6.3% decrease for Bulgaria's insurance market in 2009
For the first time in six years, Bulgaria's insurance market decreased by 6.3% on an annual basis, with premiums adding up to BGN 1.7 billion (EUR 869 million) - showed the figures presented by the Financial Supervisory Commission (FSC). Life insurance tumbled by 18% to BGN 221.6 million (EUR 113,3 million).
The general insurance market, which so far managed to keep clean of the red ink thanks to the motor policies, saw its premium income narrow by 4% to BGN 1.47 billion (EUR 751 million). "The market has fallen by almost as much as the Bulgarian economy, which shows the sector is taking its hue from the broader economy", Ivo GRUEV, Deputy Executive Director of BULSTRAD, told DNEVNIK. Bulgaria's GDP shrank by 5% in 2009.
Insurers' loss from their core activity widened more than twofold to BGN 11 million (EUR 5,6 million) from BGN 4.7 million (EUR 2,4 million) for the previous year. Claims remained almost unchanged, edging up 0.3% to BGN 775 million (EUR 396,3 million) on general insurance and dipping 1.2% to BGN 91 million (EUR 46,5 million) on life insurance.
Companies pegged the bulk of the blame for the sour performance on the mandatory motor third-party liability policy, where the increase in premiums failed to offset paid claims. Radoslav DIKOV, Executive Director of BULGARSKI Imoti, noted that the comprehensive motor insurance policy has also posted a deeper drop.
GRUEV blamed that on the weaker new car sales and old car owners' decision to scrap the policy as their income thins out.
At the same time, insurers' reserves swelled by 6.5% to BGN 1.23 billion (EUR 629 million). Market insiders said a couple of companies were forced by their European parents to stash away more cash.
Despite the loss from core activity, the Bulgarian insurance market reported an overall profit of BGN 24.5 million (EUR 12,5 million), against a BGN 2,4 million (EUR 1,2 million) loss a ear earlier. But forecasts for 2010 are pessimistic. "I expect the crisis will continue and there can't be any drastic positive changes", said DIKOV.
