The Insurance Supervision Agency of Montenegro published the results of a stress test of Montenegrin non-life insurers assessing how a fall in compulsory motor third-party liability (MTPL) insurance premiums would affect financial stability. The test indicates satisfactory resilience and capital stability, with capital adequacy remaining above legally prescribed minimums under hypothetical MTPL premium declines of 5%, 10% and 15%, despite weaker profitability. Across all scenarios, profitability metrics decline, including gross and net operating results, return on equity and return on assets, alongside moderate reductions in technical reserves and liquidity. The agency framed the exercise against mixed European experience, where MTPL price pressures have in some cases undermined technical premium adequacy and sector stability. In the MTPL segment, the average gross combined ratio rises from 88% to 95%, 100% and 106% in the three stress scenarios, indicating a direct and materially significant impact on line profitability if prices fall.
Insurance Supervision Agency of Montenegro 2025-10-17
Insurance Supervision Agency of Montenegro stress test finds non-life insurers’ capital stays above legal minima under 5–15% compulsory motor third-party liability premium drop
The Insurance Supervision Agency of Montenegro released stress test results for Montenegrin non-life insurers, showing resilience and capital stability despite potential declines in compulsory motor third-party liability (MTPL) insurance premiums. Capital adequacy remained above legal minimums under hypothetical MTPL premium declines of 5%, 10%, and 15%, although profitability metrics weakened. The average gross combined ratio in the MTPL segment increased significantly, indicating a material impact on profitability if prices fall.