Insurance in Croatia in a nutshell

How do the current political developments and economic conditions in Croatia influence the insurance industry and clients’ risks?

FUĆAK: The GDP has been growing between 2-2.5 % per year over the last 5 years. Until now a GDP growth of 3% for 2020 was forecasted but after the COVID-19 crisis and the effects of the recent earthquakes a decrease is expected. Tourism has always been a large driver of growth for Croatia and it is one of the largest areas of business in Croatia. The 2nd most important sector is construction.

In which economic segments/industries do you expect increasing investments in the coming years?

FUĆAK: Construction, tourism, marine – those areas will highly grow in 2021 after a slowdown in 2020 due to COVID-19. Despite all enterprises have been shut down in 2020 due to COVID-19 we expect no long-lasting effects in the tourism area. Nevertheless, the crisis will led to a consolidation of the industry. The larger firms have saved the profits from the last booming years and will now take the shares of those businesses that are struggling. The basic, underlying growth will continue.

In Construction all development projects that have already been planned in 2020 and now are stalled due to COVID-19 will be executed in 2021. Also the earthquake will have a strongly positive affect on the construction industry. In the area of Marine (Ports, Shipyards etc.) the situation is variable, but there should also be a strong growth in 2021, due to the dependence of Croatia on the sea.

What are the biggest risks foreign companies doing business in Croatia need to consider?

FUĆAK: Demanding administration. As a foreign firm you will run into problems when not having a local person handling your investments (“Corruption”). Therefore a local advisor is important and can strongly support with the administrative tasks.

What are the main facts of the insurance market in Croatia?

FUĆAK: The total premium is: 1.5 billion EUR. Out of this, the corporate sector makes up 35% and the life share, counting both corporate and private retail, is 30%. The shares of premium handled by broker companies is 15% manly in PDBI, liability and motor.

We can observe the following trends in Croatia: an overall market growth of 3.5 % and a growing markets share of broker business.

The reasons are:
– State companies use brokers (but also money laundering/corruption)
– The Private sector considers a broker more and more as a solution provider, also in other areas than Motor. This is also supported by the growing understanding of insurance by the clients. The maturity of the market is increasing.

What specifics differ from those in other countries?

FUĆAK: Everything is in line with the EU regulations, IDD & GDPR are implemented. Obligatory lines are MTPL, marine & aircraft liability and public transportation passenger liability. Insurance companies doing business in Croatia need to be registered in Croatia.

Brokers account for about 15% of all corporate insurance sales in Croatia. Is the share the same in life business?

FUCAK: No life insurance is not targeted by broker companies. This is mainly done by banks (as part of a loan). For other employee benefits, like additional health insurance, there is a limited demand. Some employers offer this to their employees to attract them or keep workers council in check.

Can international insurance programs be implemented? Which special features have to be considered? How is this done at GrECo HR?

FUĆAK: We still use a local carrier for fronting – clients usually prefer to have a domestic policy even though Freedom of services (FOS) is possible in most areas. This is mainly due to the fact of claims handling issues (esp. in PDBI and General Liability).

We can observe a trend towards FOS placements – particularly in specialty lines like Cyber or complex financial lines (also due to limited capacity on the local markets).

Please describe GrECo HR´s incoming business servicing capabilities?

FUĆAK: We have a team of three employees, all fluent in English, all designated to servicing international clients. On average the team has five years of experience with international insurance & client servicing.

Where do you at GrECo HR focus on when advising clients and what special expertise have you developed?

FUĆAK: As part of our Specialty strategy we have also analyzed the Croatian industry to find areas where we can add extraordinary value to our clients. This resulted in us investing to build up capabilities and teams focusing on the tourism sector as well as financial institutions. Moreover, we specialize in the marine industry.