Insurance in the Republic of North Macedonia: An In-Depth Overview

The Republic of North Macedonia, a landlocked country in Southeast Europe, has been undergoing significant transformation in its financial and economic sectors. As part of these developments, the insurance industry in North Macedonia plays a pivotal role in safeguarding assets, mitigating risks, and fostering financial stability. Though relatively small compared to Western European markets, the Macedonian insurance sector is steadily evolving, shaped by regulatory reforms, economic conditions, and consumer demand.

Historical Background

North Macedonia declared independence from the former Yugoslavia in 1991. The country transitioned from a socialist planned economy to a market-based one, which laid the foundation for the development of modern financial institutions, including insurance companies. Initially, the insurance market was underdeveloped and largely state-controlled. Over the years, liberalization and privatization attracted domestic and foreign investors, leading to increased competition and diversification of insurance products.

Regulatory Framework

The insurance sector in North Macedonia is regulated by the Agency for Supervision of Fully Funded Pension Insurance (MAPAS) and the Insurance Supervision Agency (ISA). These bodies are responsible for overseeing the solvency, conduct, and governance of insurers, ensuring compliance with the Insurance Law, and aligning the sector with European Union standards—a key goal given North Macedonia’s EU aspirations.

Key legislations governing the sector include:

• The Law on Insurance Supervision

• The Law on Compulsory Traffic Insurance

• The Law on Consumer Protection

• The Law on Insurance Contracts

The regulatory framework aims to enhance transparency, consumer protection, and financial stability, while also encouraging innovation and competitiveness within the sector.

Types of Insurance Available

The insurance market in North Macedonia is divided into two main segments: life insurance and non-life insurance.

1. Non-Life Insurance

Non-life insurance dominates the market, accounting for over 80% of the total premiums. The most common forms include:

• Motor Insurance: This includes compulsory third-party liability insurance (MTPL), which is required for all vehicles. It represents the largest portion of non-life premiums.

• Property Insurance: Covers damage to residential and commercial properties due to fire, theft, natural disasters, etc.

• Health Insurance: Supplemental to the state health system, private health insurance offers faster access to medical services and broader coverage.

• Travel Insurance: Popular among Macedonian citizens traveling abroad, particularly within Europe.

• Casualty and Liability Insurance: Includes professional indemnity, product liability, and general third-party liability.

2. Life Insurance

Life insurance is a smaller but growing segment. It includes:

• Term Life Insurance

• Endowment Policies

• Unit-Linked Insurance Plans (ULIPs)

• Group Life Insurance

The growth of life insurance has been supported by rising awareness of personal financial planning, increasing disposable income, and favorable tax treatment.

Key Players in the Market

As of recent years, there are over a dozen licensed insurance companies in North Macedonia, along with numerous insurance intermediaries and brokers. Some of the major players include:

• Triglav Osiguruvanje

• Euroins Insurance

• Uniqa

• Croatia Osiguruvanje

• Eurolink Insurance

Foreign-owned companies play a significant role in the market, bringing with them international expertise and advanced technology platforms.

Market Trends and Developments

Several key trends are shaping the future of insurance in North Macedonia:

1. Digital Transformation

The COVID-19 pandemic accelerated digitalization in the sector. Many companies have invested in online platforms, mobile applications, and automated customer service solutions. This has made policy purchase, renewal, and claims processing more efficient and customer-friendly.

2. Microinsurance and Inclusion

There is growing interest in microinsurance products aimed at low-income and rural populations. These products are typically low-premium, high-volume offerings designed to enhance financial inclusion.

3. EU Integration

North Macedonia’s goal of joining the European Union has led to the harmonization of insurance regulations with EU directives such as Solvency II and the Insurance Distribution Directive (IDD). This process is improving risk management, solvency, and consumer rights.

4. Climate Change and Risk Awareness

Increasing frequency of floods, earthquakes, and other climate-related events has heightened the need for risk mitigation through insurance. Environmental risk coverage is gaining attention, especially in the agricultural and infrastructure sectors.

Challenges Facing the Sector

Despite progress, the insurance industry in North Macedonia faces several challenges:

1. Low Insurance Penetration

Insurance penetration (measured as a percentage of GDP) is low compared to EU averages. This indicates a large untapped market, especially in life insurance and health insurance.

2. Lack of Awareness

Many citizens still lack knowledge about the benefits and mechanisms of insurance. This is particularly true in rural areas and among older populations.

3. Economic Volatility

North Macedonia’s economy, though growing, remains susceptible to external shocks and political instability, which can affect premium growth and investment returns.

4. Regulatory Compliance Costs

While aligning with EU standards is essential, it can be costly for smaller insurers to meet stringent capital and reporting requirements.

Government and Policy Initiatives

The government, in collaboration with regulatory agencies, has launched several initiatives to strengthen the insurance sector:

• Consumer Education Programs: These aim to raise public awareness about insurance benefits and rights.

• Risk-Based Supervision: A modern supervisory model focusing on the actual risk profile of companies.

• Insurtech Support: Encouragement of technology-driven insurance models through favorable policies.

Moreover, the Ministry of Finance has shown openness to public-private partnerships (PPPs) in sectors like health and agriculture, which could further boost insurance demand.

Future Outlook

The future of insurance in North Macedonia looks promising. With continuous economic growth, technological advancement, and regulatory alignment with the EU, the sector is poised for expansion. Areas such as digital insurance, health coverage, and agricultural insurance are expected to see significant growth.

Furthermore, increased collaboration between the government, insurers, and international organizations (like the World Bank and EBRD) can pave the way for innovative insurance solutions and greater financial inclusion.

Conclusion

Insurance in the Republic of North Macedonia is at a critical juncture. While the market is still emerging, its potential is substantial. Continued investment in digital infrastructure, public education, and regulatory alignment will be key to unlocking growth. As the country moves closer to European Union membership, its insurance industry is expected to mature and become more competitive, offering Macedonian citizens and businesses greater financial security and peace of mind.