Croatia Insurance Industry was Dominated by 10 Companies in 2011, According to Timetric08 Apr 2013 • by Natalie Aster
The Republic of Croatia is situated between central and eastern Europe, bordering the Adriatic Sea between Slovenia, Bosnia and Herzegovina. Croatia declared its independence in 1991 and received candidate country status from the European Council in 2004. The country is expected to enter the European Union (EU) on July 1, 2013 to become the 28th member of the world’s largest trading bloc. The Croatian economy grew at a healthy rate, averaging 4–5% annually during 2001–2008. This facilitated the growth of insurance services in the country. However, the global financial and European debt crisis affected the Croatian insurance industry which registered negative growth during 2009–2011. The Croatian insurance industry is dominated by the non-life insurance segment which accounted for 64.5% of the total gross written premium (GWP) in 2011. Privatization measures by the government to facilitate investments, increasing product development and use of new technology will be the main drivers for the insurance industry in the country over the forecast period.
According to the United Nations World Investment Report 2012, the Croatian government holds a minority stake in over 600 companies and more than 50% of assets in over 60 companies. In order to tap into growing investor attention as a result of Croatia’s accession to the European Union in July 2013, the government embarked on a drive to attract foreign funds into energy and infrastructure projects. Among the assets the Croatian government is looking to offload is Croatia Osiguranje (CO), the biggest insurance company in the country. This privatization is expected to result in the combination of new capital and will enable the company to reinforce its market share, especially in the life insurance segment.
With its accession to the EU, Croatia has to abide by Solvency II norms, which are scheduled to be effective from January 2014. The enactment of Solvency II norms will result in the consolidation of the Croatian insurance industry. Companies are preparing to meet the regulatory requirements outlined in Solvency II and are looking for ways to increase their capital reserves and risk management standards. Smaller companies are expected to find it difficult to meet the new requirements given the lack of scale to absorb the extra costs and high competition among companies. This will result in consolidation of the industry with large companies acquiring smaller ones to expand their products and grow by creating synergies in business.
The Croatian insurance industry is relatively concentrated with the 10 leading insurers accounting for 84.3% of total gross written premiums in 2011, according to the report “The Insurance Industry in Croatia, Key Trends and Opportunities to 2017” by Timetric. At the end of 2011, 26 insurance companies operated in the Croatian insurance industry, including six life insurance companies, 10 non-life insurance companies and 10 composite insurers (operating in both life and non-life segments). Out of the total 26 companies, 16 are foreign owned.
The Insurance Industry in Croatia, Key Trends and Opportunities to 2017
Published: February, 2013
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Penetration rates in the Croatian insurance industry, which is measured as the total gross written premium as a percentage of GDP, is low when compared to other Eastern and Central European countries. The total insurance penetration in Croatia averaged 2.74%, compared to an average of 7.1% for European countries at the end of 2011. The untapped market indicates opportunity for further growth.
More information can be found in the report “The Insurance Industry in Croatia, Key Trends and Opportunities to 2017” by Timetric.
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