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Croatia Insurance Report Q3 2011
Business Monitor International, June 2011, Pages: 70
Business Monitor International's 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.
The overall insurance sector remains reasonably resilient despite the weak economic conditions and outlook.
- Nonetheless, the non-life segment has reduced in terms of overall premium revenue and penetration (defined as premiums as a percentage of GDP) since 2008.
- Life premium revenues have remained relatively flat since 2008 despite the weak economic conditions in Croatia.
- Croatia’s insurance sector is therefore very underdeveloped compared to most Eastern European countries. Part of this is related to the lack of foreign players in the market to stimulate the industry, and also to weak economic conditions and domestic consumption.
Given that Croatia’s economic recovery is only in its nascent stages, it is unsurprising that the insurance industry has shown little signs of pick-up. However BMI forecasts that the Croatian economy will emerge from two years of recession in 2011, but the forecast is for weak real GDP growth of 1.9%. The recovery will be largely export driven, benefiting from a positive eurozone growth story, as consumer demand remains constrained by high unemployment (19.6% in February 2011) and weak credit growth. One positive aspect for the growth outlook for Croatia is tourism growth. Croatia is heavily dependent on tourism for economic growth and it is therefore encouraging to see that tourist arrivals have already rebounded strongly, with foreign visitors leading the charge. The rebound in service exports will in turn reduce unemployment, which BMI forecasts to moderate in 2011 as seasonal employment picks up. We also forecast 2.0% growth in private consumption in 2011, following a 0.9% drop in 2010.
Given the high unemployment and slow consumption growth outlook, demand for insurance products is likely to remain reasonably constrained in 2011. However, over the medium term BMI remains positive on the insurance sector in Croatia. As the economic recovery continues and Croatia continues the process for accession to the EU, this will be positive for sentiment and growth. The sector remains underpenetrated and therefore provides opportunities for growth, particularly should new foreign players enter the market after EU membership.
The life segment has been particularly resilient in Croatia during the economic downturn. This segment could show good growth as the financial markets continue to improve. Life density (penetration), defined as life premiums per capita, is very low compared to most other Eastern European countries.
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