THE MARKET POTENTIAL IN MONGOLIAN INSURANCE SECTOR

THE MARKET POTENTIAL IN MONGOLIAN INSURANCE SECTOR Ulaanbaatar city 2014.04.17 BATJARGAL JAMSRAN Executive director Mongolian Insurers Association

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

THE NUMBER OF LICENSED INSURERS 18,5 18 18 18 17,5 17 17 17 17 16,5 16 16 15,5 15 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 3

THE NUMBER OF BRANCHES OF INSURERS 300 250 251 213 200 188 150 120 129 138 100 50 0 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 4

TOTAL ASSETS OF THE INSURERS 140 /in billion tugriks/ 126.4 120 107.6 100 80 81.3 60 56.7 40 34.3 41.1 20 0 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 5

GROSS WRITTEN PREMIUM 100 /in billion tugriks/ 93.9 90 80 79.0 70 60 50 47.5 40 31.8 30 20 21.5 23.4 10 0 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 6

TOTAL COMPENSATION 30 /in billion tugriks/ 26.5 25 20 16.9 15 10.0 10 5 4.5 5.5 6.8 0 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 7

TOTAL RESERVE FUND 70 /in billion tugriks/ 60 57.3 50 48.2 40 36.1 30 20 21.4 24.7 29.1 10 0 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 8

OUTWARD REINSURANCE PREMIUM 30 /in billion tugriks/ 26.0 25 20.8 20 15 10.7 10 7.5 5 4.7 6.0 0 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 9

REINSURANCE RETENTION RATIO 79,0 /in percent/ 78,0 78.1 77.5 77,0 76,0 76.2 76.4 75,0 74,0 74.4 73,0 73.4 73.7 72.3 72,0 71,0 70,0 69,0 2006 2007 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 10

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 0,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 11

INSURANCE PENETRATION IN MONGOLIA 0,60 0.57 0.54 0,50 0,40 0.40 0.43 0.38 0.37 0.34 0.32 0.37 0.36 0.39 0.38 0.44 0,30 0,20 0,10 0,00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: FRC, 2013 Annual report of insurance industry MONGOLIAN INSURERS ASSOCIATION 12

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 0,0 2009 2010 2011 2012 2013 GDP Insurance penetration Source: FRC, 2013 Annual report of insurance industry 0 MONGOLIAN INSURERS ASSOCIATION 13

MOTOR VEHICLE NUMBER As of 31 Dec 2013 450 000 400 000 350 000 345,473 384,864 The number is increased with 40,000 vehicle in a year. 312,542 300 000 250 000 200 000 254,486 Average annual growth is 15% in last 3 years. 150 000 100 000 50 000 0 2010 2011 2012 2013 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 2013. MONGOLIAN INSURERS ASSOCIATION 14

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

MOTOR INSURANCE GAP 450 000 35, 00 400 000 29.95% 384 864 30, 00 350 000 300 000 22% 312 542 345 473 25, 00 250 000 254 486 20, 00 200 000 15, 00 150 000 14.4% 10, 00 100 000 9% 50 000 5, 00 0 2010 2011 2012 2013 Total number of motor vehicle Motor vehicle coverage Source: Annual report, National Statistical Office of Mongolia & FRC annual report, 00 MONGOLIAN INSURERS ASSOCIATION 16

MOTOR TPL INSURANCE GAP 450 000 93.2% 100 400 000 384 864 90 350 000 300 000 312 542 345 473 79% 80 70 250 000 200 000 254 486 50% 60 50 40 150 000 30 100 000 23.8% 20 50 000 10 0 2010 2011 2012 2013 0 Total number of motor vehicle Motor TPL insurance coverage Source: Annual report, National Statistical Office of Mongolia & FRC annual report MONGOLIAN INSURERS ASSOCIATION 17

THE NUMBER OF ENTITIES IN MONGOLIA 50000 45000 40000 45,595 The total number of entities in Mongolia is doubled since 2006. 35000 30000 Entities in rural areas 25000 20000 20,327 20,896 Entities in UB city area 15000 10000 5000 12,077 69 percent of the entities are domiciled in UB city. 0 2006 2011 Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 18

TYPES OF ENTITIES IN MONGOLIA 4.0 6.0 /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 2013-65% 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

CAR (CONTRACTORS ALL RISK) INSURANCE GAP 1600000,0 1400000,0 0.39% in million tugriks 1452208,8 0,45 0,40 1200000,0 0,35 1000000,0 0,30 800000,0 600000,0 400000,0 350807,6 450663,1 811272,0 0.22% 0.28% 0,25 0,20 0,15 0,10 200000,0 0.08% 0,05 0,0 2010 2011 2012 2013 0,00 Construction works CAR insurance coverage Source: Annual report, National Statistical Office of Mongolia & FRC annual report MONGOLIAN INSURERS ASSOCIATION 20

TOTAL POPULATION OF MONGOLIA 2 950 000 As of 31 Dec 2013 2,931,332 2 900 000 2,867,744 2 850 000 2 800 000 2,760,968 2,811,666 The population is increased with 1.9 percent on average in last 5 years. 2 750 000 2 700 000 2,716,275 45 percent of the population are living in UB city area according to official statistics. 2 650 000 2 600 000 2009 2010 2011 2012 2013 Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 21

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. 0,0 2011 2012 2013 0,00% Total livestock Livestock insurance coverage Source: Annual report, National Statistical Office of Mongolia MONGOLIAN INSURERS ASSOCIATION 22

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

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

THANK YOU FOR YOUR ATTENTION. Q & A 25