Cross-Border Insurance in Croatia

This article gives an overview of Croatia’s legal framework focusing particularly on its insurance sector, and highlights how the framework facilitates cross-border insurance services for EU/EEA states.

Primarily, the Croatian insurance market operates under the Croatian Insurance Act (Zakon o osiguranju) and the Croatian Act on Compulsory Insurance within the Transport Sector (Zakon o obveznim osiguranjima u prometu), along with various supplementary regulations. Additionally, the Croatian Civil Obligations Act (Zakon o obveznim odnosima) governs the principles of insurance contracts, including both contractual and non-contractual obligations. Oversight of the insurance market is the responsibility of the Croatian Financial Services Agency (HANFA). HANFA’s role is crucial in supervising market compliance with legal standards, aiming to ensure an efficient, equitable, and stable market environment. This supervision is vital for protecting the interests of insured individuals and beneficiaries, as well as for bolstering the financial system’s overall stability.

With Croatia’s accession to the EU in July 2013, the integration of EU law into its national legislation began, granting Croatia equal standing within the EU economic zone and the benefits of EU membership.

This integration has enabled Croatian insurance firms to compete in the EU’s internal market on equal footing with their EU counterparts. Furthermore, it also simplified the process for EU-based companies to operate in the Croatian insurance market.

EU Insurance Regulation and freedom to provide insurance services

Thanks to the implementation of EU regulation, such as Solvency II and the Insurance Distribution Directive, there are currently a total of 537 non-Croatian EU insurance companies and branch offices of EU insurance companies that have notified the supervisory authority about their intention of directly offering insurance services in Croatia, leveraging the EU freedom to provide services within the EU. Although the exact number of these companies actively providing services in Croatia remains uncertain, it is evident that their presence substantially exceeds the number of domestic insurance companies (as of November 2023, only 14), which are currently operating in Croatia.

Croatian procedure for providing cross-border insurance services

The primary regulatory framework for cross-border provision of insurance activities as provided under Solvency II and the Insurance Distribution Directive has been transposed into Croatian law by the Croatian Insurance Act. The procedure for EU insurance companies to provide their services in Croatia on a cross-border basis is regulated under chapter II of the Croatian Insurance Act.

According to these rules, any permanent presence of an insurance company in Croatia, whether in the form of a branch or merely an office managed by the company’s own staff, or an independent authorized representative, is recognized and treated the same as insurance companies with permanent presence.

Insurance companies headquartered in another EU Member State must notify the relevant home supervisory body before commencing operations in Croatia. This notification must include various details such as the nature of risks or obligations they intend to cover, their business plan, details of the authorized representative, and their Croatian address for correspondence. Additionally, these companies must confirm their compliance with the necessary solvency and minimum capital requirements as per Croatian law.

The competent supervisory authority of the insurance company from the other EU Member State is responsible for forwarding this information to HANFA. This is typically done within three months of receipt of the notification, provided there are no concerns regarding the company’s management systems, financial position, or the credibility and experience of the authorized representative (also called passporting).

Furthermore, HANFA systematically informs the supervisory bodies of other EU Member States about the Croatian regulations that must be adhered to by insurance companies based in those states but operating in Croatia. These companies, especially those providing services under the Croatian Act on Compulsory Insurance within the Transport Sector, are required to submit a statement to HANFA confirming their membership in the national insurance office and national guarantee fund of Croatia before they can start offering their services.

Lastly, for insurance companies from other EU Member States covering risks under specific types of insurance, such as health insurance, in Croatia, they must submit their insurance terms to HANFA before starting health insurance operations.

If you are interested in engaging in insurance business in Croatia and would like further insight into the Croatian insurance legislation and regulation, please contact the author.