OVERVIEW OF THE INSURANCE MARKET IN BULGARIA: OVERVIEW OF THE INSURANCE MARKET IN BULGARIA May 13, 2005 / Gdansk , Poland Ventsislav Stoykov


Marketplace Trends: Marketplace Trends Market Indexes - Penetration and Density Non Life Industry- Overview, Key Players, PI structure Life Industry - Overview, Key Players, PI structure Health Care Insurance- Key players, PI structure What’s in the future- Bulgarian EU accession and the impact over the insurance market Marsh Bulgaria - Nr.1 broker in the country - about us - improving cooperation with insurers


Major Market Indexes: Major Market Indexes Market Penetration - A positive trend is outlined for both Insurance penetration & density indexes, as exposed by figures /Table 1 and Table 2/ Market capacity increased- over EUR 400 M Underwriters remained aggressive with regard to market share


Table 1Sums in thousands EUR: Table 1 Sums in thousands EUR


Table 2Growth in GDP and Premium Income: Table 2 Growth in GDP and Premium Income


Non-life Insurance Market: Non-life Insurance Market Non-life insurance business have generated for the year 2004 total premium income of EUR 375 M, 24% growth compared to 2003. Analysts attribute this growth mainly to developing of the PD segment and Motor insurance. Bulgaria has a diversified insurance industry comprising of 20 domestic non-life entities -15 local joint stock companies and mutuals -5 branches & affiliates of foreign companies Supervision Commission 157 licensed brokers


Non-life Insurance Market /cont’d/Premium Income structure: Non-life Insurance Market /cont’d/ Premium Income structure


Non-life Insurance Market /cont’d/ Key Players: Non-life Insurance Market /cont’d/ Key Players DZI – former state-owned company, leader in the market since its establishment in 1946, privatized in 2002. For the year 2004 DZI have generated EUR 63.65M, holding the major market share of 16.98% Allianz Bulgaria- second major player on Bulgarian market - subsidiary of Allianz Group . Operates in Bulgaria since 1992, established 6 affiliates and more than 35 branches/agenesis in the country


Non-life Insurance Market /cont’d/: Non-life Insurance Market /cont’d/ Bulstrad and Bulins generated about EUR 51 M each. * Bulstrad is also a former state-owned company, now part of TBI Group of Companies. * Bulins is a local insurance company – holding the major share of Motor insurance market Other 16 insurance companies represent altogether less than 40% market share Orel Insurance Co. – 6.74% Vitosha – 5.53%. International insurance giants like AIG (1.65%) and QBE (0.66%) are still precautiously operating on Bulgarian market.


Non-life Insurance Market /cont’d/  Market share - structural chart: Non-life Insurance Market /cont’d/ Market share - structural chart


Life Insurance Industry: Life Insurance Industry Significant development is achieved in life insurance sector – premium income is increased by more than 35% comparing 2003 Total premium income for year 2004 amounts to EUR 51.7 M – most part of which is allocated in Credit Life insurance


Life Insurance Industry /cont’d/ Premium Income structure: Life Insurance Industry /cont’d/ Premium Income structure


Life Insurance Industry /cont’d/Key Players: Life Insurance Industry /cont’d/ Key Players 11 life entities – 8 local and 3 foreign DZI Life is the leader in life insurance market , generating near EUR 14.6 M Allianz Bulgaria Life is again the second major player – EUR 14.2 M Orel Life and AIG Life are other key players – EUR 5.8 M and EUR 5.6 M respectively


Life Insurance Industry /cont’d/  Market Share Structure: Life Insurance Industry /cont’d/ Market Share Structure


Health Insurance: Health Insurance Voluntary health insurance market is still in the initial stage of its formation. Yet there is a considerable growth in premium income of 81%, comparing 2003. Major premium amounts are allocated in Hospital and Outpatient modules Only 11 Health Insurance companies are operating on Bulgarian market Key players -The leading health insurance company is Zakrila – an affiliate of Orel Group of Companies, holding major share of 64%, other players are Mediko21 and Doverie – holding 11% each


Health Insurance /cont’d/ Premium Income Structure: Health Insurance /cont’d/ Premium Income Structure


Health Insurance /con’t/: Health Insurance /con’t/


Bulgaria in the EU- Accession will lower the risks of doing business in and increase competition. As a border country we will face the great changes in all business sectors including insurance, skill intensive sectors will face increased competition.: Bulgaria in the EU- Accession will lower the risks of doing business in and increase competition. As a border country we will face the great changes in all business sectors including insurance, skill intensive sectors will face increased competition. Local businesses increased competition access to larger markets compliance costs to conform with EU regulations, increases in standards, compliance and enforcement costs to raise brand awareness in foreign markets New preventative and protective measures needed - increases , incompensation/fines; new compulsory insurance’s?


Marsh Bulgaria- Nr.1 Broker in the Country : Marsh Bulgaria- Nr.1 Broker in the Country Who is Marsh Bulgaria: - fully owned subsidiary of Marsh Inc. the Global Leader in Insurance and Risk Management Services; - leader also on the Bulgarian Insurance market (FSC); - over 60 % of the sizable FDI are our clients; Our services: - unique combination of global capabilities and expertise and local knowledge and availability; - ensure full compliance with local statutory and regulatory requirements; - ensure adequate professional care in the insurance and risk management; - facilitate optimal corporate governance by one trusted point of contact for all insurance and RM needs.


Marsh Bulgaria- Nr.1 Broker in the Country /cont’d/: Marsh Bulgaria- Nr.1 Broker in the Country /cont’d/ Improving Cooperation between Marsh and insurers Marsh By understanding insurers and working closely with them to understand their capabilities and strategies , appetite and underwriting guidelines With the removal of MSA’s and increased pressure on commission and fees, the work that Marsh does need to be recognized by insurers. One of the ways in which this can be recognized is through products and services that are only available to Marsh. Insurers Flexible underwriting approach - size of business and geography Target client list Work closely with Marsh on new product ideas, coverage amendments to suit local conditions


Slide21: Thank you for your attention !!!