The subject of this thesis is to analyze the degree and direction of insurance sector's development and representation within the financial market in Europe in comparison to the global market as well as between selected European countries, also referencing the Croatian insurance market. The thesis seeks to provide insights into the basic functions of the European insurance sector, socio-economic implications of the sector and general characteristics of participants and activities (e.g., insurance risk coverage, types of services provided by insurance entities, types of insurance and definitions of insurance activities from different aspects). The theoretical framework is built incrementally by reviewing the historical development of insurance and reinsurance with an overview of mandatory legal requirements for the needs of business in the insurance market. A comparative overview of the insurance market of selected countries is presented, supported with the analysis of numerous indicators of insurance market development that help analyze the representation and development of this sector within selected countries, in comparison to world-wide state of the insurance sector. Also, the distribution of different categories of insurance (life and non-life) and the specifics of the insurance sector in Croatia are analyzed. In conclusion, the paper reviews the implementation of the insurance regulatory framework and of its development in the context of supervisory harmonization in Europe, as well as the tasks and responsibilities of supervisory authorities operating in selected countries.