The impact of privatization on insurance risk management in transition countries - The case of former Yugoslavia

Abstract

This article examines the impact of privatization on insurance risk management in Serbia and other former Yugoslav countries. In last two decades, these markets were very attractive for new entrants. We observe several risk management models depending on market development level. We find that in transition period less developed markets are more opened to foreign investments than developed markets. Supporting the strategic focus hypothesis, we find that there is a certain transition period needed for privatized companies to adopt and understand risk management procedures prescribed by parent companies. We also find that effectiveness of risk management depends on understanding of risk and risk management options and engagement of all stakeholders in risk management strategy development.