Major changes in the new Law on Compulsory Auto Insurance in Croatia

In mid-December, the Croatian Parliament confirmed the decision that would enable the abolition of the monopoly of insurance companies. Thus, the Parliament took the side of consumers and car repairers, and after 15 years, they harmonized this Act with the legal framework of the EU.

What are these major changes in the new law on compulsory auto insurance in Croatia?

First of all, under the new law, insurers have fewer rights because insurance companies will no longer be able to assess and determine how much an hour of work will cost and dictate where cars will be repaired. From 2024, hourly service rates will be recognized, not the imposed ones of only 13 euros that have not changed for decades, and policyholders will be able to count on a replacement car in the future.

This means that after a collision, the insurers will no longer be the first to go, but to the service center because the service centers will also be able to do damage assessments at their own, not imposed, prices. It means that there is no longer an insurance monopoly that allows them to simultaneously assess and determine the amount of damages and to ‘force’ consumers into services that they specify.

“The Croatian Association of the Automotive Industry made a huge contribution to the creation of the new law, the aim of which is to bring order to this dark zone of business, which generates several illegalities and irregularities, and to bring it into line with European regulations. The previous law encouraged the gray zone and “theft.” At the same time, due to the huge number of settlements and more than 65 percent of the total number of damages, the safety of poorly repaired vehicles was also threatened, and the state lost EUR 50 million annually in VAT alone,” is stated in the press release from the Croatian Association of the Automotive Industry (HUAS).

Also, the news is that the payment of damages is made within 15 days from the sending of the reasoned offer of the insurer, that is, within a maximum period of 60 days.

The Croatian Association of the Automotive Industry was able to promote greater consumer rights, and the car service profession finally started to be appreciated. Three new things have been added, and HANFA—the body that oversees insurers—must draft a new regulation outlining the specifics of the insurance claim processing process.

The most important major changes in the new law on compulsory auto insurance in Croatia are:

  • Mandatory payment of damages (the undisputed part of the damages or invoice) within 15 days of sending the explanation to the injured party. And that is at the expense of repairmen.
  • The injured party’s right to an independent assessment and the right to submit a service workshop offer are introduced. Now it is a legal right!
  • Greater rights and information for the injured party.
  • HANFA, as a regulator, issues another regulation for the processing and payment of damages.

Around one billion euros of damage is recorded every year in Austria

The risks are still significantly underestimated, according to Christian Eltner, Secretary General of the Austrian Insurance Association VVO, even though the fact that there is a clear rise in natural disasters and extreme weather events.

At a joint news conference, experts from the insurance sector, climate and preventative research, and other fields cautioned that time is of the importance and risk reduction is a key concern. However, although the fact that they must be implemented promptly, lawmakers have not yet backed the insurance industry’s requests for national responses to natural disasters.

The perception of the risk of natural disasters and awareness of the dangers in Austria vary widely by location and are generally very low, despite the fact that damages of an average of 1 billion euros are reported there each year. Surprisingly, 62% of Austrians think that the government is the only entity that can protect them from natural disasters. Everyone surveyed agrees that there is no information available on how one can personally protect oneself from natural disasters. Only 50% of those polled understood what civil protection alarms are or what to do in the event of one. Damage to open spaces (44%) and direct damage to the house or apartment (39%), respectively, are the two types of damage highlighted in the poll.

Man-made climate change is causing changes in extreme weather events in Austria. Over the last few decades, there has been a 30% increase in the number of days with heavy rainfall in the summer, while days with little rain have become less common. Climate researcher Dr. Marc Olefs explains that this is directly linked to global warming, as the atmosphere can hold more water vapor with higher temperatures. As a result, thunderstorms are becoming more intense and can lead to more severe storms with heavy rain, hail, and strong winds. If the Paris climate goals are achieved, these changes may stabilize, but if greenhouse gas emissions continue to rise, more significant changes in extreme weather events are expected.

In terms of preventing natural disasters, a recent KFV study reveals that “there is still a clear need to reach a certain level when it comes to preventing natural hazards. The population’s need for information and education is also very high.”