2006 Won BGN 1 Billion For The Insurers
If The Prices Of The MTPL Insurance Were More Adequate, The Companies Would Have Accounted For Profits Of BGN 1.3 Billion
The psychological limit of BGN 1 billion was crossed. The 2006 premium incomes of the general insurance companies come to BGN 1.057 billion, says a research conducted by www.insurance.bg (look at the table).
Most experts expected the crossing of the BGN 1 billion limit earlier-in 2005. The bitter struggle for clients buying vehicle insurance, however, made the companies keep to unreal low prices and
impacted the final results. And the accounted for amount BGN came to 919.190 million. A year later the MTPL insurance sales have as well affected the final results, in a positive way this time. 600
thousand insurance policies more were sold, as compared to 2005,due to the re-registration of the vehicles and the rigid measures taken to expand the range of the obligatory insurance practice thus
achieved better profitability up to BGN 1.06 billion. In December 2006 we again witnessed the bitter struggle for more clients and the result was the same-Motor Third Party Liability insurance sold
at unreal low prices, sometimes even lower than the ones in 2005. Fortunately, there were no negative impacts in the long run since the property insurance policies sold and the traditionally
popular Casco insurance sales contributed to the total incomes amount. If the prices of MTPL insurance were more adequate the companies could sport incomes of BGN 1.3 billion, not of the less BGN
1.06 billion. Another interesting fact, once again confirmed the fact that vehicle insurance is the actual engine moving the market forward, is that the number of the MTPL insurance policies sold
by the end of 2006 counted 152 thousand more that the number of the re-registered vehicles. This world precedent was driven into being by the panic that the prices can drastically go up which
seized the people and they bought new insurance before the old had expired.
Last year began well for the general insurance companies. They registered a 14% growth during the first three-month period only, as compared to the same period of 2005. The other two three-month
periods brought growth of more or less 10%, which indicated the fact that the companies have difficulties getting new clients and niche market, as well as another fact that the business already
done has depleted its growth potential. Yet the insurance companies register an incomes rise of 15.34% in 2006. The last three-month period was successful due to vehicle insurance again, and
especially to the MTPL insurance sales. The results are good but not as good as the growth of 25.26% achieved in 2005, and not as good as the results achieved in the previous years.
As it was mentioned several times in the text above the greatest incomes contribution was made by vehicle insurance (Casco, MTPL and Green Card)-some 64-65%. Second come Average&Property
insurance, Insurance against Fire and Insurance against Natural Disasters which make 22-23% of the incomes.
DZI General Insurance Company continues to be the leader on the market. The 2006 incomes of the company come to some BGN 187 million, i.e. 17.70% of all the incomes of the branch.
The market share of the company has, however, diminished by 2.5% and the incomes increase is below 0.5%.
Second comes Bulstrad. The company incomes amount BGN 148.141 million, i.e. little more than 14% of all incomes of the branch, and registering an incomes rise by 5.9% as compared to 2005.
The last of the top three is the Bulgarian-German company of Allianz Bulgaria whose 2006 premium came to BGN 140.885 million. The market share of the company comes to 13.33% and the incomes rise,
as compared to 2005, is of some 6.14%.
Another leader on the market is the traditionally successful in vehicle insurance Bul Ins. Its 2006 incomes amount BGN 125.014 million, with a market share of 11.83%, registering growth of
9.34%.
The commented for years concentration of the market continued in 2006 as well. The first 4 companies have way greater incomes than all of the rest. The incomes difference between the fourth and the
fifth insurance company amounts BGN 58 million, and the difference between their market shares is some 5.5%.
The common market share of the first four companies makes 56.88% and the other 16 companies have the rest 43.12% to distribute among them. The 4 leaders, however, are slowly but steadily losing
positions to teh advantage of smaller or new companies. Their market share shrank by 5.47% only during last year.
The greatest growth achieved in 2006 is by DSK Guarantee Insurance Company-its incomes were augmented by 250%, as compared to 2005; followed by Generali Insurance (former Orel)-by 99.74%, QBE
Insurance Ltd.-Sofia-by 90%.
The company placed first on the incomes chart became operational in the end of 2005. The achieved is not as impressive but is a pretty good result for a new company. What is more the success of
2006 is an indicator for stable market presence.
The second best is the well known company of Orel, which was bought by the undisputed world leader Generali. The change of the owner was beneficial for the future of the company as it moved from
number 10 to number 7 in the premium incomes chart.
The company placed third is QBE Insurance Ltd.-Sofia has always been regarded as an exotic insurer, since its owners come from Australia and it was the only foreign insurance company on our market.
The company managed to find its niche market and without the purpose of becoming a major insurer it does pretty decent business and is not subject to vehicle insurance. AIG Bulgaria is the other
insurance company which does not sell vehicle insurance, but accentuates on property insurance-a not so popular product in Bulgaria. Via Generali Insurance the branch of the Australian insurer
moved two places up on the premium income chart.
Energy and the Bulgarian Agency for Export Insurance are the two companies to have registered slight activity drop in 2006 which came to decrease of few hundreds of thousands of leva as compared to
2005.
BAEI dropped one position down and Energy dropped three positions down. There were no other market displacements in 2006.
The event of last year was the appearance of Generali Holding Vienna on the Bulgarian market. The entering of the Italian insurance company via its Austrian subsidiary means that 4 of the top 5
insurance companies are present on our market. The great absence goes for the French AXA which could not buy DZI in the beginning of 2007.
This setback did not discourage the insurance group as 4-5 of its subsidiaries have notified the Financial Supervision Commission of their will to work on the Bulgarian insurance market. Only two
general insurance companies applied and received permit to sell their products in our country, unlike the life insurance companies which submitted way more numerous license applications in 2006.
One of the companies is Cardiff General Insurance-Bulgaria, a subsidiary of the banking group of BNP PARIBAS. The other company is the subsidiary of United Bulgarian Bank, the American financial
group of AIG and the leading Greek insurance company of ETNIKI.
The former company is not operational yet and the latter started working just in the end of 2006 and achieved a premium of BGN 12 000. Its owners, however, will certainly be targeting at
greater market share.
The conclusion draws that 2006 was a successful year for the general insurance business. But the achieved during the year is by no means all the companies are actually capable of neither is the
capacity of the market.
The foreign investors anticipate the business potential and want to enter our market. The major shares of two, of the few Bulgarian insurance companies, were sold from the beginning of the year.
What is more is the fact that more than 95 companies have notified FSC of their will to work on the Bulgarian general insurance market. Almost the same is the number of brokers which want to
do the same. Most of these applicants will most probably never be operational but will be servicing just their corporate clients. There are some companies, however, which will be competing for a
decent market share.
