Motor third party offsets steep decline in Bulgarian insurance
The mandatory motor third-party liability policies ran to the rescue of the Bulgarian insurance market, preventing a vertiginous drop in the first two months of the year, show figures by the Financial Supervision Commission (FSC).
Between January and February 2010, the insurance market sank by 11% from the corresponding period of 2009. Counting out premiums generated from third-party policies deepened the decrease to a formidable over 23%. This is the only type of policy to pull off a rise in premiums alongside Guarantees and Legal Fees covers, which, however, have marginal market shares. In February, the slowdown accelerated from the previous month, partly due to the large number of motor third-party policies signed at the beginning of the year. Many drivers renew their auto covers in December or January.
Plamen YALAMOV, executive director of insurance company ALLIANZ Bulgaria, attributed the higher premium income from motor third-party covers on the higher price and not on a larger number of vehicles. Policy coverage has been beneath the 90% threshold set by the European Union (EU) for more than a year now.
YALAMOV also said the decline recorded in the comprehensive motor policy stemmed from vehicles' old age.
The latest data also displayed slimmer premiums from property insurance thanks to shrinking household income that prompts cost-cutting coupled with the deterioration on the mortgage market.
YALAMOV predicted the overall Bulgarian insurance market will tank between 10% and 15% this year. He warned of a sharper drop if the government goes ahead with plans to impose a tax on insurers' income.
