INSURANCE COMPANIES AS INSTITUTIONAL INVESTORS IN THE REPUBLIC OF SERBIA

Insurance companies, through their function of a fi nancial intermediary, namely, through the role of institutional investors, have one of the most signifi cant impacts on the economic growth. In pursuing their core activity, insurers collect considerable premium assets. The source of collected funds also dictates the maturity of investment. Since the liabilities arising from property insurance are less predictable, the assets collected from this insurance line are mostly invested as short-term investments. The situation is quite opposite when it comes to life premiums were the investments have a long-term nature. The share of life premium in the total premium of insurance sector of the Republic of Serbia is increasing year-over-year, both in nominal and percentage terms and, inclusive of 31 December 2014, it amounted to respective 16.01 billion Dinars or 23%, compared to 6% of the total premium some ten years ago. In the developed EU countries, the share of life insurance in the total premium is about 60%. Consequently, the growth of life insurance premium is expected to continue in the next period, which will generate a realistic basis for a higher demand for fi nancial instruments. In the years to come, this will affi rm insurance companies as powerful institutional investors and potentially one of the major drivers of fi nancial market development and economic recovery in Serbia.

Key words: insurance companies, non-life insurance, life insurance, institutional investors, fi nancial instruments, fi nancial market development, feedback system, country’s economic recovery