The Companies Did Not Manage To Accelerate The Current Abilities And To Instigate Greater Demand
The premium incomes of life insurance activities came to BGN 189.832 million in 2006, that is what a research conducted by www.insurance.bg reads. The
achieved result did not come as a surprise since the experts expected incomes coming to some BGN 190- 200 million half a year ago. The life insurance companies made an increase of about
26.5%, as compared to 2005. But if the increase of 2005 is compared to the on in 2004 (about 48.4%) it is obvious that the development pace has slowed down. The beginning of 2006 was very promising
but the nine- month report showed that the results will not be as good. The reasons are many and complex, but the main remain the same- low insurance culture and low purchasing capacity. The thing
is that the companies do not do anything to change the status quo.
It is not serious that the Bulgarians price their lives times less that their vehicles. The analysis shows that every Bulgarian citizen is attributed life insurance expenses of BGN 25. In the mean
time the vehicle insurance sales incomes amount 3.5 times the life insurance incomes; the average vehicle insurance premium comes to BGN 300, i.e. 12 times more.
The most popular life insurance policies were- savings and risk policies. Their share makes 70% of the total income. Other policies showed interest in were accident insurance, life insurance
involved in an investment fund, and additional insurance. Their shares vary between 7 and 9%. the other life insurance products are not popular and their market presence and incomes are
insignificant. There is some rise in the incomes from Accident insurance, higher are the compensation payments on Life insurance and annuities. Health insurance sales have dropped. The specialists
explain the fact with the development of the market of the voluntary health insurance. The life insurance companies register a serious increase of their assets and technical reserves in 2006, thus
favouring their development.
The number of the life insurance companies in the beginning of 2006 counted 12. But 4 more companies got licensed during the last 12 months- the Dutch ING Insurance, the Greek- American UBB- AIG
Life, the Slovenian KD Life and the French Cardiff; only the first two could start actually working on the market while the other two are to start working this year. The Insurance Institute (owned
by Lev Ins) may be considered as a new player in the field; it was licensed at the very end of 2005 and became operational in the middle of last year. Another very important event was the return of
Generali, of course. the Austrian section of the Italian financial group bought the majority share of Orel- G Holding, thus becoming the owner of the insurance companies of Orel Life, Orel and the
health insurance company of Zakrila.
The leader with a premium income of BGN 55 million and a market share of 28.97% is DZI. The company has augmented its activity by 21% as compared to 2005. The company did not release any other
information regarding its finance. This is strange since the information is not confidential and the company is public and information should be released. The managers of the insurance company,
which was recently bought by the Belgian KBC, do not share the same opinion. They politely advised us to wait for the official report of the FSC, which will most probably be released in the middle
of April. The financial results of the company's accounts, however, were ready and prepared two months ago.
Allianz Bulgaria Life for the first time deposed DZI with its nine- month report, stroke the balance as number two with an income of BGN 49.042 million and a market share of 25.83%. The company's
activity has been augmented by 33%. BGN 33.75 million of the incomes come from Life insurance sales, little more than BGN 10 million comes from Pension insurance and annuities; BGN 4.3 million
comes from Life insurance involved in an investment fund. The company profits amount BGN 5.215 million.
Generali Life Insurance occupies the third place with its premium income of BGN 17.735 million and market share of 9.35%. The most popular of their life insurance products is the savings Life
insurance, its sales incomes come to BGN 13.76 million as well as the Risk insurance, its sales incomes come to BGN 3.9 million. The company incomes have increased by 22.13%.
The classification of the companies in view of the increase of their incomes is quite interesting. First comes the Syndical Insurance Company (former Medic Center) having registered a rise of
274.75%, second comes Vitosha Life with an increase of 72.23%, third comes Bulstrad Life with an increase of 41.14%. The average rise of on the market is of 26.54% and only two other companies have
achieved more that the average increase, while two other companies have decreased their market share.
Of all the 16 companies only two have finished the year with negative balance. The first three companies occupy 64.15% of the market, and the first six companies occupy 88% of the market, bearing
in mind that the difference between the company placed third and the following three is almost insignificant. The other 10 companies occupy 12% of the market. The prognosis, however, expects great
competition and great changes in the status quo of the business field. These will not be as drastic but still obvious. The three leading companies used to occupy 71- 72% of the market three years
ago, i.e. their market share has decreased by 10%.
The number of the life insurance companies count 16. 7 other companies have have notified the Financial Supervision Commission of their will to enter the Bulgarian life insurance market. There are
leading European companies among them, the Austrian Vienna Insurance Group, the Italian AURORA Assicurazioni and Toro Assicurazioni, the English Inora Life Limited and Society of Lloyd's, the
German Skandia Leben and the Luxembourg EURESA-LIFE SA. Other investors come from the neighbouring Greece and Romania; there are Bulgarian companies as well e.g. Armeetz.
The listed companies suggest that the competition will be severe and will lead to the development of the life insurance market. Thus the Bulgarian customers will realise the necessity of life
insurance. The purchasing capacity issue should as well be resolved.
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A remark regarding the chart:
Following local insurance legislation changes, AIG Life has changed its premium reporting basis for 2006. AIG Life premium for 2005 is on annualized basis, while 2006 premium income is on collected
and due basis. This makes 2006 not comparable with 2005, as well as AIG Life premium not comparable with the results of the rest of the compnies, whose premia are on annualized basis. On a
consistent basis AIG Life growth is in the area of 30%. For statistical purposes AIG Life and UBB AIG Life will additionally publish premium data on annualized basis in order to make market share
information comparable.
