Insurance law and regulation in Croatia

Insurance activity in Croatia may be undertaken through: (i) a local insurance company that has obtained the authorisation of the Croatian Financial Services Supervisory Agency (HANFA), (ii) a branch of a foreign (non-EU) insurance company that has obtained authorisation from HANFA to perform insurance activity in Croatia, or (iii) an EU/EEA insurance company that has either established a branch in Croatia or is authorised to directly carry out insurance business in the territory of Croatia on a freedom of services basis. The companies authorized to perform insurance activities in Croatia can be established as a joint stock company, European company (SE) or as a mutual undertaking.

Insurance companies are only authorised to carry out insurance business within the classes of insurance for which they have been granted authorisation by the competent authority (in their home country).

The authorization process for a local insurance company may take up to three months.

An EU/EEA insurance company may directly perform insurance activity in Croatia upon receipt of confirmation from its home country supervisory authority that it has submitted the required documentation to HANFA.

In the event of an intentional violation of disclosure obligations, providing untrue information or concealing important facts, the insurer may rescind the insurance contract. This only applies if the insurer would not have entered into the insurance contract had it been aware of the undisclosed information. The insurer’s right to rescind the insurance contract is time barred (three months starting from the day on which the insurer became aware of misrepresentation and/or violation of the disclosure obligation). If the contract is rescinded the insurer has a right to keep and charge the premiums up to the day of requesting rescission of the contract. However, the insurer is obligated to pay the insurance premium if the insured event occurs before the day of the rescission request (insurer is not entitled to decrease the premium as in the case of unintentional misrepresentation or non-disclosure)

In the event of an unintentional violation of the disclosure obligation, providing untrue information or concealing important facts, the insurer may terminate the insurance contract or request an increase of the premium within one month starting from the day that it became aware of misrepresentation and/or violation of the disclosure obligation. In case of termination, the insurer is obligated to return the premium for the remaining insurance period. If the insured event occurred before the insurer became aware of the misrepresentation and/or violation of disclosure obligation or before contract termination/increase of premium, the insurance premium shall be decreased in proportion to the rate of the premium paid and the rate of the premium that should be have been paid according to the real risk.

Specific non-disclosure rules apply to life insurance. Life insurance contracts shall be null and void if the actual age of the insured exceeds the insurable age. If the insured is older than reported but they are still insurable, only the insured amount (and premiums) shall be adjusted. If the age of the insured is younger than reported, the premium shall be decreased and the insurer must return the premium difference.

The Croatian legal system does not proscribe for the effects of breach of warranty and condition precedent with regard to insurance contracts. Hence, the parties should agree on the effects of such a breach between themselves.

Save for life insurance, the insured must notify their insurer of the occurrence of an insured event within three days of becoming aware of it, unless a longer notification period is stipulated in the general insurance terms and conditions. In case of late notification, the insured is obliged to reimburse the insurer for any potential damages caused by such delay.

Any contractual provision that deprives an insured of the right to compensation (or insurance benefit) in the case that insured fails to fulfil any of his obligations after the occurrence of an insured event  is null and void. 

The insured (and the beneficiary in life insurance) has the right to raise a claim against the insurer under the insurance contract. In third-party liability insurance, the third party is by law entitled to raise a claim directly against the insurer.

The insurer is obliged to complete the loss-adjusting proceedings within the timeframe agreed in the insurance contract, but not later than 14 days after receiving notification of the insured event. If unable to complete within 14 days, the insurer is obliged to pay the insured the contracted insurance amount within 30 days of receipt of the claim or inform the insured that his claim is unfounded. If the amount of the insurer’s obligation has not been determined within the mentioned timeframes (14/30 days), the insurer is obligated to pay the insured an advance payment of the indisputed amount, immediately. The damages for late payment of claims consist of the insurer’s obligation to pay default interest from the day of receipt of the notification of the insured event as well as compensation for damages that are a consequence of the insurer being late with the payment of the claim.

In regard to transport insurance, the insurer is obliged, within sixty days, to determine if the claim is founded or not, the amount of the claim and to deliver the claimant an offer for damages (responsibility and the amount are indisputable) or a response to the claim (responsibility or the amount are disputable). If the insurer does not abide by his aforementioned obligation, then the injured party has a right to file a lawsuit against the insurer. If the insurer does not pay the injured party the amount of damages or the iindisputed amount of damages within sixty days, the injured party has a right, along with the owed amount of damages, to default interest from the day of filing the claim.

The limitation period for claims expires three years after the first day following the calendar year in which the claim originated. The limitation period for claims arising from life insurance is five years. If the insured person was unaware of the insured event having occurred, the limitation period begins on the day on which the insured person became aware of it. In any case, the limitation period expires after five years, or ten years in the case of life insurance. The insurer’s claim arising from the insurance contract expires in three years.

In the case of third-party liability insurance, where an injured person claims and obtains compensation from an insured person, the limitation period of three or five years for the insured’s claim against the insurer runs from the day the injured person filed a claim against the insured person, or when the insured person reimbursed the damages.

The limitation period for a direct claim for damages by an injured party against an insurer expires three years after the injured party became aware of the damage and of the person responsible. In any case, the limitation period expires after five years following the damage. If the damage was caused by a criminal offence, a longer limitation period will apply.

There are two triggers: (i) the occurrence of an insured event; and (ii) a beneficiary’s claim for reimbursement of damage.

In third-party liability insurance, the insurer shall, within the insurance amount, bear the proceedings costs and other justifiable costs made in order to determine the insured’s responsibility. Whether an insurer bears amount of attorney’s cost in line with Attorney’s Tariff or freely contracted higher amount for attorney’s costs depends on the provisions of the policy. 

Under D&O insurance policies, it is possible to cover amounts ordered by the court for breach of law, administrative and misdemeanour fines that are insurable according to Croatian law. However, penalties within the scope of the Criminal code shall not be covered.