According to the official insurance market statistics of the Insurance Agency in Bosnia and Herzegovina in the period from January 1, 2023, until June 30, 2023, the total insurance premium in the amount of 488,767,950 BAM was realized on the Bosnian market.
As for the market at the entity level, the total premium on the insurance market of the Republic of Srpska for the period from January 1,2023, until June 30, 2023, was 146,312,727 BAM. In terms of the structure of the stated premium, it is interesting that a far greater part of the premium relates to non-life insurance, namely 133,041,838 BAM or 90.9% of the total premium, while the calculated life insurance premium was only 13,270,889 BAM or 9.1% from the total premium realized on the insurance market of the Republic of Srpska.
The insurance market in the territory of the Federation of Bosnia and Herzegovina records a much higher premium compared to the market of the Republic of Srpska. Namely, on the market of the Federation of Bosnia and Herzegovina, premiums were realized in the total amount of 342,455,223 BAM, of which 257,978,266 BAM or 75.3% of the total premium refers to non-life insurance premiums, while 84,476,957 BAM or 24.7% of the total premium refers to the life insurance premium.
Table 1: Presentation of the total premium on the market of BiH.
|MARKET||NON-LIFE INSURANCE||LIFE INSURANCE||TOTAL|
|RS||133.041.838 BAM||90,9%||13.270.889 КМ||9,1%||146.312.727 BAM|
|FBiH||257.978.266 BAM||75,3%||84.476.957 BAM||24,7%||342.455.223 BAM|
|BiH||391.020.104 BAM||80%||97.747.846 BAM||20%||488.767.950 BAM|
Therefore, despite the fact that the market of the Federation of BiH records a higher premium, which is expected considering that it is a considerably larger market, a certain similarity can be observed in terms of the ratio of non-life and life insurance premiums: the premium related to non-life insurance is disproportionate higher than the life insurance premium.
This relationship is not surprising, considering that the group of non-life insurance includes liability insurance for the use of motor vehicles (auto liability insurance), which in accordance with the relevant regulations in Bosnia and Herzegovina has a binding character. Thus, the auto liability insurance premium in the Republic of Srpska in the period from the beginning of the current year to June 30, 2023, amounts 90,923,913 BAM, while in the market of the Federation of Bosnia and Herzegovina in the same period it is 140,772,297 BAM. The importance of this type of insurance for the entire market becomes even more apparent when the amount of the total premium for auto liability insurance, which at the level of Bosnia and Herzegovina is 231,696,210 BAM, is compared with the next in the row type of insurance in terms of premium. Thus, life insurance was in second place on the BiH market with a premium of 87,257,699 BAM, while motor vehicle insurance was in third place with a premium of 53,677,243 BAM.
Table 2: Presentation of premiums by type of insurance on the BiH market.
|TYPE OF INSURANCE||PREMIUM ACHIEVED||SHARE|
|1.||Car liability insurance||231.696.210 BAM||47,40%|
|2.||Life insurance||87.257.699 BAM||17,85%|
|3.||Motor vehicle insurance||53.677.243 BAM||10,98%|
|4.||Accident insurance||30.618.236 BAM||6,26%|
|5.||Other property insurances||22,322,355 BAM||4,57%|
|6.||Insurance against fire and natural disasters||21.949.216 BAM||4,49%|
|7.||Health insurance||10,381,734 BAM||2,12%|
|8.||Additional insurances in addition to life insurance||10.028.351 BAM||2,05%|
|9.||Other liability insurances||7.507.168 BAM||1,54%|
|10.||Loan insurance||4.232.233 BAM||0,87%|
|11.||Insurance of various financial losses||3.714.644 BAM||0,76%|
|12.||Insurance of goods in transport||2.981.179 BAM||0,61%|
|13.||Assistance insurance||1.427.950 BAM||0,29%|
|15.||Surety insurance||305.773 BAM||0,06%|
|16.||Other types of life insurance||103.504 BAM||0,02%|
|17.||Aircraft liability insurance||90,039 BAM||0,02%|
|18.||Legal protection costs insurance||66.681 BAM||0,01%|
|19.||Liability insurance for the use of the vessel||24.180 BAM||0,00%|
|20.||Insurance of rail vehicles||11.251 BAM||0,00%|
|21.||Vessel insurance||10.038 BAM||0,00%|
|22.||Aircraft insurance||3.975 BAM||0,00%|
Source: Insurance market statistics of the Insurance Agency in Bosnia and Herzegovina
Despite the economic crisis caused by the consequences of the COVID-19 pandemic as well as ongoing geopolitical events, the insurance market of Bosnia and Herzegovina recorded an increase in the total premium of 9.9% compared to last year. On the market of the Republic of Srpska, the amount of realized premium is higher by 10.5%, and on the market of the Federation of Bosnia and Herzegovina by 9.6% compared to last year. The slightly higher growth that can be observed on the market of the Republic of Srpska is potentially due to the increase in the prices of auto liability insurance policies that occurred in March 2023 in the Republic of Srpska. Given that the prices of auto liability insurance policies from September 16, 2023, increased at the level of the Federation of Bosnia and Herzegovina, until the next official statistics we can expect an even greater increase in the premium at the level of this entity.
Parallel to the growth of the total premium, there was also an increase in the total amount of claims paid out. On the market of Bosnia and Herzegovina until June 30, 2023, a total of 199,978,958 BAM was paid, which is 7,950,042.43 BAM more than in the same period last year.
The above-mentioned phenomenon represents a trend that is present not only in the BiH market, but also in all other countries of the Adriatic region. The increase in the amount of liquidated damages is not surprising, bearing in mind that it occurs as a result of the increase in the inflation rate. The aforementioned particularly affects the liability insurance sector for the use of motor vehicles, and thus the entire BiH insurance market, bearing in mind the participation of this type of insurance in the total realized premium. This is because the increase in the price of parts and repairs of motor vehicles has a decisive impact on the profitability of insurance companies in Bosnia and Herzegovina. If the trend of liquidated damages growth continues, it is realistic to expect that insurance companies will increase the price of insurance in the near future, in order to provide an increase in the total premium, all with the aim of maintaining solvency and profitability.
Author: Jelena Milinkovic
E-mail: [email protected]