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What Drives Property Insurance Demand in Croatia?

Author

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  • Krišto Jakša

    (University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia.)

  • Kedžo Margareta Gardijan

    (University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia.)

  • Škrinjarić Tihana

    (Bank of England, London, United Kingdom.)

Abstract

Property insurance is an important part of risk management, insurance coverage and vehicle of catastrophic losses financing. In developed countries, property insurance plays an important role in the structure of non-life premium, while in developing markets, such as Croatian, property insurance penetration is rather low. Unfortunately, the recent earthquakes in Zagreb (Croatia) and the surrounding area in 2020 have once again highlighted a large protection gap, resulting in a dominant role of government in financing catastrophic losses. The aim of this paper is to discuss and investigate the factors that determinate property insurance demand in Croatia. Using the VAR (Vector AutoRegression) methodology extended via spillover index approach, we analyse a comprehensive data set ranging from the economic, financial, social to insurance indicators. The conclusions of this research point that some of the expected drivers of insurance demand such as mortgage loans, consumer confidence and loss experience, are not important in Croatia, and that property insurance is dominantly driven by economic development.

Suggested Citation

  • Krišto Jakša & Kedžo Margareta Gardijan & Škrinjarić Tihana, 2024. "What Drives Property Insurance Demand in Croatia?," Zagreb International Review of Economics and Business, Sciendo, vol. 27(1), pages 155-176.
    • Handle: RePEc:vrs:zirebs:v:27:y:2024:i:1:p:155-176:n:1008
    DOI: 10.2478/zireb-2024-0008
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    References listed on IDEAS

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    More about this item

    Keywords

    property insurance demand; Croatian insurance market; VAR model; spillover effect;
    All these keywords.

    JEL classification:

    • G52 - Financial Economics - - Household Finance - - - Insurance
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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