New Market Research Report: Bulgaria Insurance Report Q2 2015

For some time, we have seen Bulgaria's insurance sector as being underdeveloped, and with limited scope for growth. This remains the case. Constraints and challenges include the small size of the economy, and the low income levels of many households. These factors will limit volumes and growth therein. The fragmented nature of the non-life segment means that prices are more likely to fall than to rise. Development of the life segment is being held back by a lack of understanding of the benefits of life insurance.

The Financial Services Commission (FSC- the regulator), non-life and life premiums rose by 3% and 10% respectively in BGN terms during the first 10 months of 2014, relative to the previous corresponding period. In the short-term, the main factor limiting the growth of premiums in USD terms will be the slippage in the BGN. However, we are looking for total premiums to be broadly unchanged in local currency terms until 2017.

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As the case in much of Central and Eastern Europe, volumes in the Bulgarian non-life segment have been held back by the general softness of the economy. They will likely continue to be so. Pricing pressure is downwards: this is the result of the fragmented competitive landscape, in which the numerous players lack pricing power. There is no obvious catalyst for an increase in penetration (premiums as a percentage of GDP) from levels that are low by most standards.

Claims losses have been surging, in part because of the hailstorms which swept across Sofia in early July. This has had an impact on profitability. We remain of the view that consolidation within the non-life segment will continue. Indeed, local group Euroins, one of the larger non-life companies is building up its capital base having already undertaken significant acquisitions from multi-nationals who are no longer committed to the Bulgarian market (i.e. QBE and Achmea).

Whether the sector is able to sustain superior rates of growth from 2020, beyond the end of...

The Bulgaria Insurance Report has been researched at source and features Business Monitor International (BMI)'s independent assessment and forecasts for the insurance sector. It examines industry developments, key growth drivers and risk management projections, including the macroeconomic situation, government policy, regulatory environment and the level of development and potential for growth, broken down by line. Leading insurers are profiled, covering premiums, products and services and competitive positioning.

BMI's Bulgaria Insurance Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Bulgarian insurance industry.

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