XPRIMM: How would you assess the current development stage of Montenegro’s insurance market, and what will drive growth in the next few years?

Boris ŠABAN: The insurance market in Montenegro continued its stable growth during 2025, with a simultaneously pronounced trend of increasing the amount and frequency of claims. According to the data presented in Budva at the "IV Montenegrin Insurance Days" conference, the total gross invoiced premium reached 148.3 million euros, which represents an increase of 10.5% compared to the previous year.

The average net premium per capita was EUR 237.8 at the end of 2025; EUR 215.2 at the end of 2024; and EUR 191.5 at the end of 2023.

EU accession and regulatory alignment are the most important processes for the insurance market and the whole Country.

We strongly believe that EU accession will have positive impact on the growth of the insurance market.

XPRIMM: Motor insurance dominates the market. How can insurers accelerate diversification toward property, life and health lines?

B.S.: Overall, motor vehicle insurance and liability insurance for the use of motor vehicles account for 54.8% of the total non-life insurance premium at the end of 2025; 55% at the end of 2024 and 55.1% at the end of 2023. Which means that motor business still dominates the insurance market.

The market has reported some positive trends in the other class of business, like health and accident insurance. Also, growth in property and real estate insurance. Construction activity, rising coastal property values, and foreign investment in tourism real estate are increasing demand for property insurance.

But in respect of further development of the property insurance, insurers believe that only compulsory property insurance will increase significantly this class of the business. Many people still believes that insurance is just a formality, and unnecessary expense.

XPRIMM: With climate risks intensifying, is Montenegro’s insurance sector adequately prepared for higher natural catastrophe losses?

B.S.: Compared to the region, Montenegro is not among the least prepared, but it remains vulnerable to large-scale catastrophic events

The Montenegrin insurance sector is partially prepared, but there are still significant limitations when it comes to major natural disasters such as earthquakes, floods, wildfires, or extreme weather events. The situation is better than it was a decade ago, but it still falls short of the standards seen in more developed European markets.

Insurance companies in Montenegro use reinsurance through international reinsurers, meaning part of the risk is transferred to large global companies, but we still have a large number of houses, apartments, and agricultural facilities in Montenegro which are uninsured or hold policies that do not cover catastrophic events.

This means that after a major earthquake or flood, a significant financial burden would fall directly on the state and citizens. Low level of property insurance coverage is mail limitation for better net cat coverage.

Montenegro is located in a seismically active area. A disaster similar to the 1979 earthquake could generate damages far exceeding the domestic sector’s capacity and trigger massive claim payouts which eventually will require international financial assistance.

We believe that only introduction of the compulsory property insurance for can significantly improve resilience to the Nat Cat risks.

XPRIMM: As Montenegro advances toward EU integration, what regulatory reforms are most critical for strengthening market stability?

B.S.: If I had to highlight one single most important reform for Montenegro in the EU accession negotiations regarding the insurance market, it would be full implementation of Solvency II.

For Montenegro, this is especially important because the market is: small, concentrated, vulnerable to economic shocks and still developing.

The priority is not just adopting EU laws, but ensuring Montenegro can enforce them: risk-based solvency supervision, stronger governance, consumer protection, digital resilience and credible intervention powers. This means more skilled people in the industry, actuarial expertise, IT/data tools, and power to intervene before solvency problems become failures. This is particularly important for the supervisor.

On the paper it is ok but, in reality, the business could become more expensive because more experienced people have to be employed on the reporting side. This could be issue for our market.

The most important question for us is how to find the right balance between very complex EU requirements of Chapter 9, and capacity of the Montenegro insurance market. Because without full implementation of solvency II, there can be no fully stable and EU compatible insurance market.

XPRIMM: How is digitalization reshaping the insurance sector, and what more can be done to improve insurance literacy and public trust?

B.S.: Digitalization is gradually reshaping the insurance sector in Montenegro by changing how insurers sell policies, process claims, interact with customers, and comply with regulation.

The biggest change is the shift from traditional paper-based insurance toward digital services and online platforms. This is very important as the Customers increasingly expect the things such as online policy purchases, digital claims submission, faster payouts, mobile applications.

This transformation accelerated after COVID-19 and is now strongly connected with Montenegro’s EU integration process.

However, the transformation is still uneven and the market remains behind more advanced EU insurance systems. Because of this, we must strengthen both our digital infrastructure and regulatory framework to ensure that fast innovation does not undermine market stability.