DEVELOPMENT OF BANK ASSURANCE IN THE REPUBLIC OF MACEDONIA

Abstract

Banking has gained a new dimension throughout the world in the last few decades due to the integration of global financial markets, the development of new technologies, the universalization of banking operations and diversification into non-banking activities. The merging of various financial services has provided synergies in the banks' operations and development of new concepts. One of these concepts is bank insurance (or banc assurance). Banc assurance, as an emerging distribution channel of insurance, essentially is defined as mediation of banks in the sale of insurance policies issued by insurance companies that are most often used as additional collateral for banks when giving loans to their clients, while the clients with the purchase of credit insurance through banks are secure in case of inability to pay off the loan due to occurrence of the insured risk, whereby the insurer covers the remaining debt of the client towards the bank. Banc assurance is much more developed in Western European countries, but in recent years this type of insurance has noted a trend of growth in the less developed countries also. Banks in the Republic of Macedonia, as well as banks in other countries in the region, try to encourage the development of banc assurance, but it still has a low level of growth in comparison with the European Union member states. This paper presents the level of development of banc assurance as well as its share in the insurance market in the Republic of Macedonia by analyzing the annual reports of the Insurance Supervision Agency of the Republic of Macedonia for the past few years. Consequently, an appropriate comparison was made between the realized values of the gross written premium of the banks as intermediaries in insurance with the realized values of the gross written premium of the other insurance intermediaries (insurance brokerage companies and insurance agencies); and a brief comparison was made with the share of banc assurance in the insurance markets in several countries in the region. The purpose of the paper is to determine the reasons for the situation in which the banc assurance in the Republic of Macedonia is, to analyze the need and the possibility for its development, as well as to determine the manners for banc assurance to reach the level of development in the member states of the European Union as soon as possible. For this purpose, an adequate analysis of the level of implementation of the European Directives for banc assurance (such as the Directive on Insurance Mediation and the Directive on Insurance Distribution) in the legal framework of the Republic of Macedonia has been carried out, as well as analysis of the national legislation regulating banc assurance in the Republic of Macedonia, covered in couple of provisions in the Law on Banks and the Law on Insurance Supervision.