The last decennary the universe has faced the worst fiscal and economic crisis in recent history. Although ab initio the crisis started in USA, Europe was besides badly affected. The Balkan states including R.Macedonia were non exemption and were besides negatively influenced by the crisis. In this paper we critically evaluate the impact of the planetary crisis on macro and micro variables in the national economic system analysing the public presentation of cardinal economic phenomena during the crisis.

Furthermore, we focus our attending more narrowly on one specific industry, measuring the influence the crisis had on the insurance sector as a whole and on “ X & A ; Y ” insurance company in peculiar.

We besides discuss governmental anti-crisis steps and policies, crisis-generated alterations in the insurance industry, every bit good as steps taken by the company in order to beef up its failings and emerge stronger after crisis of such proportion.



The planetary fiscal and economic crisis is one of the chief universe subjects of twenty-first century. Almost every state in the universe has felt its impact one manner or another. Even people who are non professionals in economic system, felt or at least heard the continuously reiterating intelligence for the effects of the crisis such as rising prices, high unemployment rates, diminution of national and international production, clangs in stock markets, loss of trust in fiscal establishments or governmental anti-crisis steps.

Fiscal analysts agree that the root of the crisis is effect of the lodging bubble explosion in the USA which joined with the autumn of the US dollar rate created lay waste toing and durable impact on the universe economic system ( Jones, 2009 ) . The crisis took gait with the backdown of foreign investors ‘ capital in USA, through shuting down major international Bankss, to crashed stock markets around the universe. Europe was besides barely hit. The effects of old ages of jurisprudence involvement rates in most EU states joined with the spillover consequence of the fiscal crisis fuelled the debt in the fiscal sector and in 2009 most EU members experienced contraction of GDP, negative growing rates, increased unemployment and doubled budget shortages ( Goshev, 2009 ) .

As seen from the graph above in 2008 and 2009 there was economic ruin in all major international economic systems.

As we live in one networked and globalized universe it is easy apprehensible how the fiscal crisis in USA was rapidly spread in EU and across other continents.

The crisis goes even deeper, outside the EU, spread outing its consequence on non EU states such as R.Macedonia. The state ‘s economic system recorded a uninterrupted GDP growing during 2004-2008 that was non visibly weakened by the crisis until 2008.

However, even though non EU member, due to the size and openness of the economic system, the effects of the crisis were transferred in the state largely through the export oriented production sector and the lessening of influxs from private transportations from abroad ( Goshev, 2009 ) .

All these proved that regardless the fact the state is neither EU member nor strongly connected to international fiscal markets, it still is non an stray island but is delicate to international and regional economic perturbations.

In this context, the chief subject of this paper are the effects of the planetary fiscal and economic crisis. In the first portion we analyze the influence of the crisis on the national economic system by reexamining the public presentation of its chief macroeconomic indexs. Furthermore, in the 2nd portion, we concentrate on the micro economic system by traveling through the public presentation indexs of the insurance industry as a whole and “ X & A ; Y ” insurance company in peculiar. In the 3rd section of the paper we discuss governmental anti-crisis policies every bit good as specific measures the company has taken to get the better of the negative crisis-generated deductions. At the terminal of the paper we present our reasoning comments.


Macroeconomicss surveies phenomena such as economic growing, rising prices and unemployment, following economic parametric quantities of economic systems as a whole, without sing the public presentation of specific single organisations or groups ( Schiller, 2008 ) .

The economic crisis itself left Markss on the macro every bit good on the micro degree, and the economic system of RM has non remained immune to the deepest global recession in recent history.

However, as a consequence of the limited capital history openness, the economic system seemed undisturbed from the first moving ridge of the economic crisis ( Nikolov, 2009 ) . Furthermore, the fact that the national fiscal system was non good integrated into the international fiscal market “ proved to be an advantage for the Macedonian economic system, because the fiscal crisis practically missed RM. ” ( Nenovski et al. , 2011, p.1158 ) .

In more occasions in 2008 governmental functionaries stated that the economic system will non experience the effects of the crisis and they even thought the state could do net income from it.

This belief has been supported with statements that international Bankss that suffered most from the fiscal crisis were non runing in the state and that commercial Bankss were dependent on stable domestic sedimentations ( Boskovska, 2008 ; FESF, 2009 ) . Therefore any larger temblor was non expected to go on.

“ Vice-Prime Minister Zoran Stavrevski even projected the 2009 economic growing at three per centum. ” ( Georgievski, 2009, p.1 ) .

However, in 2009 the world proved that these governmental functionaries have made incorrect prognosiss.

The economic contraction in EU provinces which are major export market for Balkan states and the reduced FDI led to the first manifestations of the crisis in the Balkan part by the Q4 of 2008 ( Panagiotou, 2012 ) .

Furthermore, the reduced planetary demand negatively affected the exports, whereas in the same clip the lowered production resulted in decreased public grosss ( Panagiotou, 2012 ) . GDP, capital investings and budget shortage were besides negatively affected ( Shukarov, 2012 ) .

Exports and FDI

The production industry is characterized by export oriented companies chiefly concentrated in the metal production, machinery and fabric industries. However, the export capacities are limited and really sensitive to foreign economic fortunes ( Shukarov, 2012 ) .

As the crisis enlargement took gait, the negative effects were bit by bit transferred through the externally-export oriented production sector, merely after chief trade spouses such as Germany, Italy, Greece and other Balkan states declared that their economic systems entered into recession ( Nenovski et al. , 2011 ) .

One of the chief entry points of the crisis was the lessening of the universe demand for metals, joined by the autumn in demand for fabrics ( NBRM, 2010 ) . As a effect the export fell by 43 % in Q1 of 2009 ( SSO, 2009 ) .

The state of affairs worsened in Q2 and Q3 of 2009 with farther important contraction of industrial production and diminution in both- foreign trade and FDI ( Bucevska, 2011 ) .


Historical Data Chart

Beginning: World Bank, 2013

Logically to the impairment of EU and other foreign economic systems FDI visibly shrank merely after the crisis started.

From the tabular array below we see the important lessening of the entire exports in 2009 compared to the old twelvemonth. However, as the economic system started to retrieve, the sum of entire exports in 2010 increased once more easy nearing the degree from 2008.

Beginning: NBRM, 2012

The entire exports recorded positive tendencies in 2011 when it was apparent that the state was easy retrieving from the crisis.

Gross domestic merchandise

Harmonizing to State Statistical Office ( 2009 ) , GDP of the state has entered the negative side of the scale entering rate of -0.9 % ; -1.4 % and -1.8 % in the first 3 quarters of 2009, which meant that the state has officially entered into recession.

As seen from the graph, in 2009 the existent GDP growing rate was -0.9 % ( NBRM, 2012 ) .

Degree centigrades: UsersHPDesktopchartgo ( 2 ) .png

Harmonizing to NBRM ( 2009 ) the lessening of the export demand joined with the lag of the capital flows and the important diminution in the remittals from abroad were the chief factors which led to the ruin of the national economic activity.

However, the contraction of the national economic system was smaller compared to most adjacent states, chiefly because of the low degree of integrating with the international fiscal markets, so there was no critical descent of fiscal support to the economic system ( NIBM, 2010 ) .

Beginning: NBRM 2010

In the undermentioned 2010 and 2011 the existent GDP growing rates returned on the positive side of the graduated table and the state has recorded low but stable growing rates of 2.9 % and 2.8 % severally ( SSO, 2012 ) .


The contraction of EU economic systems every bit good as the national 1 has stopped the high rising prices from 2008 which harmonizing to SSO ( 2009 ) was 8.3 % , mostly due to the addition of universe monetary values of nutrient and energy. As the state is mostly dependent on energy and nutrient imports, the addition of energy monetary values led to increased production costs in about all industries, whereas the increased nutrient monetary values hit the limited household budgets.

However, contrary to high rising prices rates in 2008, in 2009 the monetary value degrees recorded negative rates i.e. deflation. After the critical 2009, rising prices returned on the positive side of the graduated table entering stable and low rates on an one-year degree.

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Employment and rewards

Although other macroeconomic parametric quantities underwent decline logical to the crisis, the Numberss for the employment rates recorded positive development.

The positive tendencies in the labour market from 2008 continued in 2009 when unemployment rates fall from 33.8 % to 32.2 % compared to 2008 ( NBRM, 2010 ) . This growing in employment can be contributed to the larger figure of employees in public disposal ( NBRM, 2010 ) . This contradicts the state of affairs where the state faces lower domestic production and economic ruin, but some accounts are possible clip slowdown of accommodation of the labour market to alterations in the economic system and enrollment of larger figure of employees from the informal to the formal sector ( SSO, 2010 ) .

Furthermore, in 2009, “ the nominal mean net and gross rewards registered an one-year growing of 9.8 % and 9.2 % , severally. ” ( NBRM, 2010, p.38 ) . The ground for this once more is the populace sector where rewards were increased in September 2008 with governmental determinations.

Degree centigrades: UsersHPDesktopchartgo ( 5 ) .png


Contrary to Macroeconomics, Microeconomics surveies specific, narrower inside informations of economic system. It is concerned with behaviour of peculiar single economic histrions, industries, companies, governmental organic structures or persons who compose the bigger image ( Schiller, 2008 ) .

In this portion of the paper we focus merely on the impact of the crisis to the insurance industry as a whole and to “ X & A ; Y ” insurance in peculiar.

Impact of the crisis to insurance industry

The economic system of RM is one of the least developed in the part, and so is its insurance. However, this industry is in uninterrupted growing since 2004, and has attracted international insurance trade names like Vienna Insurance Group, UNIQA and Triglav which joined the insurance market ( NIBM, 2010 ) .

Compared to the economic system as a whole, the effects of the crisis over the insurance sector were less seeable. ( Popovski, 2011 ) .

However, although slighter, the impact on insurance was still mensurable. Harmonizing to informations from NBRM ( 2010 ) , in 2009, the insurance sector ‘s gross premiums decreased 3.7 % compared to 2008. This was chiefly effect of the 4.5 % bead of gross premiums in non-life insurance which generated 95.1 % of entire premiums in the industry. This diminution in non-life/property insurance premium can be clearly seen from the graph below.

Beginning: NIBM 2010

The most important diminution was recorded in the Motor Third Part Liability Insurance category which constitutes around 50 % of the entire non-life insurance premiums. Apparent from the graph, the diminution in this insurance category in 2009 was 11.24 % , and the gross written premiums achieved before the crisis were non exceeded even in 2010.

At the terminal of 2009, all negative influences “ resulted in loss from operating at the degree of the whole insurance sector ” ( NBRM, 2010b, p.98 ) .

Furthermore, insurance companies were confronting important jobs with ungathered claims based on sold constabularies, due to the decreased abilities of clients to pay their premiums in regular mode. This crisis-generated tendency increased the liquidness hazard of insurance companies as their chief beginnings of funds-premiums were entering reduced and delayed influxs ( NBRM, 2010b ) .

Banks and insurance companies are both portion of the fiscal system in the state but the insurance sector is much more dependent on the banking. Therefore, quakes in the banking and fiscal sector have large influence on the fiscal consequences of insurance companies ( KoA?oviA‡ et al. , 2011 ) .

Harmonizing to Schich ( 2009 ) “ the exposure of most insurance companies to the important impairment in planetary fiscal markets has been chiefly through their investing portfolios. ” p.4.

The ground for this is the fact that 28.6 % of entire assets of insurance companies were placed in sedimentations in domestic Bankss ( NBRM, 2009 ) . Insurance companies invest their available financess in bank sedimentations or in bonds, stocks and securities in order to derive extra net incomes at minimal hazards ( Wolski, 2011 ; KoA?oviA‡ et al. , 2011 ) .

However, the crisis led to drop in stock monetary values in 2009 when the MBI stock exchange index dropped down about 60 % in period of merely 6 months ( Zografski, 2009 ) . This lowered the profitableness and increased the hazard of insurance companies ‘ investings ( KoA?oviA‡ et al, 2011 ) .

These stock exchange turbulencies led to important lessening of insurance sector ‘s arrangements in portions and at the terminal of the twelvemonth additions from fiscal instruments were reduced on half compared to 2008 ( NBRM, 2010 ) .

“ X & A ; Y ” insurance and the crisis

“ X & A ; Y ” insurance was and stayed the largest insurance company on the market. However, if its market portion in 2006 was over 27 % , until 2012 it has decreased to 18 % ( NIBM, 2012 ) . Although the chief grounds for this are increased market fight, entryway of new companies and hazardous monetary value wars of some rivals, still one of the grounds can be attributed to the economic crisis itself.

The reverberations of the crisis were most apparent in 2009, but some wake effects continue to this twenty-four hours. In 2008 the company recorded premiums in sum of 1.368.218.000 MKD ( 22.247.447 EUR ) , whereas in 2009 sum premiums shrank to 1.316.168.000 MKD ( 21.401.105 EUR ) , which was about 850.000 EUR autumn ( NIBM, 2010 ) . Historically, in 2008 and 2009 the company recorded the worst consequences and lowest gross written premiums since 2003. All gross revenues mediators except securities firm companies achieved lower consequences in 2009 compared to the twelvemonth earlier.

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In the nucleus concern the crisis has initiated different impact on assorted insurance categories. Most noteworthy was the lessening in premiums from recognition insurance. This was the instance because the company was much more selective when make up one’s minding to accept any recognition hazard in its portfolio.

Other significantly affected category of insurance was the motor ( vehicle ) insurance and MTPL in particular-which was lowered from 65.91 % engagement in entire premium in 2007 to 50.30 % in 2009.

The diminution of renting services was one of the cardinal factors for important lessening in written premiums from motor insurance.

Harmonizing to informations from the NIBM ( 2010 ) in 2009 compared to 2008 there was 51.7 % lessening in figure of new vehicles sold. One of the taking funding beginnings for new autos was the fiscal rental offered by renting companies but in 2009, “ the figure and value of new renting contracts declined by 51.2 % and 31.2 % , severally. ” ( NBRM, 2010b, p.107 ) .

Several grounds for this diminution are the reduced domestic disbursement, psychological effects of the crisis which influenced purchasers to prorogue their determinations for regenerating their auto fleets, every bit good as increased leasing involvement rates and tightened standards in leasing services ( NBRM, 2009 ) .

However, the diminution of written premiums in the MTPL category can non be attributed to the crisis merely. Part of the doomed premiums is consequence of the governmental determination to diminish the premium rates for MTPL. Although monetary values were lowered, as the demand of this merchandise is non so elastic, the lower monetary values did n’t ensue in higher grosss ( Schiller, 2008 ) .

From fiscal facet the crisis decreased the capacity of clients to pay their premium duties and installments on clip. This led to reduced influxs from premiums, higher liquidness hazard and decreased “ X & A ; Y ” insurance ‘s chances to put extra financess in profitable fiscal instruments on the fiscal capital market. This resulted in fewer net incomes from fiscal investings compared to 2008.


Governmental policies and anti-crisis steps

Get downing from 2008 the Government reacted to the crisis by suggesting four bundles of anti-crisis steps with purpose to diminish the negative effects on the economic system.

The first bundle was based on steps which alternatively of direct fiscal injections in the economic system enforced revenue enhancement decrease and debt authorship off inducements for companies. With these steps companies were enabled to reprogram their debts and pay revenue enhancement duties on up to 36 installments and portion of the private sector ‘s liabilities, accumulated debts and involvements for medical insurance, revenue enhancements and like were written of ( Bexheti, 2010 ) . Stimulating investings in growing by revenue enhancement of net incomes merely if they were allocated in dividends was besides introduced.

However, these steps had limited economic consequence, so the Government proposed 8 billion EUR deserving 2nd bundle of strategic economic steps for the 2009-2016 period.This bundle was really optimistic capital investing program concentrating on undertakings in substructure, energy and other sectors. The chief aim was to back up economic activity and growing and to lend for better fight of the economic system. However, this long term investing plan was non backed up with detailed beginnings of funding, or concrete execution stairss and therefore merely few undertakings have been started or implemented.

The 3rd bundle was focused on budget rebalance ( outgos were reduced for around 173 million EUR ) , governmental asceticism steps, cutting outgos on all non- productive costs in public sector and 100 million EUR recognition support for private endeavors from European Investment Bank financess ( Nenovski et al. , 2011 ) . Furthermore, 54 steps were implemented, simplifying imposts processs and enabling better flow of goods at boundary lines.

The 4th bundle of 24 steps was introduced in March 2010 and it did non hold any budget deductions. It proposed steps in the countries of revenue enhancement, crediting, land and belongings issues, agribusiness, and other countries. These steps were intended to simplify administrative processs, to excite growing and development and to better the fight of the economic system ( Ristevski, 2010 ) .

X & A ; Y ‘s crisis influenced steps

Inside the house the crisis triggered an dismay for the demand of transmutation of the insurance portfolio by scattering the hazard in assorted insurance categories. The diminution in MTPL premium pointed out that the company should concentrate on growing of other insurance categories instead than MTPL- which constituted about half of the portfolio. Therefore, the direction brought long term scheme for enlarging the internal trade channel of insurance agents, and diminishing the dependance on insurance mediators like securities firm companies and proficient review sites-predominantly selling MTPL merely. It besides became apparent that instead than pulling big companies as clients the company should scatter the hazard by pulling more medium or little sized houses, as the larger 1s and their liquidness were most affected during the crisis. Attracting more natural individuals as clients was besides solution for more equal hazard planning.

Furthermore, the crisis influenced the investing in fiscal markets. In this section of the concern the company took more conservative investing attack by puting available financess in more unafraid fiscal instruments although they bring lower involvement rates. Rather than in stocks of attractive foreign and domestic companies the fiscal investing portfolio during the crisis was directed in bank sedimentations in domestic Bankss and in governmental bonds or exchequer measures ( KoA?oviA‡ et al. , 2011 ) . This attack decreased the net incomes from fiscal investings but increased the long term security of the company and its clients.


This disruptive economic period revealed the failings of all economic entities on macro and micro degree. It has exposed the state ‘s dependence on international demand and supply and sensitivity on international economic turbulencies. Furthermore, it has unraveled that motors of the economic system are merely few key sectors which are dependent on universe monetary values of cardinal export and import merchandises. On a company degree, the weak points of the house besides became more apparent. The homogeneous portfolio based on few insurance categories and the increased liquidness hazards triggered the demand for new attacks and broader managerial vision adequate to these stormy, fast altering market conditions.

However, the crisis could be turning point for the manner of making concern on all degrees. It has shown the greater demand for long term planning, more alert moves, and the precedence of sustainability on the long tally instead than merely believing of net incomes on the short tally. The effects of the avaricious economic logic, fast gained net incomes and hazardous economic moves taught the universe they should be left behind. Sustainability, maintainable fight, increased corporate and societal duty, environmental consciousness are merely some of the new tracts all economic histrions on macro and micro degree should get down following.