ZAGREB, 18 July, 2021- Gross premiums written by Croatian insurance companies in the first six months of 2021 totalled HRK 6.4 billion, which is a 13.1% increase year-on-year, show data released by the Croatian Insurance Bureau (HUO).

Gross non-life insurance premiums increased by 13.1% to HRK 4.8 billion, and gross life insurance premiums went up by 13.3% to HRK 1.6 billion.

Motor vehicle liability insurance continues to be the most prevalent type of non-life insurance, with gross premiums written in the amount of HRK 1.5 billion, an increase of 17% on the year.

Traditional life insurance plans accounted for the largest portion of life insurance, with premiums in the amount of HRK 1.3 billion, 14.6% up from June 2020.

Croatia Osiguranje, Euroherz, Allianz cover a half of insurance market

Croatia Osiguranje (CO) still holds the biggest market share in terms of gross premiums, of 26.7%, with gross premiums written having increased by 7.9% on the year, to HRK 1.7 billion.

It is followed by Euroherc, with a market share of 11.5% and an increase in gross premiums written of 14.8% to HRK 736.7 million.

Allianz ranks third, and it registered an increase in gross premiums written of 11.8% to HRK 719.9 million, and a market share of 11.2%.

(€1 = HRK 7.5)

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ZAGREB, July 2, 2020 - This year will be challenging for the Croatian insurance market due to the coronavirus as premiums are projected to fall by 5.5%, but the market is expected to rebound in 2021 with an increase of 5.6%, according to a global report by the Allianz insurance group published on Thursday.

Allianz estimates that in Croatia life insurance premiums could fall by 3.4% and property and accident insurance by 6.5%.

However, after stagnating, a quick recovery is expected in 2021 and the market should grow by 5.6%. It is expected that Croatia will reach an overall annual growth of 3.6% by 2030, Alliance said and added that that is far better than the growth rate of 0.4% recorded in the previous decade.

The Eastern Europe market, which includes Croatia, Bulgaria, Czech Republic, Hungary, Kazakhstan, Poland, Romania, Russia, Slovakia, Turkey and Ukraine, last year recorded a growth rate of 8.6% with premiums amounting to a total of €64 billion, half of which can be attributed to Russia and Poland.

However, 2020 will be challenging for Eastern Europe, with Allianz estimating that revenue from premiums will stagnate and life insurance will decrease by 1% while the non-life insurance segment might increase by 0.6%.

Things look a little brighter in the long run and the region should recover in 2021 with a growth of about 9%. By 2030 it is estimated that the growth could reach 6.1%.

Co-author of the report Patricia Pelayo Romero said that after a challenging decade and large financial crises, Europe's insurance industry has shown to be quite resilient during the COVID-19 pandemic.

As Poslovni Dnevnik writes on the 28th of May, 2020, a ranking of the world's top ten pension systems has been published. In light of the impending demographic changes, the fatigue of pension reforms is the last thing Croatia can afford, the analysis concludes. With that being said, just how does the Croatian pension system really level up?

Allianz recently unveiled the first edition of its Global Pension Report, which analyses pension systems from countries around the world using Allianz's very own pension indicator - the Allianz Pension Indicator (API).

The indicator follows a simple logic: it begins with an analysis of demographic and fiscal preconditions, after which it looks at national pension systems based on two crucial dimensions: sustainability and suitability. It is therefore based on three pillars and takes into account a total of thirty different parameters, which receive ratings on a scale of one to seven, with one being the best possible rating and seven being the worst. By summing up all of the subtotals, the API assigns a rating of one to seven to each of the seventy countries analysed, thus providing a detailed and comprehensive overview of many national pension systems.

"In recent years, demographic and pension policies have been overshadowed by other policies, primarily by climate change, and currently the fight against the coronavirus pandemic," said Allianz's chief economist Ludovic Subran.

"But you can't ignore demographic data, given that changes in the demographic picture will soon become a burning issue. Mitigating the impending pension crisis and preserving generational justice and equality are key to building inclusive and resilient societies,'' he added.

Dramatic changes in the demographic picture are most visible in the increase in the share of the economically inactive elderly population. By the time 2050 rolls around, the share of such individuals will grow by a staggering 77 percent to 25 percent, faster than it has in the last seventy years, from 1950 to now. Over the next three decades, many emerging economies will see more that share more than double in size. The best example is China, where the aforementioned share will jump from the current 17 percent up to 44 percent. In the case of industrialised countries, the absolute level of this share is a major cause for concern; for example, in Western Europe alone it stands at 51 percent.

Such developments are also reflected in the first pillar of the API (so-called starting points), which combines demographic changes and the public financial situations (in the sense of there being space for financial action).

Understandably, many African countries with rapid economic development can boast very good ratings according to the API, given that their populations are still young and the public deficit and debt are extremely low. On the other hand, many European countries (such as Italy and Portugal) are among the worst rated countries because their populations are old and their debts are high.

"For many industrialised countries, the old Scottish joke is true: if I want to build a stable pension system, I will certainly not start from here," said the report's author Michaela Grimm.

"And that was before the appearance of the coronavirus pandemic and the new debts that the pandemic brought with it. The legacy of the current crisis will certainly be the need to redouble our efforts to reform our pension systems. We've been left without room for financial action. "

The second pillar of the API is sustainability, ie, measuring how systems respond to demographic changes: are there built-in stabilisers or will the system fall apart when the number of contributors falls and the number of users continues to grow?

In this context, the age limit for acquiring the right to a pension is an important factor. Back in the 1950s, the average 65-year-old resident of Europe could expect to spend about 12.3 years in retirement (and 14.1 years for women). Today, the average life expectancy of a retired 65-year-old is 20.5 years for women and 17.2 years for men. By 2050, life expectancy is expected to jump to 23.1 years for women and 20.2 years for men. Therefore, the ratio of an individual's working life to the time spent in retirement recorded a significant decline. Consequently, countries (such as the Netherlands), which has decided to adjust the retirement age in view of increasing life expectancy in retirement, now have significantly more sustainable pension systems than countries where deferred retirement is still considered somewhat of a taboo theme.

The third pillar of the API assesses the suitability of a pension system, meaning that it works to determine whether a certain pension system provides a suitable standard of living. Among the important factors are the coverage ratio (what the shares of the working age population and the retirement age covered by the pension system actually are), the pension benefit ratio (how much money does the average retiree receive - measured by average income), and the existence of pension insurance based on individual capitalised savings as well as various other sources of income.

Overall, the average rating in the eligibility pillar (3.7) is slightly better than the average rating in the sustainability pillar (4.0), which is a sign that most systems still attach more importance to the well-being of current generations of retirees than future generations of taxpayers and their social security contributions. Leading countries in the eligibility pillar either still have significant state pensions, like Austria or Italy, or strong capitalised savings (Pillar II and III), like New Zealand or the Netherlands.

Pension insurance based on individual capitalised savings is, however, under increasing pressure due to persistently low interest rate conditions. The ongoing coronavirus pandemic further exacerbated this trend by reducing yields.

"In conditions where there are low returns, pension funds and life insurance providers have turned to alternative asset categories," explained Cameron Jovanovic, director of global pension operations at Allianz SE.

"The aforementioned transition to alternative investments enables pension companies to realise an illiquidity premium that is in line with the duration of the portfolio. Another strategy is to get rid of risk instead of chasing returns while the solution to cover the costs of longer-term pension insurance beneficiaries, pension risk transfers, and creative reinsurance become ways to optimise the exposure of pension funds and insurers.''

By combining grades from all three pillars of the API, we get the following results: Sweden, Belgium and Denmark have the best pension systems in the world. However, the Croatian pension system ranked in a rather unimpressive 46th place.

Like many other countries in the immediate region, Croatia is facing a trend of accelerated population aging: by 2050, the share of economically inactive elderly people in the country will rise to 55 percent. In this context, a poor sustainability rating is quite understandable (4.1). The weakness of the Croatian pension system is the age limit for acquiring the right to a pension, which is failing to keep up with the growth of life expectancy; the demographic factor in the formula for calculating pensions could also make the Croatian pension system more stable in this respect.

In terms of eligibility (3.7), the assessment of the Croatian pension system is in line with the global average. Factors that could be worked on to improve the Croatian pension system include coverage-to-benefit ratios, private savings, and employment opportunities for the elderly.

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