First signs of hard market as insurers strain to absorb storm losses

Slovenia is one of the biggest insurance markets in the central and east European transition economies. One reason for the market’s high premium income is the large size of the healthcare account. Slovenian health insurance is a voluntary supplement to the state health insurance system and the high growth rates in 2006 and 2007 were largely the result of structural reforms in this particular sector of the market, which accounts for nearly 30.0% of non-life market premiums. However, competition is intense in most lines of business and growth is likely to be slower in the future. According to preliminary results for the first half of 2008, non-life premiums grew by 8.5% on a year-on-year basis. But the market finally began to harden (with motor casco rates rising by 5% and household and commercial property rates up to 15%) as a result of a series of costly hail and windstorm losses in the summer of 2008. There is also the prospect that the formal privatisation of the Triglav and Sava Re groups will lead to a greater emphasis on shareholder value. There is also the hope that the impact of the global economic crisis locally will encourage insurers in the market to increase the level of their retained profits

The Slovenian insurance market consists of 15 locally-supervised companies and three “freedom of establishment” branches which are supervised elsewhere in the EU. Of the local companies, four are life, four are non-life and seven are composite. Eight insurance and reinsurance companies belong to three groups centred on Triglav, Sava Re and the KD Group respectively.