Petar-Pierre MATEK
President
Croatian Financial Services Supervisory Agency (HANFA)

XPRIMM: How do you comment on the 1H2016 insurance market's overall results? What are the main trends recorded during the period?
Petar-Pierre MATEK:
At the time being, there are some features specific to the Croatian insurance market. Although there were no major changes to the amount of total GWP on an annual basis, there is a significant increase in unit-linked life insurance segment. It can be contributed to a number of factors. The most important one is that interest rates are currently low and are expected to remain low in the long run, therefore the traditional composite insurance products have become less attractive. This lead to a shift in insurance companies' focus to unit-linked products. As this product has become more prominent, recognized on the market and visible to the public, we published a detailed explanation on the product's features.


On the non-life side, competition in MTPL is still strong.

We anticipate that there is a considerable room for growth in the health insurance sector and property insurance, although this depends on many other favourable factors.

XPRIMM: What are your expectations for the end year results?
P.P.M.:
With such a small but dynamic market, it is difficult to foresee the exact market trends, although we do not see major deviations from the current situation. It seems that total GWP will not differ significantly on the annual basis compared to 2015, although its structure may differ. Consumer protection is also one of our top priorities, especially taking into account the growth in unit-linked life insurance.

XPRIMM: Has the market seen any legal changes of some relevance in the first part of 2016? Are any in preparation?
P.P.M.:
There were no new acts concerning insurance in 2016 (the new Act became effective on 1 January 2016), although we adopted a vast number of by-laws on various issues (audit, reporting, key functions and management board, risk distribution by insurance types etc.) on the basis of the new insurance Act. Naturally, insurance companies should also monitor and take into consideration various EU level regulations, whether these refer to EC (such as delegated acts) or to EIOPA (guidelines).

We closely monitor the upcoming EU level regulations and are currently focused on IDD and PRIIPS and their influence on the insurance sector in general.

XPRIMM: As the statistical data show, life insurance has seen a decreasing trend in the first half of 2016. Can you please provide more details on this trend?
P.P.M.:
Decrease in life insurance is primarily affected by decrease recorded by two companies with a significant market share, due to lower single premium income in comparison with the previous year. As already noted, one segment within life insurance sector has recorded a significant growth, so we do not consider the current situation to be an indicator of a long-term downward trend in GWP.

XPRIMM: The GWP decrease in MTPL appears to slow down, as compared with the previous periods. Would you consider the MTPL's market status as reaching an equilibrium point?
P.P.M.:
It is true that in the last couple of years (since the beginning of "liberalisation"), there has been a significant decrease in MTPL GWP.  At this stage, it may be that lower limits in the MTPL have been reached and it is quite possible that prices will even slowly increase. However, it is not easy to determine whether an equilibrium point has been reached as this depends on many factors, such as trends in the number and consequences of traffic accidents and related damages, as well as possible further decreases in insurers' costs due to improved business efficiency. Although, because of strong competition and market dynamics, companies may still find room for innovations in this area, including those that may affect the prices. There are also other factors that should be considered, such as the number of cars sold. Of course, we keep our eyes on this segment that is of great importance for our market and react accordingly when we notice behaviour that requires our intervention.

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