All of the signals are examined in due time, says Ralitsa Againe, Deputy-chairperson of the Finance Supervision Commission
Mrs. Againe, how many examinations were carried out during 2005? How many of them were subject examinations and how many were on grounds of a signal or some other
reason?
- There were total 38 examinations carried out last year. 20 of them were on insurance companies and 3 – on health insurance companies. There was one examination on the Guarantee Fund and 14
examinations on the activities of insurance brokers. The examinations on the insurance brokers were scheduled. As to the insurance and health insurance companies, examinations have been both
subject and scheduled.
As far as I see, 10-12 companies have not been examined, as well as 10 health insurance companies and about 160 insurance brokers. Do plan expanding the scope of supervision or at least
covering the activities of the largest companies that usually carry bigger risk for the clients?
- Surely, there will be more frequent examinations in 2006 than there were in 2005. One reason for this is that during the first four months of 2005 there was no Deputy-chairperson of the
Commission to initiate such examinations. This covers one third of the year. So we are not entirely unjustified to say that there has been an interruption in the supervision activities of the
Commission with regards to the supervision on insurance and health insurance companies. We hope that will not be the case in 2006.
The licenses of two insurance companies were rescinded last year. Are there any other problem companies?
- As at present date, we don’t have any reasons to worry about other problem companies.
Are there any expectations as to the issuing of new licenses? To the best of my knowledge, there are candidates - KD Life, ING Life. Are there any others?
- Yes, there are applications for licenses for carrying out of insurance activities and amongst the candidates there are significant foreign investors, this being a very good sign of the
development of the Bulgarian market. I would, though, withhold comment. As soon as all ambiguities and faults in the documents are cleared out, the Commission would pronounce its
decision.
Do you apprehend any depressions in the market as a result of the liberalization of the prices of the Motor Third Person Liability policy?
- Insurance Supervision Division at the Finance Supervision Commission undertook timely measures in order to avoid any depression that might have resulted from the liberalization of the prices. Our
objectives are to ensure that prices of the issued policies are high enough so that insurers would be able to meet their obligations, including accruing of adequate financial reserves. In that
respect officials at Insurance Supervision Division put forth great efforts to impose timely measures on companies, whose premiums are considered to cause instability.
As you can judge about the inadequacy of some prices, that is to say that they are considered lower than the necessary effective amounts, would you be able to set an average price of the
Motor Third Person Liability policy?
- I cannot set such average price on account of the variety of factors determining the price. Besides, distinctive features in the insurance practices of each insurer should be taken into
consideration. As a whole, the average risk premium is similar to the one formed in 2005 pursuant to Ordinance No18 for the Obligatory Insurance.
Are there any signals of violations within the current MTPL Campaign 2006?
- Yesterday we received tens of signals. The companies concerned are being examined today.
And what kind are these violations?
- As far as we do not have any results from the examinations we can not talk about violations yet. Though, signals varied – from offers of bonuses to prices far lower than the real
ones.
Are the measures undertaken for expanding the scope of the mandatory insurance effective enough? Will we succeed in reaching the limit of 90% set by the EU?
- It is too early to make any judgments as whether we will be able to meet the requirements of no more that 10% uninsured cars. The state has undertaken very serious measures, including
stricter sanctions for failure to fulfill that obligation, as well as more excessive information provided to the consumers. Furthermore, the Finance Supervision Commission, in collaboration with
the Ministry of Interior, plans to upload on the Commission’s website information about all motorcars for which an insurance contract has been concluded so that every owner of a motorcar will be
able to check whether their car has a valid insurance and in case they find any inaccuracies - to take necessary steps to clarify the situation. Measures may be divided as follows: first, sanctions
will be stricter, i.e. motorcars not having a mandatory insurance will be banned from use, and then, fines will get higher. Furthermore, the Code and the secondary legal framework are bound to
ensure significant improvement in the communication between the bodies of the Ministry of Interior, the Finance Supervision Commission and the Guarantee Fund. As from the beginning of this year all
insurers shall be obliged to submit on weekly bases information about the issued policies, both to the Guarantee Fund and to the Finance Supervision Commission. Besides, that information will be
presented to the Ministry of Interior and enable it to take timely measures against uninsured motorcar owners. As another measure may be considered the liberalization of the prices which resulted
in significantly more advantageous conditions to the clients on the market. Last, but not the least, we plan changes in the method of calculation of the MTPL scope, so that it would be determined
by the proportion between the number of uninsured motorcars responsible for a traffic accident and the number of all traffic accidents.
That percent is currently 3-4% ..
- According to figures provided by the Ministry of Interior that percent is less than 10%, which meets the requirement of the European Commission. Of course, the method shall be approved by our
European partners.
By the enactment of the Insurance Code was fulfilled one of the requirements of the EU – namely, to have modern legislation in conformity with the European directives. That happened far too
quickly, though. Are there, in your opinion, any gaps in the Code? Were all remarks of those occupied in the business taken into consideration?
- I don’t think the Code was adopted too quickly. Quite the contrary, its preparation began yet in the summer of 2004. In January 2005 it was approved via a concurrent procedure by the Council of
Ministers and was passed to the National Assembly for discussions. In the period between January and May all parties concerned have had the chance to go through the Draft Code and form an opinion
as regards all its parts. After the divestment of the mandate of the 39th National Assembly, the Finance Supervision Commission initiated another discussion procedure on the Insurance Code under
which were made many significant amendments to the Code. As a whole the discussions at the National Assembly showed that there weren’t serious problems that might lead to considerable deviations in
opinions of the different parties. The major problem discussed – besides the liberalization of the MTPL prices – was the foundation of a security fund that shall ensure the interests of the insured
in case of an insurer’s insolvency. That problem remained unsolved because of a claim by the members of the National Assembly for a new discussion regarding the foundation of such
fund.
Was 2005 a good or a bad year for the insurance business?
- The market shows that year 2005 was a successful year, registering a considerable increase in the premium incomes of the insurers, as well as in the number of insured persons.
Though, that increase is mainly due to motorcar insurance ..
- There is a rise in premiums as regards all types of insurances. Motorcar insurance is a still leading part of the portfolios of Bulgarian insurers, but we should also take into account the
increase in all other types of insurances.
