Bosnia Herzegovina

Bosnia – struggling to find low growth amid hard politics

Bosnia Herzegovina was the scene of one of the most bitter civil wars of the 20th century, and the consequences of that war still influence almost every aspect of life within the country. Officially united under a tripartite presidency, the country is split into two parts, reflecting the opposing sides of the civil war: Republica Srpska is predominantly ethnic Serbian and the Federation is mostly ethnic Croatian and Bosniac (Muslim).  NATO withdrew from the country in 2004, handing over responsibility to EUFOR (European Union FORce), which retains small detachments of military in the country to dissuade any resumption of violence, as well as to assist in the location and arrest of individuals indicted for war crimes.

Despite the continued need for the presence of foreign troops to maintain stability, Bosnia is turning itself into a tourism center: the country has always been renowned for its unspoiled countryside and the architecture of many of its towns and cities: from medieval castles to the repaired Ottoman bridge at Mostar and the beautiful Austro-Hungarian buildings of Sarajevo. More people now visit Bosnia than any of the former Yugoslav Republics. Despite the growth in tourism, and the spending of significant amounts of EU and IMF funds on infrastructure, unemployment remains very high at over 40% (44.3% at December 2012).

Bosnia has stated an intent to join the European Union. Economically it is a long way from meeting the entry requirements, and is unlikely to be allowed to join, for political reasons, before Serbia.

Low penetration, high opportunity?

There is a great potential for insurance products in the Bosnian market, as historically they have not enjoyed a high penetration, and often values are at book rather than replacement cost. However the local commercial and retail markets have not evolved to the stage where the importance of insurance is recognised locally: a lasting legacy from the communist era.

Due to the regulatory requirements, and the difficulties establishing a stable office and finding reliable insurance partners, MAI Croatia has responsibility for  servicing clients with operations in Bosnia. Typically working on a fee basis and providing advisory services, MAI Croatia is working actively with a number of key insurers to provide access to insurance products that will provide a good standard of cover:

Property and Casualty (Liability) insurance for companies and individuals.
Reinsurance for local insurers writing large and complex risks.
Financial loss and bonds for CAR/EAR.
Political risks.
PI schemes.
Private health insurance.

MAI Croatia is already well-versed in helping companies understand these risks and opportunities and provides expert counsel for companies looking to protect their investments.