Changes to health insurance law provide opportunity for growth

The last 10 years in the Czech Republic have seen the formation of a series of financial services groups normally led by banks, comprising composite insurance companies, voluntary pension funds, fund managers, mortgage lenders and leasing companies. The trend towards financial agglomeration has been reinforced by the sale of state-owned banks to foreign bancassurers. But along with the growing importance of the bancassurance channel (which had a 24.0% share of the Czech life insurance market in 2007), the other potentially big opportunity, as well as challenge, for foreign insurers (a change in the regulations permitting) is health insurance. Other than dental insurance policies there is no private healthcare insurance in the Czech Republic. Under current legislation, if an insurer were to offer a product, the cost would have to be the same as that of the state health insurers. However, since the beginning of this year, new laws oblige employers to increase the payment of sickness benefit from the current three to 14 days. This may, in the long term, present an opportunity for insurers to provide some form of indemnity cover on an excess basis. This would be particularly beneficial for the smaller companies as under the new rules each person off sick represents a potential five-fold increase in statutory sickness benefits

The number of insurers in the Czech insurance market has been expanding in recent years. At the end of 2007 there were a total of 52 companies operating, up from 49 in 2006. At the end of 2007 there were 34 local insurance companies and 18 branches of insurance companies from the EU operating. At the end of 2007, some 478 insurance companies (life and non-life) and branches from EU/EEA showed interest in operating in the Czech Republic by giving appropriate notification on the basis of freedom to provide services, compared with 401 in the previous year.