Bulgaria Insurance Report Q4 2011
Includes 3 FREE quarterly updates
By virtually all metrics, Bulgaria’s insurance sector is small and underdeveloped. It will still be so at the end of the forecast period.
After a long period in which the fortunes of the sector have suffered as a result of recession and/or low household incomes, there are signs that premiums are stabilising in both the non-life and the life segments.
Bulgaria is a classic example of a Central and Eastern European insurance market that, as a result of past financial crises and privatisations, is now dominated by the local subsidiaries of major multinationals. Allianz, KBC, Vienna Insurance Group, Generali – PPF, Uniqa, MetLife Alico and Uniqa are all present, as are offshoots of Chartis, Eureko and Grawe.
Bulgaria’s Financial Services Commission (FSC) has indicated that premiums – in both the non-life and the life segments – were stabilising in the first four months of 2011. If this is true, it means that a difficult period, in which premiums contracted over two years, is at an end. Normally, one might reasonably have expected a contraction in the number of companies that are active in the market. However, the vast majority of the players are subsidiaries of European or global multi-nationals whose regional footprints give them economies of scale and who see a presence in Bulgaria as being essential if their networks in Central and Eastern Europe are to be complete. We strongly suspect that this is leading to tough price competition. KBC, for instance, noted that Bulgaria is the only country of the five in which it offers insurance (the others being Hungary, Czech Republic, Slovakia and Poland) in which the combined ratio exceeded 100% in Q111. Taking a longer term view, it may be that some of the players choose not to increase the capital of their operations in what is a marginal market for most of them.
Like most under-developed non-life markets, Bulgaria’s continues to be dominated by auto-related lines, which account for about two thirds of total premiums. Voluntary car insurance (CASCO) appears to have suffered most from the problems of the economy in 2009-10, with premiums falling in the first four months of this year relative to the previous corresponding period. However, the decrease was basically offset by an increase in Compulsory Motorists Third Party Liability (CMTPL) premiums). In other words, stability of a sort has returned. Looking forward, we expect that non-life penetration will increase slowly – and from a fairly low base: we can see no catalyst for a rapid change.
The key development in the life segment appears to be the strong growth – from virtually nothing – in unit-linked sales. In the first four months of this year, unit-linked life products accounted for about one tenth of BGN82mn in premiums. Thanks to unit-linked insurance, it appears that the life segment is growing again. We think that it is reasonable to look for life density to grow quite steadily. However, at the end of the forecast period, most Bulgarian households will still be too poor to save significant amounts of money through life insurance – or other organised savings channels.
By virtually all metrics, Bulgaria’s insurance sector is small and underdeveloped. It will still be so at the end of the forecast period.
After a long period in which the fortunes of the sector have suffered as a result of recession and/or low household incomes, there are signs that premiums are stabilising in both the non-life and the life segments.
Bulgaria is a classic example of a Central and Eastern European insurance market that, as a result of past financial crises and privatisations, is now dominated by the local subsidiaries of major multinationals. Allianz, KBC, Vienna Insurance Group, Generali – PPF, Uniqa, MetLife Alico and Uniqa are all present, as are offshoots of Chartis, Eureko and Grawe.
Bulgaria’s Financial Services Commission (FSC) has indicated that premiums – in both the non-life and the life segments – were stabilising in the first four months of 2011. If this is true, it means that a difficult period, in which premiums contracted over two years, is at an end. Normally, one might reasonably have expected a contraction in the number of companies that are active in the market. However, the vast majority of the players are subsidiaries of European or global multi-nationals whose regional footprints give them economies of scale and who see a presence in Bulgaria as being essential if their networks in Central and Eastern Europe are to be complete. We strongly suspect that this is leading to tough price competition. KBC, for instance, noted that Bulgaria is the only country of the five in which it offers insurance (the others being Hungary, Czech Republic, Slovakia and Poland) in which the combined ratio exceeded 100% in Q111. Taking a longer term view, it may be that some of the players choose not to increase the capital of their operations in what is a marginal market for most of them.
Like most under-developed non-life markets, Bulgaria’s continues to be dominated by auto-related lines, which account for about two thirds of total premiums. Voluntary car insurance (CASCO) appears to have suffered most from the problems of the economy in 2009-10, with premiums falling in the first four months of this year relative to the previous corresponding period. However, the decrease was basically offset by an increase in Compulsory Motorists Third Party Liability (CMTPL) premiums). In other words, stability of a sort has returned. Looking forward, we expect that non-life penetration will increase slowly – and from a fairly low base: we can see no catalyst for a rapid change.
The key development in the life segment appears to be the strong growth – from virtually nothing – in unit-linked sales. In the first four months of this year, unit-linked life products accounted for about one tenth of BGN82mn in premiums. Thanks to unit-linked insurance, it appears that the life segment is growing again. We think that it is reasonable to look for life density to grow quite steadily. However, at the end of the forecast period, most Bulgarian households will still be too poor to save significant amounts of money through life insurance – or other organised savings channels.
Contents
Executive SummaryTable: Total Premiums, 2008-2015
Key Insights And Key Risks
SWOT Analysis
Bulgaria Insurance Industry SWOT
Bulgaria Political SWOT
Bulgaria Economic SWOT
Bulgaria Business Environment SWOT
Life
Central And Eastern Europe Life Sector Overview
Table: Central And Eastern Europe’s Life Premiums, 2008-2015 (US$mn)
Bulgaria Life Sector Update
Table: Life Segment – Breakdown Of Premiums, January-July 2010
Life Industry Forecast Scenario
Table: Total Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Population
Table: Insurance Key Drivers, Demographics 2008-2015
Healthcare
Healthcare Insurance
Epidemiology
Table: Insurance Key Drivers, Disease Adjusted Life Years 2008-2015
Non-Life
Central And Eastern Europe Non-Life Sector Overview
Table: Central And Eastern Europe’s Non-Life Premiums, 2008-2015 (US$mn)
Bulgaria Non-Life Sector Update
Table: Non Life Segment – Breakdown Of Premiums, January-July 2010
Industry Forecast Scenario
Table: Total Non-Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
Table: Bulgaria – Economic Activity, 2007-2015
Political Stability Outlook
Table: Europe Security Risk Ratings
Automotives
Table: Key Insurance Drivers – Auto Sales, 2008-2015
Tourism
Table: Insurance Key Drivers, Out-Bound Tourism 2008-2015
Insurance Business Environment
Table: Bulgaria’s Insurance Risk/Reward Ratings
Table: Central And Eastern Europe Insurance Risk/Reward Ratings
Competitive Landscape
Competitive Landscape Analysis
Major Players In Bulgaria’s Insurance Sector
Table: Non-Life– Ranking Of Companies By Premiums, January-July 2010
Table: Life– Ranking Of Companies By Premiums, January-July 2010
Company Profiles
Local Company Profiles
Armeec
Bul Ins
Lev Ins
Regional Company Profiles
AEGON
Allianz
Aviva
AXA
BNP Paribas Cardif
ERGO
Eureko
Generali
GRAWE
Groupama
HDI-Gerling/ Talanx
ING
KBC Group
MetLife ALICO
Prudential Financial
QBE
RSA
UNIQA
Vienna Insurance Group
Zurich
BMI Methodology
Insurance Risk/Reward Ratings
Table: Insurance Business Environment Indicators And Rationale
Table: Weighting Of Indicators Skip to top