Analysis of insurance market concetration in Croatia

Industrial concentration as a concept is used to determine the market power of economic entities in the respective industry, which can be defined as the proportion of or a number of economic entities in the market. Industrial concentration implies the ability to make decisions in this industry. Analysis of concentration in this study is performed on the insurance market in the Republic of Croatia, which consists of twenty-eight companies for life/non-life/mixed insurance. The concentration of the insurance market demonstrates the extent to which a particular insurance company and/or a few of them are able to influence the amount of premium (in terms of legal provisions that regulate the operations of insurance companies), which is equivalent to the prices of products or services on the market in question. The aim is to determine the degree of concentration in the insurance industry taking calculated gross premiums of some insurance companies in the total mass calculated gross premiums at the national level as an indicator of market share. Referring to the respective indicator of gross premiums the following indicators of concentration are calculated: concentration ratio (CR), Hirschman - Herfindahl Index (HHI), Hall -Tideman Index (HTI), Rosenbluth index (RI), a comprehensive index of industrial concentration (CCI), a measure of entropy (E), the Gini coefficient (G) and the Lorenz curve. Once determined, the calculated indicators are correlated in order to determine the extent to which different concentration indicators point to the same conclusion, in order to offer recommendations about the optimal concentration indicators for a specific industry. The analysis includes yearly data from 2007. to 2012.