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Croatia Insurance Report Q1 2011
Business Monitor International, Nov 2010, Pages: 78
Croatia Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Croatia's insurance industry.
Overall, 2010 will probably be regarded as a challenging but not disastrous year for Croatia’s insurance sector. We note that the Croatian Agency for Supervision of Financial Services (HANFA), which regulates the insurance sector, reported that total premiums in H110 were 2.13% lower than those in H109. Non-life premiums were down by 2.51% and life premiums by 0.85%. We estimate that the final outcome for the year as a whole will be similar and estimate a fall across the board of 2%.
During H110, voluntary motor insurance premiums (CASCO) contracted by 11.64%, according to HANFA. Premiums for compulsory motorists’ third-party liability insurance (CMTPL) fell by 1.46%, limiting the overall contraction of the sector. For most lines of non-life business, premiums in H110 were slightly higher or slightly lower than they had been in H109. As was the case in other markets in Central and Eastern Europe, sales of unit-linked life policies were weak, with premiums falling by 7.36%. However, sales of traditional life policies, which account for nearly 90% of the premiums in the segment, fell by just 0.33%.
The conclusion that we would make is that Croatia’s insurance sector has proven surprisingly resilient over the last two years in face of massive economic challenges. CROATIA Osiguranje, the former stateowned monopoly, described the industry as being ‘stagnant’ in 2009. The main problem, though, was downward pressure on prices rather than a contraction in the volumes of demand for insurance cover. However, during that year and, as far as we can see, in H110, Croatia’s insurance sector performed respectably in comparison with its peers in other countries the region. In this report we include a discussion of developments within regional markets, on the basis of results published by major cross-border companies and the latest information provided by regulators and/or trade associations. In Croatia, fire and diversified risks, liability insurance and other lines have been growing in tandem with regional expansion and life insurance, a segment with mixed results region-wide, has risen slightly in Croatia.
We estimate total premiums of HRK9,223mn in 2010. This includes non-life premiums of HRK6,784mn and life premiums of HRK2,439mn. In 2015, the corresponding figures are forecast to be HRK13,630mn, HRK10,240mn and HRK3,391mn. In terms of the key drivers that underpin our forecasts, we anticipate life penetration to rise from 2.02% of GDP in 2010 to 2.25% in 2015 and for life density to increase from US$103 per capita to US$135. BMI’s proprietary Insurance Business Environment Rating for Croatia is 54.5.
Issues To Watch CROATIA’s Distribution Deals In Q309, CROATIA reached an agreement with Croatian Post and Financial Agency to sell its products through their branches. It remains to be seen what impact this will have on the insurer’s market share. Contagion In Bond Markets The resilience of Croatia’s economy and insurance companies was reflected in the performance of both in the first three quarters of 2009 especially. Volatility in bond markets elsewhere in Central and Eastern Europe, which affects perceptions of Croatian bonds, could be a major challenge. Pricing Of Insurance Products Unlike other Central and Eastern European markets, the burden of adjustment has been felt through pricing rather than volume in Croatia. Unless there is a clear sign of stabilisation in pricing, we may have to reduce our projections for premiums in 2010 and 2011.
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