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Bulgaria Insurance Report Q1 2012
Business Monitor International, Dec 2011, Pages: 80
Business Monitor International's 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.
In many ways, Bulgaria remains an archetypal Central and Eastern European insurance market – albeit one that is (very) underdeveloped by most metrics. Its weaknesses are the lack of absolute size, modest (or negative) growth in most lines over the last five years or so, susceptibility to a fairly uninspiring outlook for the economy and fundamental constraints – such as the inability of most households to afford life insurance. In part because of intense competition in auto-related lines, non-life penetration has not advanced. Its strength is that, because of government policies and past financial crises, the sector is dominated by a large number of foreign players, each of whom sees Bulgaria as a small fragment of a much larger business across the region – or, indeed, all Europe. Vienna Insurance Group, Allianz and KBC, for instance, all have leadership positions in both major segments, through their respective offshoots in Bulgaria. Other foreign companies that are present include Generali-PPF, Uniqa, MetLife Alico, Chartis, Grawe and Eureko.
As of November 2011, it appears that non-life premiums will hardly grow at all in the year as a whole, relative to 2010. Penetration remains on a downwards trend, and is well below 2% of GDP. Various developments through Q411 indicate that the major companies are – with some success – boosting profitability through measures to improve efficiency and reduce costs. Allianz’s non-life business in Bulgaria improved its profitability in the first nine months of 2011 relative to the previous corresponding period. In early October 2011, Vienna Insurance Group announced that it would be merging Bulstrad with Bulgarski Imoti, in order to realise synergy benefits for a combined group that accounts for about 16% of the non-life market (and which is a major player in the life segment as well).
In the life segment, the latest figures published by the Financial Services Commission (FSC) indicate that premiums – and density – are growing, if at single digit rates. The main impetus for growth appears to be a strong increase –from a very low base – in unit-linked products. Another key development, in October 2011, has been the announcement from KBC that it hopes to extend its bancassurance business model to Bulgaria: for this reason, the Belgian financial services group is moving to full control of DZI. Overall, though, BMI stress that they expect that the life segment will still be very underdeveloped at the end of the forecast period.
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