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									                        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


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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


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                          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


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         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



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                     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.




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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


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                    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




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 Discuss possibility for next training cycle and/or postgraduate studies
  at one of Macedonian Faculties




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