Skuflic, Lorena; Galetic, Fran; Greguric, Branimir

Article

Liberalization and Market Concentration in theInsurance Industry: Case of Croatia

Economic Review: Journal of Economics and Business

Provided in Cooperation with:Faculty of Economics, University of Tuzla

Suggested Citation: Skuflic, Lorena; Galetic, Fran; Greguric, Branimir (2011) : Liberalization andMarket Concentration in the Insurance Industry: Case of Croatia, Economic Review: Journal ofEconomics and Business, ISSN 1512-8962, University of Tuzla, Faculty of Economics, Tuzla,Vol. 09, Iss. 2, pp. 61-75

This Version is available at:http://hdl.handle.net/10419/193804

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* University of Zagreb, Faculty of Economics and Business, lskuflic@efzg.hr** University of Zagreb, Faculty of Economics and Business, fgaletic@efzg.hr*** University of Zagreb, Faculty of Economics and Business, branimir.greguric@gmail.com

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LIBERALIZATION ANDMARKET CONCENTRATION IN THE INSURANCE INDUSTRY:CASE OF CROATIA

ABSTRACT

This paper analyzes market concentration onthe market of insurance companies in Croatia. For a very long time, Croatian insurancemarket was dominated by one company. Afterthe liberalization, the number of insurancecompanies on the market began to increase,which led to a significant fall in levels of marketconcentration. The paper analyzes various indicators of market concentration, and for eachindicator there is a calculated value whichshould help to see the trend. From all theanalyzed indicators of market concentration,three were selected for the estimation ofeconometric models trend. The aim of thesemodels is to predict the movement of marketconcentration on the insurance market in thenext few years. The analysis shows that in thenear future we can expect a further reductionin the level of concentration on Croatian insurance market companies, as well as the transition to less concentrated market structures.

Keywords:

JEL:

1. INTRODUCTION

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2. METHODOLOGY

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3. THE PROCESS OF LIBERALIZATION INTHE INSURANCE INDUSTRY

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acquis communautaire

4. ANALYSIS OF INSURANCE INDUSTRY INCROATIA

Source: Croatian Insurance Bureau

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5. THE POSITION OF COMPANIES IN THEINSURANCE INDUSTRY

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nQ, qi

n

iiqQ

1

Qqs i

i

Concentration index

QqsS i

ii 100100

0100

concentration ratio,

4

14

iiSCR

Herfindahl Hirschman index

n

iiSHHI

1

2

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Tideman Hall index

12

1

1

n

iisi

HTI

1/n 10

1

Rosenbluth index (RI)

12

1

1

n

jjsj

RI

1/n 1 10

Comprehensive Concentration Index CCI

n

iii sssCCI

1

21 2

01 0

1

Hannah and Key

1,0,1

1

1asHKI

n

ii

>01

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0.005, 0.25, 5 10

Hause index

n

i

sHHIsi

iisH1

2 2

=0.25

0

1

Entropy

n

i ii s

sE1

1ln

0ln n = 0 n 1

ln n.

Lorenz curve

Gini coefficient

01

1

n

ii

n

ii

n

ii

xn

xnxiG

1

1112

n

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Source: Author's calculations basedwww.huo.hr

6. ANALYSIS OF INDICATORS OF MARKETCONCENTRATION IN THE CROATIANINSURANCE INDUSTRY

Name of index Label 2004 2005 2006 2007 2008 2009 2010

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n,

7. ESTIMATING MODELS OFCONCENTRATION INDICATORS TREND ININSURANCE INDUSTRY IN CROATIA

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8. CONCLUSION

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REFERENCES

Tržišteosiguranja u Republici Hrvatskoj 2009.Insurance market in Republic of Croatiain 2009

Osiguranje

Osiguranje

Competition inhealth insurance

Commission regulation

Indian Economic Journal

Financijska liberalizacija, monetarna ifiskalna politika Europske unije (Financialliberalization, monetary and fiscal policyof European Union)

Using Excel toIllustrate Hannah and Kay's ConcentrationAxioms

Indeksi koncentracijebankarskog sektora u Hrvatskoj (Concentration indices of banking sector inCroatia)

Introduction toEconometrics

Business Economics

Zakon oosiguranju (Insurance law)

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Osiguranje

Ekonomska misao i praksa

Osiguranje

Pravo i porezi

Privredna kretanja i ekonomskapolitika (Economic trends and Economicpolicy),

Vladaju i položaj natržištu i njegova zloupotreba u pravutržišnog natjecanja Europske zajednice(Dominant market position and its abusein the competition law of the EuropeanCommunity)

PostCommunist Economies

NOTES