CZECH REPUBLIC Trends and Developments Contributed by: Eva Nováková, Michaela Šmotková, Martin Sztefek and Kateřina Chizzola Bardonová, JŠK, advokátní kancelář, s.r.o.
Introduction The insurance sector in the Czech Republic remains a cornerstone of the national financial market, showing robust growth and stability comparable to other Viseg- rád Group countries. Insurance penetration is around 2.9% of GDP, slightly below the Western European average, and the market is highly concentrated – the five largest insurance groups control approximately 84% of the market. The year 2025 brought notable developments: rising claims costs (known as “claims inflation”), contin- ued digitalisation of processes, especially in non-life claims handling, enhanced protection for group insur- ance clients, and modernisation of products such as property insurance, cyber risk coverage, pension solu- tions, and microinsurance. Insurers also responded to macroeconomic and climate challenges with a focus on sustainability, financial stability, and innovation to address increasing average claim sizes. The impact of extreme events from 2024, such as the September floods, continues to resonate, highlighting the impor- tance of reinsurance and risk management. Recent data from the Czech Insurance Association (ČAP) confirm these trends. In the first half of 2025, claims costs reached CZK56.6 billion (+ 7.5% year- on-year), with 1.65 million claims handled (+ 1.6%). Growth remains stronger in non-life insurance, where claims inflation outpaces premium growth. Active poli- cies rose to 30.8 million (+ 2.1%), and gross written premiums increased by 7.8% to CZK114.5 billion, signalling a slight slowdown compared to 2024. Life insurance claims remain stable at CZK18 billion, while premiums grew by 6.5%; non-life premiums rose by 8.3%, reflecting strong demand for risk coverage. Despite the pressures, the sector remains healthy. The average annual premium per person is estimated at around EUR714, with a stable split between life and non-life insurance. Combined with regulatory changes (Solvency II updates, the AI Act, DORA, IRRD, and new distribution rules for group insurance), these fac- tors create an environment where insurers must adopt new strategies to stay competitive.
Regulatory Updates and Legislative Developments 2025 introduced several significant legislative and regulatory changes aimed at improving consumer protection, transparency, and reducing administra- tive burdens, in line with EU efforts to simplify and modernise regulation. Distribution and consumer protection A key update was the amendment to the Insurance Distribution Act (Act No 170/2018 Coll.), effective 1 July 2025, following an EU Court of Justice ruling (Case C 633/20 TC Medical Air Ambulance Agency). It addresses fleet (group) insurance practices, where leasing companies, car dealers, banks, or credit pro- viders offer customers group insurance for a fee. Under the new rules, these entities are classified as insurance intermediaries and must obtain a Czech National Bank (CNB) licence, demonstrate profession- al competence, implement internal compliance pro- cesses, and register with the CNB. The goal is greater transparency and stronger protection for group insur- ance participants. Although the amendment formally entered into force in July 2025, the application of several key obligations was deferred: by 12 months for requirements relat- ing to professional competence, and by 24 months for obligations tied to the actual conduct of business, such as licensing, product governance, and internal compliance frameworks. A significant change in this area is the partial relaxation of the previously strict three-tier distribution chain (insurance company – independent intermediary – tied agent/supplementa- ry intermediary). For group insurance only, a four-tier structure is introduced: an independent intermediary who is the policyholder may, when arranging group insurance, be represented by another independent intermediary who is not the policyholder. This flex- ibility allows established commercial models (such as leasing companies or car dealerships offering insur- ance) to continue operating, but only within the group insurance context. In addition, Czech transposition of the EU Directive 2023/2673 on Distance Marketing of Financial Ser- vices (DMFS) began in 2025, with full effect expected in mid-2026. The legislative changes will significantly affect insurers by establishing stronger consumer pro-
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