engleski

Securitization implementation in insurance industry in Croatia

Last years numerous changes have occurred in business strategies of insurance companies which are dominantly caused with contemporary changes in overall financial structures across the world but also with specific changes in insurance industry (regulatory factors ; appearance of sophisticated products and innovations in insurance industry). As a result of deregulation and convergence in financial sector and consequently increased competition on insurance market, increased prices and profit margin pressures lead insurers to completely redefine their strategies. Also in last decades in contemporary financial structures has developed sophisticated financial instrument - securitization. Insurance companies use this financial tool in several roles: as finance tool for reduction or transfer of insurance risks on financial markets and to investors, increase of liquidity, capital relieves, etc. In insurance industry assets that can be securitized are: life insurance portfolios, mortgage portfolio, catastrophic risks hedging, costs and reserves on insurance premiums, reinsurance incomes, etc. Securitization implementation in insurance can rationalize capital uses and prove profitability ratios, prove capital allocation and risk measurement adjusted to capital (RAROC) for individual products and sectors and reduce regulatory costs in which the necessity is management’ and actuaries’ education. So the aim of this paper is to make overview of securitization structure in insurance industry and consequently to analyze the possibilities of usage of securitization in Croatian insurance industry. In that sense insurance markets, like other financial markets, have continuous transformation in risk management strategies in which new financial instruments are produced which change or add to traditional insurance or reinsurance products.

insurance; securitization; risk; insurance linked securities

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