The Western Balkans insurance market: competition, concentration and managerial practices

Igor Mišić; Dalibor Tomaš; Milica Marić

doi:10.63356/ace.2026.002

Authors

Igor Mišić Faculty of Economics, University of Banja Luka https://orcid.org/0000-0003-0304-3279
Dalibor Tomaš Faculty of Economics, University of Banja Luka https://orcid.org/0000-0002-5279-2957
Milica Marić Faculty of Economics, University of Banja Luka https://orcid.org/0009-0002-7228-2951

DOI:

https://doi.org/10.63356/ace.2026.002

Keywords:

Insurance market, competition, concentration, Western Balkans

Abstract

This paper analyses the competition and concetration of insurance markets in Bosnia and Herzegovina, Montenegro, Serbia, and North Macedonia. We measure market structure using the Herfindahl–Hirschman Index (HHI) and market development using premiums per capita (EUR) and the share of premiums in GDP. Country-specific linear time trends are estimated with OLS and heteroskedasticity and autocorrelation-consistent standard errors, complemented with rank-based Kendall and Spearman tests designed for short series and potential nonlinearity. We document statistically significant deconcentration in Montenegro and Serbia, a significant increase in concentration in Bosnia and Herzegovina, and an inconclusive pattern for North Macedonia given the limited availability of data. In parallel, premiums per capita trend upward across all markets, with typical annual growth ranging from roughly 9% (Bosnia and Herzegovina) to 14% (Serbia). Taken together, the results support the hypothesis that higher competition is not directly or uniformly associated with market development over the 2019–2024 window. Policy recommendations emphasize proportionate entry facilitation, conduct-focused supervision, and investment in statistical capacity for line-of-business series and longer time frames.

References

Amiti, M., & Konings, J. (2007). Trade liberalization, intermediate inputs, and productivity: Evidence from Indonesia. American Economic Review, 97(5), 1611–1638. https://doi.org/10.1257/aer.97.5.1611

Ayyagari, M., Demirgüç-Kunt, A., & Maksimović, V. (2011). Firm innovation in emerging markets: The role of finance, governance, and competition. Journal of Financial and Quantitative Analysis, 46(6), 1545–1580. https://doi.org/10.1017/S0022109011000378

Ayyagari, M., Demirgüç-Kunt, A., & Maksimović, V. (2012). Financing of firms in developing countries: Lessons from research. Policy Research Working Paper No. 6036. World Bank. https://doi.org/10.1596/1813-9450-6036

Bayar, Y., Dănuletiu, D. C., Dănuletiu, A. E., & Gavriletea, M. D. (2023). ICT penetration and insurance sector development: Evidence from the 10 new EU member states. Electronics, 12(4), 823. https://doi.org/10.3390/electronics12040823

Bas, M., & Strauss-Kahn, V. (2014). Sourcing foreign inputs to improve firm performance. VoxEU. https://voxeu.org/article/sourcing-foreign-inputs-improve-firm-performance

Bellone, F., Musso, P., Nesta, L., & Schiavo, S. (2010). Financial constraints and firm export behavior. The World Economy, 33, 347–373. https://doi.org/10.1111/j.1467-9701.2010.01259.x

Bezati, J. (2024). Analyzing market concentration in life and non-life insurance in Albania. European Academic Research, 11(12), 1550–1560. https://euacademic.org/UploadArticle/5950.pdf

Berman, N., & Héricourt, J. (2010). Financial factors and the margins of trade: Evidence from cross-country firm-level data. Journal of Development Economics, 93(2), 206–217. https://doi.org/10.1016/j.jdeveco.2009.11.006

Bertrand, M., & Schoar, A. (2003). Managing with style: The effect of managers on firm policies. Quarterly Journal of Economics, 118(4), 1169–1208. https://doi.org/10.1162/003355303322552775

Bloom, N., & Van Reenen, J. (2010). Why do management practices differ across firms and countries? Journal of Economic Perspectives, 24(1), 203–224. https://doi.org/10.1257/jep.24.1.203

Brander, J. A., & Spencer, B. J. (1985). Export subsidies and international market share rivalry. Journal of International Economics, 18(1), 83–100. https://doi.org/10.1016/0022-1996(85)90006-6

Brossart, D. F., Laird, V. C., & Armstrong, T. W. (2018). Interpreting Kendall’s tau and tau-U for single-case experimental designs. Cogent Psychology, 5(1), Article 1518687. https://doi.org/10.1080/23311908.2018.1518687

Delgado, M., Ketels, C., Porter, M. E., & Stern, S. (2012). The determinants of national competitiveness. NBER Working Paper No. 18249. https://doi.org/10.3386/w18249

Demirgüç-Kunt, A., Beck, T., & Honohan, P. (2008). Finance for all? Policies and pitfalls in expanding access. World Bank. https://doi.org/10.1596/978-0-8213-7291-3

Insurance Agency of Bosnia and Herzegovina. (2025). Statistics of insurance markets in Bosnia and Herzegovina. https://azobih.gov.ba/statistika/default.aspx?id=3867&langTag=en-US

Insurance Supervision Agency of Montenegro. (2025). Izvještaji [Reports]. https://www.ano.me/index.php?option=com_phocadownload&view=category&id=77:izvjestaji-2024&Itemid=69

Insurance Supervision Agency of North Macedonia. (2025). Statistical reports: Insurance agencies. https://aso.mk/en/category/reports/isa-reports-en/insurance-agencies-en/

Kiefer, N. M., Vogelsang, T. J., & Bunzel, H. (2000). Simple robust testing of regression hypotheses. Econometrica, 68(3), 695–714. https://doi.org/10.1111/1468-0262.00128

Kumar, K. S. D., & Kumar, J. P. S. (2024). Efficiency assessment and trends in the insurance industry: A bibliometric analysis of DEA application. Insurance Markets and Companies, 15(1), 83–98. https://doi.org/10.21511/ins.15(1).2024.07

Koprivica, M., Kočović, J., & Rakonjac Antić, T. (2025). What drives efficiency of insurance companies in Western Balkan countries? Acta Oeconomica, 75(1). https://doi.org/10.1556/032.2025.00002

Krugman, P. (1990). Rethinking international trade. MIT Press.

Krugman, P. (1994). Competitiveness: A dangerous obsession. Foreign Affairs, 73(2), 28–44. https://doi.org/10.2307/20045917

Milašinović, M. B., Mitrović, A. B., & Milojević, S. V. (2025). Efficiency of Serbian insurance companies: An approach using data envelopment analysis. Tokovi osiguranja (Insurance Trends), 41(2), 337–351. https://doi.org/10.5937/TokOsig2502337M

Musso, P., & Schiavo, S. (2008). The impact of financial constraints on firm survival and growth. Journal of Evolutionary Economics, 18, 135–149. https://doi.org/10.1007/s00191-007-0087-z

National Bank of Serbia. (2025). Insurance undertakings’ operations. https://nbs.rs/en/finansijske-institucije/osiguranje/poslovanje/

Njegomir, V., Demko-Rihter, J., & Bojanić, T. (2021). Disruptive technologies in the operation of insurance industry. Tehnički vjesnik – Technical Gazette, 28(5), 1797–1805. https://doi.org/10.17559/TV-20200922132555

Porter, M. E. (1990). The competitive advantage of nations. Harvard Business Review. https://hbr.org/1990/03/the-competitive-advantage-of-nations

Puth, M.-T., Neuhäuser, M., & Ruxton, G. D. (2015). Effective use of Spearman’s and Kendall’s correlation coefficients for association between two measured traits. Animal Behaviour, 102, 77–84. https://doi.org/10.1016/j.anbehav.2015.01.010

Schwartz, J., Guasch, J. L., Wilmsmeier, G., & Stokenberga, A. (2009). Logistics, transport and food prices in LAC: Policy guidance for improving efficiency and reducing costs. Report No. 70796. World Bank. http://documents.worldbank.org/curated/en/675711468048530044

Srbinoski, B., Kjosevski, J., Poposki, K., & Mecheski, S. (2025). Financial inclusion, market concentration and underwriting performance: Empirical evidence from Central Eastern and Southeastern European countries. Economics and Business Review, 11(1), 133–156. https://doi.org/10.18559/ebr.2025.1.1850

Syverson, C. (2011). What determines productivity? Journal of Economic Literature, 49(2), 326–365. https://doi.org/10.1257/jel.49.2.326

Volpe Martincus, C., Carballo, J., & Cusolito, A. (2017). Roads, exports and employment: Evidence from a developing country. Journal of Development Economics, 125, 21–39. https://doi.org/10.1016/j.jdeveco.2016.10.002