Czech Republic - Insurance

The pre-World War II insurance companies and institutions of the former Czechoslovakia were reorganized after 1945 and merged, nationalized, and centralized. Since 1952, the insurance industry has been administered by the State Insurance Office, under the jurisdiction of the Ministry of Finance. Two enterprises conducted insurance activities, the Czech and the Slovak Insurance Enterprises of the State.

Property insurance and car insurance are used by more than 80% of the population in the Czech Republic. By 2001, the Czech Republic's state insurance enterprise, Ceska Pojistovna, had been joined by nearly two dozen other firms, including branches of foreign companies. Most offer standard life and health insurance, as well as property coverage and commercial insurance. third-party auto insurance, workers' compensation, and liability for certain professions are compulsory insurance. By law however, Ceska Pojistovna must write the automobile liability cover, and it maintains control of the market.

By 1997, it had been proposed to switch the country's pay-asyou-go pension system into one incorporating mandatory private savings and voluntary pension insurance. This is to prevent the burden on the present system, caused by the aging of the population, from precipitating a future funding crisis. The relative importance of the pay-as-you-go element and the privately funded element have not been determined. The introduction of such a scheme has drawn sharp criticism from the opposition and has met with a certain amount of skepticism from the CNB, which has indicated that the quality of capital market regulation would have to improve considerably before pension funds of the kind proposed could be built up.

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