As a result of the low demand on banks caused by the large amount of money and reduced demand for loans, interest on savings in most banks in Serbia is zero or close to zero, while in banking circles there are suggestions that socalled negative rates will be introduced
Banks estimate that, despite this, citizens will not withdraw their money from banks and that reduced interest on savings will earn more, but will also provide room to reduce interest on loans and thus generate their growth. In such a situation, however, it is to be expected that many citizens will withdraw their savings and opt for savings “under the mattress” or seek to re-invest their money.
On the other hand, following an initial boom around 2008, the economic crisis has slowed the growth of life insurance in Serbia, thus, according to the information available, life insurance is currently paid in Serbia by about half a million citizens, which is well below than the European average. Investing through bank savings and investments in life insurance are not mutually exclusive, but – comparing current conditions and benefits – it is far more cost-effective and rational to invest in life insurance than in bank savings. I see the main reason why this is not so, first of all, in the absence of the systemic educating of the population about the importance of, and the need for, insurance in general.
Promotions of all insurance products are also lacking, including life insurance as a form of long-term saving, which, in addition to serving this interest, also provides the user with life insurance. We have to work on this through the Association of Insurers, as well as within each insurance company individually.
Both the lives and investments of citizens are often risky, and citizens should know what the insurance industry could do for them. One of the medium-term solutions for stimulating demand for life insurance is to reduce tax, as an additional form of support and for the development of the behaviour of the population, to save will taking care of their own future.