The Insurance Industry As An Economic Growth Factor Untapped Potential

The investment potential of insurance companies exceeds €600 million, which could represent additional impetus for the national economy. That’s why it is important to create the prerequisites for their continuous growth


When it comes to expectations for 2016, it is important to note that in every country in the world the strengthening of the economy is supported by growth in the insurance industry. Economic growth is in direct correlation with the growth of insurance. The growth of insurance in our country will be influenced significantly by the inflow of foreign direct investments, as these are great projects that bring with them the necessity of insuring these projects. The more foreign investment there is, the more the insurance industry will grow. In retail it is essential to raise awareness of the need for insurance. Here I am primarily referring to household insurance (fire, water leaks, broken glass, burglary), as well as insurance against natural disasters (floods, earthquakes, droughts). Insurance of agriculture (crops) is very poorly developed, with only eight per cent of arable land in Serbia insured, and a lot of work has to be done to increase this percentage. The state has done a lot in this respect, by subsidising insurance premiums up to an amount of 40 per cent, and that should be retained because it increases the percentage of insured farms.

Overall, the share of insurance in Serbia’s financial system is not negligible, and the investment potential of insurance companies alone totals just over 600 million euros, which can represent an additional incentive for the national economy. That’s why it’s important to create an environment in which the insurance industry achieves significant growth every year, as this would also increase the total financial mass invested in government securities and bonds, from which the state gains a significant benefit.

The new Law on Insurance, which came into force as of 1st January 2016, largely aligns the operations of our insurance companies with European regulations. Enacting a new law on compulsory motor vehicle insurance remains to be done, and the future growth and stability of insurance companies on our market will depend largely on this.