Legal framework of the insurance market in Croatia

With the aim of establishing market relations, the Republic of Croatia has brought the first Insurance Act at the beginning of 1994, which has been updated several times in recent years by the amendment published at the beginning of 1997, at the end of 1999 and at the beginning of 2001. The newest Insurance Act was brought in December 2005. Under this law, insurance company management boards must have at least two members, and at least one member must have residence in the Republic of Croatia. The new Insurance Act, the Law on Mandatory Insurance on Public Roadways, the Financial Services Supervisory Authority Act (governing the supervision of insurance companies, brokers, agents, security companies and pension funds) and the Law of Obligations (with provisions relating to insurance policies as well as common provisions for non-life and

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personal insurance) entered into force on 1st of January 2006. All four laws represent greater harmonization with EU requirements and/or an improvement in existing regulations. Establishment of insurance companies Natural persons and legal entities may establish insurance public limited companies. Their individual holding with voting rights may amount to a maximum of 15% of total voting shares. Special approval by the Insurance Companies Supervisory Authority is needed for holdings that exceed over 15%. Other types of insurance companies may also be established under the Insurance Act: mutual insurance companies, captive insurance companies, public law insurance companies, insurance and re-insurance pools and branches of foreign insurance companies. Initial Authorised Capital and Activities The amount in domestic currency that must be paid when establishing an insurance public limited company or a branch of a foreign insurance company may not be less than: o HRK 22,5 million (EUR 3,1 million) for life-insurance; o HRK 15 million (EUR 2,06 million) for a single type of non-life insurance; o HRK 22,5 million (EUR 3,1 million) for more than one type of non-life insurance; o HRK 22,5 million (EUR 3,1 million) for re-insurance Control and Supervision The Croatian Agency for Supervision of Financial Services (HANFA) was established on November 28th 2005 (Official Gazette 140/05) as a legal adherent of the Insurance Companies Supervisory Authority. It issues operating licenses and monitors whether insurance companies carry out business activities according to the economic principles and regulations of the insurance branch. The Agency may revoke the license for some or all insurance activities if the insurance company does not comply with legal provisions.