Within its regular activities the Croatian Competition Agency carried out a market investigation into the insurance sector in the Republic of Croatia in 2016. On the basis of the data submitted by the Croatian Insurance Bureau and other sources of data available to the public the objective of the CCA was to establish the insurance market data base in the Republic of Croatia.
The insurance market investigation included the life and non-life insurance market with a special emphasis on the automobile insurance market. The market shares held by the undertakings in certain market segments have been determined on the basis of the total gross written premium.
In accordance with the CCA’s market study the biggest change in the insurance industry in 2016 was brought about by the introduction on the new Solvency II Directive. The new Insurance Act that entered into force brought significant changes in respect of the calculation of the capital requirement, valuation of assets and other liabilities, calculation of technical provisions, level of eligible own funds necessary to cover their solvency capital requirements and the minimum capital requirement.
With respect to the legal and institutional framework it has been established that the Statute of the Croatian Insurance Bureau has recently been revised. Consequently, since February 2017 the provision has been deleted stipulating that the insurance company whose share in the total gross written premium exceeds 25 per cent of the insurance market is entitled to have two members in the board of directors. The provisions that limited the terms of office of the members and the deputy-members of the board of directors to four years, with the possibility of re-appointment have also been repealed.
General indicators of the insurance market in Croatia in 2016
In 2016 there were 21 insurance companies active in the Croatian market. There has been no legal or factual barrier to entry, whereas the market was to a great extent regulated by the specific regulator – Croatian Financial Services Supervisory Agency (HANFA), says the CCA market investigation.
The insurance market slightly rose by 0.5 per cent compared with 2015. The total gross written premium amounted to HRK 8.76 million in 2016 and HRK 8.72 million in 2015. What went up in the report period was the non-life insurance market, particularly the automobile insurance market – third party liability insurance by 12.5 per cent and health insurance by 24.3 per cent.
The highest gross written premium in 2016 was realized by Croatia osiguranje that held a 29.2 per cent market share (including Croatia zdravstveno osiguranje – Croatia Health Insurance that was in 2016 still a separate company), which made this company the number one insurance company in the Croatian market. However, its total written premium fell slightly in comparison with 2015 and so did its market share.
Croatia osiguranje is followed by Agram Group, whose members – Euroherc osiguranje, Jadransko osiguranje and Agram Life indicated a rising trend in the insurance premium whereas their combined market share in 2016 amounted to 19.4 percent. If these companies are taken individually, it is evident that Agram Life recorded a more significant rise in the gross written premium in nominal amounts.
The company Allianz Zagreb also recorded fall in the gross written premium, adequately also in its market share. In 2016 its share in the insurance market was 12.7 per cent.
Wiener osiguranje VIG together with Erste osiguranje VIG continued to rise slightly, whereas their market share was 8.75 per cent and consequently they took the fourth place on the insurance market leaders list where it squeezed out Uniqa osiguranje that in the year of 2016 showed certain fall in the gross written premium, and consequently, of its market share. In the same period Triglav osiguranje recorded a 7.2 per cent-rise in the gross written premium, as well as Generali osiguranje whose growing rate was 4.1 per cent. At the same time Generali osiguranje held the market share of 5.7 per cent, while Triglav osiguranje’s market share was 4.2 per cent.
Insurance market features
Commonly used market concentration measures were used for showing the insurance market concentration – the concentration ratio (CR) and the Herfindahl index (HHI). The concentration ratio is the measure of the percentage market share in an industry held by the largest firms within that industry, whereas the Herfindahl index is simply the sum of the squares of the market shares for each firm within the industry and is always less than one.
In 2016 CR5 with respect to individual insurers was 61.6, which means that CR fell in comparison with the CR in 2015 when it was 63.4. On the other hand, when insurers are regarded as connected undertakings (constituting one economic entity) the CR5 in 2016 was 76.6, whereas in 2015 it was 77.1.
HHI of the overall insurance market in 2016 as regards individual insurers was 1.165, and it also fell compared with the HHI of 2015 then amounting to 1.212. When the insurers are taken as connected companies, HHI in 2016 was 1.569, similarly as in 2015.
The market concentration data generally indicate that the market insurance market in Croatia in 2016 was relatively well structured indicating moderate market concentration whereas there has been a falling trend in the concentration ratio in comparison with the previous year.
After a three-year rising trend in the past the gross written life insurance premium in 2016 went down slightly, by 0.5 per cent, relative to the previous year. The premium amounted to HRK 2.92 billion whereas fall was in the first place linked to the substantial lowering of the premium recorded by Uniqua osiguranje in the segment of life insurance. The most prominent players in the segment of life insurance were Allianz and Croatia osiguranje who had similar market shares in 2016 – 18.5 per cent and 18.3 per cent respectively, followed by Wiener osiguranje VIG with a market share of 10 per cent, Grawe Hrvatska with 8.7 per cent and Agram Life osiguranje with 8.6 per cent market share. There were 14 insurers active in the life insurance market in Croatia in 2016.
In 2016 CR5 in the segment of life insurance when insurers are taken individually was 64.1, which means that CR slightly fell in comparison with the CR in 2015 when it was 65.4. On the other hand, when insurers are regarded as connected undertakings the CR5 in 2016 was 70.1, whereas in 2015 it was 71.3.
HHI of the life insurance market in 2016 as regards individual insurers was 1.166, and it also slightly fell compared with the HHI of 2015 when it was 1.162. When the insurers are taken as connected companies, the HHI in 2016 was 1.286.
In the segment of non-life insurance the gross written premium in 2016 amounted to HRK 5.8 billion, which means that it went up by 1 per cent compared with 2015. The market leader in this segment Croatia osiguranje held a market share of 29.7 per cent. The additional 5 per cent market share was held by Croatia zdravstveno osiguranje – resulting in a combined market share held by this company amounting to 34.7 in 2016. Agram Group with its members – Euroherc, Jadransko osiguranje and Agram Life held the market share of 24.8 per cent. Allianz Zagreb held 9.9 per cent of the market, followed by Uniqa osiguranje, Triglav osiguranje, Wiener osiguranje VIG, Generali osiguranje with their respective market shares of 5 to 6 per cent. There were 18 undertakings present in the non-life insurance market in Croatia in 2016.
In the segment of non-life insurance in 2016 the CR5 with respect to individual insurers was 69.3, which means that the CR fell in comparison with the CR in 2015 when it was 71. On the other hand, when ownership ties of the insurers are taken into account the CR5 in 2016 was 80.6, similar to 2015.
HHI of the non-life insurance market in 2016 as regards individual insurers was 1.432, and it also fell compared with the HHI of 2015 when it was 1.505. When the insurers are taken as connected companies, the HHI in 2016 was 2.047.
Taking into account the data indicated above a conclusion can be drawn that the non-life insurance market in Croatia in 2016 was relatively well structured, showing a moderate concentration that was somewhat higher than the concentration of the overall insurance market and the life insurance market.
Compulsory third party insurance for motor vehicles
The motor car insurance market – including both the third party motor insurance (compulsory third party insurance) and the comprehensive automobile insurance took a share of 32.5 per cent in the total gross written premium in the insurance market in 2016, showing a slightly rising trend.
The gross written premium in the third party motor insurance in 2016 was HRK 1.94 billion whereas in 2015 it was HRK 2 billion. There was a falling trend in the written insurance premiums.
The gross written premium in the comprehensive automobile insurance in 2016 was HRK 737.5 million and it rose compared with 2015 by 12 per cent. This positive trend is linked to the raising number of the registered motor vehicles – 123,206 in total in 2016 or 30 per cent more than in the previous year, predominantly as the result of the rising purchase of fleet vehicles that are in principle covered by the comprehensive automobile insurance.
There were 13 insurers active in the car insurance market. Eight of them recorded fall in the premium, most of all Allianz Zagreb, Croatia osiguranje, Euroherc osiguranje, Uniqa osiguranje and Grawe, while the premiums of Jadransko osiguranje, Triglav osiguranje, Izvor osiguranje, Velebit osiguranje and Ergo osiguranje went up.
The highest market share of 36.1 per cent in the third party insurance for motor vehicles was held by Agram Group (Euroherc osiguranje and Jadransko osiguranje), followed by Croatia osiguranje with 23.3 per cent market share, and Allianz, Wiener osiguranje VIG, Triglav, HOK osiguranje, Uniqa, Generali, that individually held a market share between 5 and 7 per cent.
Compared with the 2015, the CR5 in the compulsory third party insurance for motor vehicles in 2016 was 72 if the players in the market are taken individually and 77.7 if they are regarded in the market investigation as connected companies. In that regard the concentration ratio fell insignificantly.
HHI in the compulsory third party insurance for motor vehicles in 2016 was 1.420 if the players are taken individually or 2.053 if regarded as structurally connected entities.