VIENNA INSURANCE GROUP VIG: the role and importance of insurance for national economies Yalta, 21. September 2010 Insurance development worldwide Dependencies in the development of the insurance markets Insurance is dependent on the economic development, and at the same time is influencing the further progress of the economies, creating security for stable financial development. 2 Ukraine – Growth potential Insurance penetration in some of the CEE markets Penetration (Life+Non Life) 7,0% 6,0% 5,0% 4,0% 2,1% 3,0% 2,0% 1,0% 0,0% Austria Czech Slovak Republic Republic 2007 Poland 2008 Romania Ukraine Bulgaria 2009 Non Life penetration Life penetration 3,0% 3,5% 2,5% 3,0% 2,1% 2,5% 2,0% 2,0% 1,5% 1,5% 1,0% 1,0% 0,1% 0,5% 0,5% 0,0% 0,0% Austria Czech Slovak Republic Republic 2007 Poland 2008 Romania 2009 Ukraine Bulgaria Austria Czech Slovak Republic Republic 2007 Poland 2008 Romania Ukraine Bulgaria 2009 Source: Swiss Re Sigma 3 What else is insurance? Selling confidence What is insurance? (back to the roots) Main functions of insurance: Risk hedging Risk prevention Savings and profit generation Insurers themselves are profit oriented institutions, playing at the same time also an important social role for the development of a national economy, besides of the importance to the financial markets. Insurance is a safety net, which is able to assess the possible risks and mitigate its consequences, giving confidence to the insured. Insurance is a price for confidence and a base for stability! 4 Insurance framework Interdependencies of development of an economy and insurance What do insurance markets need for a playing an important role in the development of a national economy? Stable economic development, well developed financial market Optimized legal framework, developed pension and life and health markets Fair clear rules: competitiveness on the market (state control, insurance associations) Understanding of the value of insurance among population (Important role of the insurance organization in spreading this knowledge) Demand for insurance In most CEE countries the understanding of value of insurance is low due to economic situation, negative past experience, lack of know how, image of insurance business. Once insurance industry brings professionalism and clear transparent and solid client relationship, the insurance business will become one of the motors of the further economic development. 5 Insurance role Insurance in the emerging markets Insurance is a path from playing with risk to understanding and controlling the risk, from consuming only to appropriate saving, from emerging markets to industrialized countries. 6 VIG in Ukraine UKRAINE is a new CORE MARKET Let us make together a prospering insurance market! Let us be the power, which will help to boost the economic development!