Registration in Zagreb and Krapina Nearly Twice as Expensive as in Daruvar

The basis for paying mandatory insurance for personal vehicles from 33 to 44 kW in the seventh zone is 1,215 kuna, while in the most expensive, first zone – 2,142 kuna! Among commercial vehicles, this difference is even greater, which is why carriers are complaining.

written by Marijan Banelli and Gordana Gelenčer

Croatia is divided into seven risk zones for mandatory vehicle insurance. According to this division, it turns out that it is most risky for insurance companies to register vehicles with Krapina and Zagreb license plates. Thus, the unique basis for calculating the functional premium in kuna (which is also the basis for paying mandatory insurance for personal vehicles from 33 to 44 kW in the seventh zone, where Daruvar is located) is 1,215 kuna, while in the most expensive, first zone, which includes Zagreb and Krapina, it is higher – amounting to 2,142 kuna! When it comes to commercial vehicles, this figure is even more pronounced: for a truck of 300 kW, a carrier in the first risk zone must pay 12,232 kuna for mandatory insurance, while his colleague in the seventh risk zone pays 6,938 kuna for the same vehicle. A carrier who has, for example, ten such trucks or buses per year pays more than 50 thousand kuna higher insurance costs.     

Determining Zones
This system was established about 30 years ago. Namely, when someone bought a car back then, they drove in their district, in their municipality, and rarely drove longer distances. Today, a vehicle can cover many counties and many countries in the same day, which is why this regional system by zones makes no sense. In 2001, the premium system was revised, but the premium system of seven risk zones was not touched, except that Varaždin County was moved to a higher zone. Additionally, international carriers spend about 270 days abroad, so this risk zone system certainly does not apply to them. A similar system exists in Italy (two or three zones), but comparing the traffic systems of these two countries in terms of the scale of land area and traffic resources is pointless. This premium system is determined by the Croatian Insurance Bureau, whose members are all insurance companies in Croatia that offer vehicle insurance, and it must then be verified by the Ministry of Economy.

 Futile Promises
Carriers discussed with representatives of the Croatian Insurance Bureau, with the mediation of the Ministry of Sea, Transport and Infrastructure, last year, but that conversation, despite promises, has not yielded any results to date, nor have any feedbacks come from the Croatian Insurance Bureau (HUO). Decisions are made by representatives of insurance companies, and HUO shifts responsibility to the Croatian Agency for Financial Services Supervision. Croatian road carriers are at a disadvantage compared to competitors, especially carriers from BiH, who, according to a market analysis from 2006, take up to 60 percent of exports in bilateral trade, regarding fixed operating costs, especially insurance costs. Carriers from BiH have up to 60 percent cheaper costs in this segment, while other major competitors from the European Union, such as Slovenians, have up to 20 percent cheaper insurance. The price of mandatory insurance is determined by the state through Hanfa; it certainly has a secure and substantial income in the budget from it. If we also add that the company with the greatest market influence is state-owned, we see that it is not in the government’s interest to do anything in this segment to relieve the costs of the economy and the possibility for Croatian road carriers to be competitive in the market. Such an autistic economic policy will surely backfire on this government if it does not realize that carriers had a share in the budget of 9.3 percent in 2002, and today it is 4.9 percent.

Collapse and Cheapness
Today, there are about 177 thousand commercial vehicles in Croatia. Last year, approximately 1,300 carriers competed for so-called critical permits in international road transport, while this year about seven hundred have applied. The company Pevec transporti with about four hundred vehicles has also collapsed, as well as hundreds of small carriers. All these vehicles were certainly insured. Vehicle sellers are complaining about lower sales and are lowering vehicle prices, while the government is consistent in not lowering taxes in any segment of the economy. Politicians, it seems, do not care much about insurance prices, perhaps due to ignorance. For example, Boris Šprem, a member of the Parliamentary Committee for Transport, has not heard of risk zones at all. – I have no idea what you are talking about, so I cannot comment – replied Boris Šprem to a journalist’s inquiry about the risk zones of mandatory vehicle insurance. In unofficial conversations with some smarter people in insurance companies, it was concluded that insurance companies should adjust insurance prices to the market situation, but everyone points a finger at Hanfa, which needs to abolish the pointless risk zones. Some people in politics even go so far as to respond to questions about the collapse of Croatian road carriers: ‘Well, when we enter the EU, let whoever is cheaper drive – that’s a market game.’

 Abolish Risk Zones
In their political blindness, they absolutely do not care that thousands of Croatian citizens will lose their jobs and be forced to become servants to others. If the government wants Croatian road carriers, albeit significantly decimated, to survive until entering the EU, it needs to take steps that will keep them on their feet and somewhat bring them closer to the possibility of being competitive in the transport services market. To this end, the government should give guidelines to Hanfa to make a decision with the Croatian Insurance Bureau to abolish risk zones in insurance for commercial vehicles and form a unique zone based on the mathematical average of the value calculations of all current zones or, to start, to abolish risk zones for vehicles that have licenses for international road transport based on the same principle only for international road carriers.