natural Sciences and
Mathematics, Local Initiatives Support Project for Organic
Agriculture and unemployed individuals interested in actuarial
science)
Actuarial association
April 2004 – Macedonian Actuarial Association established
11 members
Mr. Simeon Gacovski – Chairman of the Association
Main objectives of the Association:
o To follow developments of scientific actuarial disciplines;
o To assist members for the active participation in this development
o To study and enhance practical implementation of actuarial discipline
o To cooperate with educational institutions and international
associations
o To enhance actuarial and professional education of actuaries
Membership criteria
Regular member – an individual who scientifically or in practice deals with
actuarial profession or person interested to follow the Actuarial practice.
Bodies of the Association
o Assembly
o Executive Board – 5 members (Chairman, Vise-chairman, Secretary,
Cashier, and one member)
o Supervisory Board – 3 members
o Chairman of the Association
Next steps
Intensify activities of Macedonian Actuarial Association to promote
actuarial profession, role of the actuaries, actuarial training
Establish a library in the Macedonian Actuarial Association
Cooperation with international Actuarial Associations
Application for participation at IAA Training of trainers program
7
Discuss possibility for next training cycle and/or postgraduate studies
at one of Macedonian Faculties
8
