It is the second year in a row that the sector has reported rise in the numbers of insured, in income and profits
Premium income of Bulgarian life insurance companies reached in 2005 BGN 147.366 million, analysis of the market made by the information website INSURANCE.BG shows. Compared with the results
reported in 2004 income within the sector went up by 45.78%. However, it fell by BGN 1.5 million compared with premium income in 2002. Here, we should take into consideration that in 2002 companies
relied more on taxation schemes than on established life insurance practices. That is now almost abandoned due to the numerous law restrictions imposed. We can be proud of the fact that for a
second year in a row the life insurance market in the country has reported rise in income (which was 35.16% in 2004), profits and the number of insured persons.
Premium income in the sector has gone up by 233.72% over the last five years. These results are very promising but still the market has not showed its full potential yet. Life insurance in Bulgaria
hides many latent opportunities waiting to be developed over the next years. This is proved by the fact that in 2005 the average amount spent on life insurance policies per capita (presently the
population of Bulgaria numbers approximately 7.5 million people) adds up to BGN 19.65. That amount is, though, derisively low compared with the average expenditures of Bulgarians on motor
insurance, which amount according to non-final figures to BGN 82-85 per capita. A possible comparison between the amount spent on life insurance in Bulgaria and the relevant amount in Western
Europe would be inadequate and the reasons for this should be sought in the gap between the standards of live. However we still have much to strive for and much to learn. We should also take
consideration to the fact that expenditure on life insurance products per capita went up by BGN 7 compared with 2004 when the relevant amount was BGN 12.65.
It is indicative that Bulgarians have begun to look for insurance protection on their own and do not to wait for the insurance agent to persuade them in the importance of the life insurance policy.
Another important thing is that except for the purely risk insurances, people in Bulgaria are increasingly asking for long-term life insurances.
According to preliminary information, the Life insurance and the annuity account for approximately 70% of the income, while supplementary insurances and Life insurances related with an investment
fund – for approximately 8% each. The latter insurance service is offered by only 2 or three insurance companies in Bulgaria and nevertheless it has yielded sizable profits. According to all
specialists the product is very good and in the near future it will be offered by more companies and the demand for it will significantly grow.
In 2005 State Insurance Institute (DZI) ranked first by income amongst life insurance companies. Its market share is equal to 30.73% and its premium income amounted in 2005 to BGN 45.282 million,
being higher by 59% than the compny’s income in 2004. Profits of the company reached in 2005 BGN 5.163 million.
Gross premium income of Allianz Bulgaria Life PLC amounted in 2005 to BGN 36.867 million, registering a rise by 32.54% as against 2004. The market share of the company slightly exceeds 25% and its
profits reached in 2005 BGN 4.6 million (after taxation). Profitability of company’s products was as follows: 7% - of insurance contracts concluded in Euros, 7.5% - of those in Bulgarian notes and
6.2% - of policies in American dollars. The company plans to offer in 2006 new insurance products having high profitability, such as life insurances related with various investment funds. Besides,
new covered risks, such as treatment at a foreign hospital, are planed to be included in already existing products.
Orel Life ranked third amongst the leading insurance companies, having registered in 2005 premiums amounting to BGN 14.523 million and rise by 28.88% as against 2004. Orel Life has considerably
expanded its business as regards individual clients. Company’s profits reached in 2005 BGN 431 thousand.
Analysing the situation on the life insurance market one can observe a considerable concentration, i.e. the four leading companies hold 74.29% of the market, thus leaving only 25.71% to the eight
smaller ones. We should, however pay attention to the fact that the monopoly on the market is slowly breaking and some of the smaller companies have aspired to catch up with the bigger ones. This
is proved by the fact that in 2004 the four leading companies held 77.66% of the market and now their share has fallen by more than 3 per cent. One thing that helps to change the status quo is the
establishment of new companies. DSK Guarantee has already set a good example in that relation, having found a niche on the market for the short period of one year and a half. Company’s income in
2005 amounted to BGN 6.913 million, registering a rise by 341% compared with 2004. DSK Guarantee has market share of 4.69%.
Serious forecasts for better performance in 2006 and the next years gave also the managers with Wiener Stadtische, the owner of Bulgarian Real Estates, and UNIQA, which has interest in Vitosha
Life.
It is interesting that there are only two companies – DZI and Orel Life- have mainly Bulgarian interest. In all others life insurance companies the major interest is held by foreign investors. In
figures, companies with prevailing Bulgarian interest hold 41.72 of the market, while the others – 58.28%
The potential of life insurance market in Bulgaria was estimated highly by many investors. At the end of the last year Life Insurance Institute – a daughter company of Lev Ins – was issued a
license. Furthermore, applications for license to carry out life insurance activities have been submitted by the Dutch ING and the Slovenian KD Group. It is expected that within the next few months
a new life insurance company will be established by the United Bulgarian Bank, the American life insurance company AIG and the Greek Etniki. Specialists expect also 2 or three more participants to
appear on the market this year, some of them buying new companies and others – making investment.
In conclusion, we may expect an interesting year during which not only new companies but also new financial records will be registered. Specialists hope that the accent of their work would fall
onto classic life insurance products having longer terms and higher insurance premiums. Those occupied in the sector hope also that more and more clients would seek the services of life insurance
companies so that agents wouldn’t have to ‘pursue’ and persuade them into the quality of the products offered.
