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Bulgaria Insurance Report Q1 2011
Business Monitor International, Nov 2010, Pages: 80
Bulgaria Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bulgaria's insurance industry.
The global financial crisis had a brutal impact on Bulgaria’s insurance sector. Three years of strong growth in 2006, 2007 and 2008 were followed by a year when non-life premiums slipped by 5% and life premiums contracted by 19%. By July, it was clear that 2010 would be another grim year. The data published by the Financial Supervision Commission (FSC) in relation to the first seven months of the year suggest to us that it is reasonable to estimate that non-life premiums to contracted by 7% in 2010. At the time of writing (November 2010), we are reasonably confident that premiums in the tiny life segment will stabilise, but at levels lower than in 2007. The main changes appear to have been in relation to the insurance of cars. The FSC’s figures indicate that premiums for voluntary motor insurance (CASCO) fell from BGN366mn in the first seven months of 2009 to BGN298mn in January-July 2010 – a decrease of 19%. Conversely, premiums for compulsory motorists’ third-party liability (CMTPL) insurance rose by 17% over the same period.
In summary, we estimate total premiums in 2010 of BGN1,596mn. This includes non-life premiums of BGN1,357mn and life premiums of BGN240mn. In 2015, the corresponding figures should be BGN2,502mn, BGN2,006mn and BGN496mn respectively. In terms of the key drivers that underpin our forecasts, we predict non-life premiums’ penetration to rise from 2.15% of GDP in 2010 to 2.25% in 2015, and for life density to rise from US$23 per capita to US$40 per capita. BMI’s Insurance Business Environment Rating (IBER) for Bulgaria is 52.5.
Issues To Watch Stabilisation Of Life Premiums This will be an indicator that local savers perceive an improvement in the medium-term outlook for Bulgaria’s economy and financial markets.
Motor Insurance Premiums Given that the growth in CMTPL premiums is probably unsustainable, we expect a more difficult market for non-life insurance overall in the coming months.
Competitive Landscape The small Bulgarian insurance market is crowded. Although some companies are committed because they see Bulgaria as an important part of a regional business strategy, and/or because they have dominant shares in at least one of the two major segments, we would not be surprised if there is rationalisation. The contraction in the life segment, from what was a low level of development, has been disappointing.
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