Car insurance continues to attract higher revenues but yet generates largest losses
At the end of 2007 the gross premium revenues accumulated by insurers in Bulgaria amount to BGN 1,505,070 thousand. For comparison a year earlier the collected premium revenues reached BGN
1,246,949 thousand, which means it has realized an impressive growth of 20.7% on an annual basis. These conclusions are based on data collected by the Financial Supervision Commission (FSC) and
officially announced at the end of April.
Besides revenues, growth is reported in the total assets in the insurance sector in 2007, namely 23.4%. At the end of December these assets are BGN 2,166,071 thousand, including BGN 1,358,815
(62.73% of total assets) in the non-life insurance and BGN 807,256 million (37.27%) in life insurance. The amount of assets in the non-life insurance segment rose by 21.1% on an annual basis,
whereas in life insurance with 27.5%.
The total amount of equity with the insurance companies increased by 17.9% at the end of 2007, to reach BGN 856,905 million, including BGN 438,545 million with insurers operating in the field of
non-life insurance, and BGN 418,360 million with insurers operating in the field of life insurance. The increase in equity of non-life insurance companies is estimated at 12.4% and that of life
insurance companies – at 24.4%.
The gross premium revenues in non-life insurance by the end of 2007 is BGN 1,269,546 thousand, where growth has marked 19.7% on an annual basis. Revenue premiums at direct non-life insurance
policies stand at BGN 1,259,882 thousand at the end of 2007, vs. BGN 1,045,507 thousand recorded at the end of 2006. The amount of premiums received from active reinsurance activities is
estimated at BGN 9,664,000 at the end of the period, recorded at BGN 15,261 thousand a year earlier.
The claims in the non-life insurance sector have reached the sum of BGN 563,712 thousand with a growth of 28.6% y/y. A worrisome aspect is that the growth of claims paces out the revenue
growth rate by nearly 10 percentage points. The amount of gross plant reserves (representing the funds necessary for payment of future benefits) increased by 29.3% on an annual basis, reaching BGN
903,131 thousand.
In 2007 the technical result (both gross and net, and after taking into account the effect of reinsurance) of companies operating in the non-life insurance sector, is positive. This technical
result excludes the insurance policies for "illness" (under which only 3 companies reported activity, whereas all the technical results are negative, totaling BGN 17 thousand. Negative have
been also the net and the gross technical results, respectively BGN 4,443 thousand and BGN 302 thousand under insurance of sea vessels, a product offered by some 4-5 companies. As for
civil liability insurance of drivers the gross and the net technical results are also negative, with respectively 36 BGN 892 thousand and BGN 27,562 thousand. The gross technical result was
negative with 11 of all 16 licensed car insurers, and 9 of them have recorded negative net technical result.
The largest relative share in the net technical result (taking into account the effect of reinsurance) as per types of insurance policies, is found with the "Autocasco" (BGN 35,721) and the policy
"Fire and natural disasters" (BGN 32,855).
On the non-life insurance market the highest share is reported with the car insurances – "autocasco" (44.2%) and the policy “Civil liability related to the possession and the use of motor vehicles"
(24.4%) - 68.6% of the gross premium revenues realized in the sector.
Compared to 2006 the relative share of car insurance has increased by several percentage points, which is mainly due to the record number of newly registered cars during the previous year –
purchased new vehicles and imported second-hand vehicles. The second reason is the increased scope and the prices of the third party liability insurance.
The relative share of any claims on car insurance was highest – 85.3% of the total amount of any claims.
The greatest increase in premium revenues on an annual basis is recorded with products such as "credit insurance" (54.2%), "autocasco" (36.6%) and "miscellaneous financial losses" (34.2%).
According to Orlin Penev, chairman of the Association of Bulgarian Insurers (ABI), "the sector is growing pretty well, but it could not be left without notice that its development is not due to the
efforts of insurers themselves, but rather to the refreshing economic situation in the country.
The analysis of last year's results show a continuously shrinking market share of the leading insurers, which happens on the account of other companies. The top four companies, for example, in 2007
have given a little over 40% of total revenues in the non-life insurance sector. For comparison, at the end of 2006 those same companies had a market share of 56.7%.
The 2007 leader in the non-life insurance segment is Insurance and Reinsurance Joint Stock Company "DZI – Non-life Insurance PLC”, whose premium revenues reached BGN 186,728,903 and the
market share stood at 14.72%. Thus the company has cemented its leadership ever since 2006, when its market share accounted for 17.70% of the total revenues in the sector.
Insurance and Reinsurance Joint Stock Company “Bulstrad PLC” withdrew a step back from the top, although it did lead the sector until the end of November. So, the company remained runner-up with a
premium revenues of BGN 177,576,318 and market share of 14% (the company took the second place also in 2006).
The leading triumvirate is complete with the Bulgarian-German consortium Insurance and Reinsurance Joint Stock Company "Allianz Bulgaria PLC” with premium revenues of BGN 149,183,447 and a
market share of 11.76%.
Among the market leaders honorary ranking is given also to Insurance Company "Bul Ins PLC” with premium revenues of BGN 146,572,526 and market share of 11.55%.
The gross premium revenues accumulated by life insurance companies at the end of 2007 has reached BGN 235,524, which has realized growth of 26.5% on an annual basis. Premium revenues from direct
life insurance amounted to BGN 234,148 thousand at the end of 2007, vs. BGN 185,026 thousand at the end of 2006. The amount of premiums received from ceded assets is estimated at BGN 1,376 thousand
at the end of the period, vs. BGN 1,155 thousand recorded a year earlier.
Any claims on life insurance have amounted to BGN 78,663 thousand, whereas the annual growth rate was 13.2%, i.e. nearly twice less than the growth of revenues. The amount of gross technical
provisions increased by 35.2% on an annual basis, reaching BGN 362,218 thousand.
It should be noted that the technical results reported by the life insurance companies amounted last year to BGN 13,179 thousand vs. BGN 15,214 thousand in 2006.
The highest share, in terms of premium revenues and the amount of any claims, is the life assurance and the annuity – respectively 73.2% and 77.7%.
The greatest increase in premium revenues on an annual basis is found with the following insurance: "life" related to investment fund – 86.9%, "Accident" insurance – 47.3% and annuity life
insurance – with 29%.
Last year reshuffles occurred in the individual rankings as per premium revenues among the leaders in the life insurance industry. Insurance Company "Allianz Bulgaria Life PLC” upgraded to the top
ranks of peers, as premium revenues were generated from a total of BGN 67,684,063, while its market share amounted to 26.88%. A year earlier the company was running up. The second place in 2007 has
remained with top insurers of 2006 – Insurance and Reinsurance Joint Stock Company "DZI" with premium revenues of BGN 44,839,982 and a market share of 17.81%. And there was a hot contest for
the third place. The fifth in the 2006 ranking – runner up Insurance Company "Unika life PLC” rose up positions to third place on the wings of premium revenues standing at BGN 30,685,196 and market
share of 12.19%. For a second consecutive year "Generali Life Insurance PLC” has steadily occupied the fourth place with market share of 9.81% and premium revenues of BGN 24,702,944.
In the ranks of life insurance companies, unlike their non-life insurance peers, there is still a high concentration – the first 4 companies accumulate around 2/3 of the revenues in two branches.
Despite this fact, smaller companies constantly make up for lagging behind the leader and "bite up" from the leaders' market shares. Besides the high growth in revenues and the positive financial
results in the life insurance branch worth noting that the interest towards the insurance business in Bulgaria comes along with the growth of the sector. Last year, the Financial Supervision
Commission (FSC) issued 4 licenses, including 3 to life insurance companies (Insurance Joint Stock Company "SoGéLife Bulgaria", Insurance Joint Stock Company “CCB Life” and “Interamerikan Life
Insurance Bulgaria”) and one non-life insurance license to Insurance Joint Stock Company "Grave Bulgaria non-life Insurance”).
Besides the new companies granted with licenses last year in accordance with the European Union standards for free provision of services, a total of 162 foreign companies have notified the
Financial Supervision Commission on their intention to operate on the Bulgarian insurance market. In all, this shows that the Bulgarian market segment has great potential for development and that
the most interesting is just to happen in the future.
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The Financial Supervision Commission announced statistics on the number of clients dissatisfied with the received insurance services. In 2007 the Financial Supervision Commission received 460 complaints against insurers, including 62 complaints against insurers in liquidation or bankruptcy. All complaints are addressed. The content of complaints against licensed insurers is directed mainly to claim a question and the expression of disagreement with the following: the amount of compensation as set by the insurer, the decline to pay out compensation or failure of the insurer to announce its decision within the legally specified term.
In 2007 a total of 208 acts establishing administrative violations were drafted, including 117 against insurance companies, 2 against health insurance companies, 67 against insurance brokers, 13 against actuaries and 9 against individuals. The Financial Supervision Commission issued 94 criminal provisions at the total cost of BGN 267,400, including such against insurers – 52 criminal provisions for BGN 183,000, against insurance brokers – 35 criminal provisions of BGN 81,000 and individuals – 6 penal provisions for BGN 2,400 each.
