THE MARKET POTENTIAL IN MONGOLIAN INSURANCE SECTOR

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1 THE MARKET POTENTIAL IN MONGOLIAN INSURANCE SECTOR Ulaanbaatar city BATJARGAL JAMSRAN Executive director Mongolian Insurers Association

2 CONTENT MARKET POTENTIAL IN MONGOLIAN INSURANCE INDUSTRY MAIN OPPORTUNITIES EXPANDING MONGOLIAN INSURANCE MARKET MONGOLIAN INSURERS ASSOCIATION 2

3 THE NUMBER OF LICENSED INSURERS 18, , , , Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 3

4 THE NUMBER OF BRANCHES OF INSURERS Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 4

5 TOTAL ASSETS OF THE INSURERS 140 /in billion tugriks/ Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 5

6 GROSS WRITTEN PREMIUM 100 /in billion tugriks/ Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 6

7 TOTAL COMPENSATION 30 /in billion tugriks/ Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 7

8 TOTAL RESERVE FUND 70 /in billion tugriks/ Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 8

9 OUTWARD REINSURANCE PREMIUM 30 /in billion tugriks/ Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 9

10 REINSURANCE RETENTION RATIO 79,0 /in percent/ 78, ,0 76, ,0 74, , ,0 71,0 70,0 69, Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 10

11 INSURANCE DENSITY IN MONGOLIA 20,0 19,0 18,0 16,6 16,0 14,0 14,0 12,0 10,0 9,3 8,0 6,0 5,2 6,3 6,9 4,0 2,0 1,7 2,0 2,0 2,5 3,0 3,6 0, Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 11

12 INSURANCE PENETRATION IN MONGOLIA 0, ,50 0, ,30 0,20 0,10 0, Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 12

13 GDP vs Insurance penetration 20,0 18,0 16,0 0,44 0,57 14,6 in trillion tugriks 18,4 0,54 0,6 0,5 14,0 0,39 0,38 0,4 12,0 11,2 10,0 8,5 0,3 8,0 6,0 6,6 0,2 4,0 0,1 2,0 0, GDP Insurance penetration Source: FRC, 2013 Annual report of insurance industry 0 MONGOLIAN INSURERS ASSOCIATION 13

14 MOTOR VEHICLE NUMBER As of 31 Dec , ,864 The number is increased with 40,000 vehicle in a year. 312, ,486 Average annual growth is 15% in last 3 years Source: Annual report, National Statistical Office of Mongolia 35,502 motor vehicles or 9.3 percent of the vehicle is covered in voluntary motor insurance in MONGOLIAN INSURERS ASSOCIATION 14

15 MOTOR VEHICLES /BY TYPE/ 23% 5% 4% Passenger car Truck 89 percent of vehicle is private-owned. 67% 67% Bus Special purpose 11 percent of vehicle is business-owned. Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 15

16 MOTOR INSURANCE GAP , % , % , , , % 10, % , Total number of motor vehicle Motor vehicle coverage Source: Annual report, National Statistical Office of Mongolia & FRC annual report, 00 MONGOLIAN INSURERS ASSOCIATION 16

17 MOTOR TPL INSURANCE GAP % % % % Total number of motor vehicle Motor TPL insurance coverage Source: Annual report, National Statistical Office of Mongolia & FRC annual report MONGOLIAN INSURERS ASSOCIATION 17

18 THE NUMBER OF ENTITIES IN MONGOLIA ,595 The total number of entities in Mongolia is doubled since Entities in rural areas ,327 20,896 Entities in UB city area , percent of the entities are domiciled in UB city Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 18

19 TYPES OF ENTITIES IN MONGOLIA /in thousand/ Business entities The staff in these entities are totalled to 559,7 thousand. Government entities 56.4 Non-government organizations Staffs in the entities are: As of 31 Dec % are for businesses. - 28% are for public entities. -7% are for NGO s. Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 19

20 CAR (CONTRACTORS ALL RISK) INSURANCE GAP , ,0 0.39% in million tugriks ,8 0,45 0, ,0 0, ,0 0, , , , , , ,0 0.22% 0.28% 0,25 0,20 0,15 0, ,0 0.08% 0,05 0, ,00 Construction works CAR insurance coverage Source: Annual report, National Statistical Office of Mongolia & FRC annual report MONGOLIAN INSURERS ASSOCIATION 20

21 TOTAL POPULATION OF MONGOLIA As of 31 Dec ,931, ,867, ,760,968 2,811,666 The population is increased with 1.9 percent on average in last 5 years ,716, percent of the population are living in UB city area according to official statistics Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 21

22 LIVESTOCK INSURANCE GAP 50,0 in million 4,00% 45,0 40,0 35,0 30,0 36,3 40,9 2,93% 45,1 3,55% 3,50% 3,00% 2,50% The number of livestock is increased with 11.3 percent on average in last 4 years. 25,0 2,00% 20,0 15,0 10,0 5,0 1,38% 1,50% 1,00% 0,50% Only 3.5 percent of livestock has been covered in index-based livestock insurance. 0, ,00% Total livestock Livestock insurance coverage Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 22

23 Main opportunities expanding Mongolian Insurance Industry New mandatory insurance forms is still pending: - Professional indemnity insurance - Contractors All Risk (CAR) insurance - Crop mandatory insurance - Other MONGOLIAN INSURERS ASSOCIATION 23

24 Policyholders signature on insurance policy or written policy Main opportunities expanding Mongolian Insurance Industry Specific regulation on micro-insurance Distribution channel improvements: Exclusive agents regulation Using the mobile technology MONGOLIAN INSURERS ASSOCIATION 24

25 THANK YOU FOR YOUR ATTENTION. Q & A 25