Insurance Comparative Guide

• Law Firm: Macesic & Partners
• Subject Matter: Insurance, Insurance Laws and Products, Reinsurance
• Author: Mr Miroljub Macesic and Toni 'tifani&#263
• Published date: 03 April 2023

1 Legal framework

1.1 Which legislative and regulatory provisions govern the insurance sector in your jurisdiction?

The legislative and regulatory provisions which govern the insurance sector in Croatia are as follows:

• Legislation regulating the establishment and operation of insurers, reinsurers, and insurance intermediaries:
• • the Insurance Act (Official Gazette 30/15, 112/18 63/20, 133/20), which implements the Solvency II and other EU directives in the insurance sector and secures the prerequisites for the implementation of EU regulations on insurance; and
  • secondary legislation.
• Legislation regulating the terms and conditions of insurance as well as the rights and obligations of the contractual parties:
• • the Civil Obligations Act (Official Gazette 35/05 41/08, 125/11, 78/15, 29/18 and 126/21), excluding reinsurance and creditor insurance;
  • the Act on the Nullity of Certain Types of Insurance Contracts and Loan Agreements (Official Gazette 9-160/1994);
  • the Compulsory Traffic Insurance Act (Official Gazette NN 151/05, 36/09, 75/09, 76/13 and 152/14);
  • the Maritime Code (Official Gazette 181/04, 76/07 146/08, 61/11, 56/13, 26/15 and 17/19) for marine insurance and insurance of goods carried by road;
  • the Act on Obligatory and In Rem Relations in Air Transport (Official Gazette 132/98, 63/08, 134/09 and 94/13) for insurance and reinsurance in air transport;
  • the Railroad Act (Official Gazette 32/19, 20/21) for compulsory liability insurance of railroad carriers; and
  • other acts and secondary legislation regulating individual aspects of various types of insurance, some of which is provided by state insurers (eg, compulsory health insurance, pension and social security).

1.2 Which bilateral and multilateral instruments on insurance have effect in your jurisdiction?

There are no bilateral or multilateral instruments on insurance in effect in Croatia in the traditional sense.

However, as part of the EU acquis communautaire, EU regulations directly apply; while the Insurance Act and other laws implement EU directives regulating insurance and ensure the fulfilment of the prerequisites for the application of EU regulations in the insurance sector. Some of the many EU directives implemented by the Insurance Act are the Solvency II Directive (2009/138/EC) and the Omnibus II Directive (2014/51/EC).

Therefore, it may be considered that the writing of insurance in Croatia is in line with the acquis communautaire.

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

The main body responsible for enforcing the applicable laws and regulations is the Financial Services Supervisory Agency (HANFA). HANFA exercises supervision and enforcement according to the Insurance Act, the HANFA Act (Official Gazette 140/05, 154/11 and 12/12) and other applicable legislation.

HANFA's objectives are to:

• supervise the national insurance market and its ef‌fectiveness, safety and stability as part of the national f‌inancial market; and
• ensure the lawfulness of insurance activities through the approval process, supervision and enforcement of corrective measures.

When conducting supervision, HANFA acts as the authorised administrative body and may impose supervisory measures. HANFA is also obliged to press charges for misdemeanours prescribed by the Insurance Act.

1.4 What is the regulators' general approach in regulating the insurance sector?

The regulator's general approach in regulating the insurance sector is to implement an enhanced level of policyholder protection and ensure the stability of the financial market within the scope of its licensing, supervisory and enforcement role. This is in line with EU legislative trends concerning the 'Three Pillars' of the Solvency II Directive:

• financial requirements;
• governance and supervision; and
• reporting and disclosure.

2 Insurance contracts

2.1 What are the main types of insurance available in your jurisdiction?

The two main types of insurance available in Croatia, as prescribed by the Insurance Act, are:

• general (non-life) insurance; and
• life insurance.

Each of these has many sub-types.

Approval may be issued for the following types of insurance:

• all types of general (non-life) insurance;
• all types of life insurance;
• individual sub-types of general and life insurance;
• risks belonging to certain types of insurance; and
• sub-types of certain types of general insurance.

Insurance companies cannot obtain approval for the simultaneous performance of both general (non-life) and life insurance activities.

Approval for reinsurance activities may be issued for just one or both groups of general (non-life) and life insurance.

Specific and separate types of insurance include the compulsory insurance provided by state insurers - health, pension and social insurance - which are part of the Croatian social security scheme.

2.2 Are all insurance contracts regulated? What terms do they typically include?

Not all insurance contracts are expressly regulated in Croatia. Insurance contracts (excluding marine, transport and air transport insurance) are generally regulated by the Civil Obligations Act as the main substantive law regulating insurance contracts. The Civil Obligations Act contains both general provisions and special provisions regarding the insurance of property and persons (life and accident insurance).

Insurance contracts typically include provisions on:

• the formation of the insurance contract;
• the rights and duties of the insurer and insured;
• the terms and period of cover;
• exclusions;
• loss of cover;
• notification of occurrence of the insured event; and
• other contractual terms.

These are also generally prescribed by the Civil Obligations Act.

The main principle of the Croatian law of obligations is freedom of contract. The parties' freedom of contract is limited by mandatory substantive law provisions. This also applies to insurance contracts.

However, the parties may derogate only from those provisions of Civil Obligations Act which expressly permit this or authorise the parties to act as they wish. Derogation from other provisions, unless forbidden by the Civil Obligations Act or another act, is permitted only if it is undoubtedly in the interests of the insured.

The terms of compulsory traffic insurance and liability insurance of railroad carriers are additionally regulated by the Compulsory Traffic Insurance Act and the Railroad Act respectively.

The Civil Obligations Act does not apply to:

• reinsurance;
• creditor insurance;
• marine insurance;
• air transport insurance and reinsurance; and
• the insurance of goods carried by road.

These are all regulated by other pieces of legislation as lex specialis (see question 1.1).

2.3 What are the formal and documentary requirements for conclusion of an insurance contract?

There are no specific formal or documentary requirements for the conclusion of an insurance contract.

According to the general rule of law of obligations, the insurance contract is executed once the offer made by the offeror has been accepted by the offeree. A 'meeting of the minds' must exist.

Upon execution of the insurance contract, the insurer must issue, without delay, the insurance policy, endorsement slip or other certificate of insurance. The Civil Obligations Act prescribes the minimum information that the insurance policy must contain. If the insurer's general terms and conditions apply, this must be expressly stated in the policy. The general terms and conditions must either be printed on the policy or be handed over with the policy.

Some exceptions exist, as follows:

• A contract of insurance of persons is executed once the parties have executed the insurance policy.
• An offer made to the insurer in writing binds the offeror for eight days unless the offeror states that the offer is binding for a shorter period. If a medical examination is required, the offer is binding for 30 days unless the offeror shortens the period. If the insurer does not decline and the offer is in line with the insurer's terms, it is considered that the insurance contract was executed on the date of receipt of the offer by the insurer.
• If so prescribed by the insurance terms, the contract may be executed by payment of the insurance premium.

The Civil Obligations Act also regulates the execution of the insurance contract in the name and on behalf of another.

2.4 What are the procedural requirements for conclusion of an insurance contract?

There are no procedural requirements for the conclusion of an insurance contract. Under the Insurance Act, the insurer is obliged to provide written notice to the other contracting party which must contain, at a minimum, the notices and information prescribed by the Insurance Act. The contents of the notices differ for life and general (non-life) insurance.

The insurer must also provide certain notices during the period of cover.

If the insurer fails to provide the notices, misdemeanour liability exists and monetary fines may be imposed by the Financial Services Supervisory Agency.

2.5 What are the respective obligations and liabilities of insurer and insured, both on concluding an insurance contract and during its term? What are the consequences of any breach?

The respective obligations and liabilities of the insurer and insured, both on concluding an insurance contract and during its term, as well as the consequences of their breach, are as follows.

Insured: Under the Civil Obligations Act, the principal obligations of the insured are:

• the duty of disclosure;
• payment of the premium; and
• notification of occurrence of the insured event.

Prior to execution of the insurance contract, the insured must disclose all material circumstances...