Serbia said on Tuesday it had accepted trade union demands for worker benefits in the long delayed sale of its second biggest insurer DDOR, hoping to speed up the first privatisation in the sector.
The government accepted union demands and will release 15 percent of DDOR shares to workers, who will be entitled to an equivalent of 200 euros worth of shares per year of service, an aide to Finance Minister Slobodan Ilic told reporters. "This clears the problem as far as trade unions are concerned. But this is also good news for 11 companies which have expressed interest in DDOR."
Further reforms to the insurance sector were also planned, and amendments to the Insurance Law would be submitted next week and adopted by parliament in September, he said.
DDOR controls almost a third of the Serbian insurance market. Since it was first put up for sale in May 2006 it has attracted bids from a dozen international companies. The government hopes to complete the sale by end-2007, Ilic said.
"The board of the Bank Rehabilitation Agency has decided to resume the process and will inform all interested parties of deadlines for submitting binding bids," he said. The government is still keen on holding a public auction to select the buyer.
When the government launched the tender in 2006, bids came from France's Axa Germany's Allianz Italy's Fondiaria-SAI and Generali. Belgium's KBC Vienna Insurance Group Swiss company Baloise Greece's National Insurance Czech insurer Ceska Pojistovna, Dutch-based Eureko, Slovenia's Triglav, France's mutual insurer Groupama and Germany's VHV Gruppe also bid.
Serbia's insurance market remains small, and following 10.5 percent nominal growth in 2006, the gross written premium accounts for 2.0 percent of its GDP. Seven of 14 insurers are majority foreign-owned. State-held Dunav Osiguranje and DDOR control more than a half of the total market.
The insurance sector is high on a list of issues the United States and Canada want Serbia to address before it joins the World Trade Organisation, with requests ranging from providing cross-border services, a full scope of insurance services including air, road and river transport.
But the government has only considered allowing affiliates of foreign insurers to set up business in Serbia, Ilic said. "We will allow foreign affiliates of EU-based insurers to set up business here only when Serbia joins the European Union." The government planned to postpone for a later date the December 31 deadline when insurers were supposed to divide their activities into life and non-life business. All licensed insurers are likely to keep their businesses integrated and the division will be applied to new comers, he said.
Non-life insurance accounted for 92.1 percent of the total written premium at the end of the first quarter this year, with life-assurance holding a 7.9 percent share.