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Newspaper Insurer Press Issue no 20

11 2009 .,zastrahovatel.com
Dear readers, in the overview of the newspaper Insurer Press we put an accent on the highlights and hot topics news and events. We make you acquainted with the analyses and thoughts expressed by the leading insurers and also keep you informed about all that happened within the period between the last two issues of the newspaper.

Newspaper Insurer Press Issue no 20

(28 October 11 November 2009) with an accent put on the highlights, hot topics and comments


Dear readers, in the overview of the newspaper Insurer Press we put an accent on the highlights and hot topics news and events. We make you acquainted with the analyses and thoughts expressed by the leading insurers and keep you informed about all that happened within the period between the last two issues of the newspaper.

We offer our best wishes to our contributors, friends and well-wishers who celebrate their birthday in this period!

Happy new returns and all the best!


We start our overview with the news on page 2: The Green Card System is 60 years old. The Green Card System facilitates the flow of cross border road traffic in Europe and guarantees the compensation of domestic victims of accidents caused by foreign motorists.

The Green Card System was founded in 1949 on the basis of Recommendation No.5 adopted by the Working Party on Road Transport of the Inland Transport Committee of the United Nations (Economic Commission for Europe).

Today the Green Card System has 45 members, which are mainly all European countries. Russia has recently joined the Green Card System. The purpose of this system is to facilitate the crossing of borders and to organize the settlement of claims.

The Cover Story LIFE INSURANCE: IS IT IN CRISIS? is carried on pages 4, 8 and 10. For the first seven months of 2009, the highest share, in both terms of premium revenue and the amounts and benefits paid out, is won by the insurance policy "Life and rent" (Annuity). This translates in the fact that repeatedly the Bulgarian preferred to insure their car and real property to their life. Unfortunately, this year the results showed that the crisis has already invaded the life-insurance business. The aggregated data of the Financial Supervision Commission in Bulgaria show that the most purchased policies are Annuity, while the gross written premiums (GWP) of  the last couple of years star -  fund linked insurance products, shrunk to half  after the decline in stock exchange prices and further lost of profitability of such policies. The relatively high bank deposit interest rates and the harsh credit constraints have shrunk the life insurance market as a whole.

The problems the life-insurance business have worsened during the last seven months. To lid this misery the companies have generated even more decline, and it is 16.5%, compared to the first half FY2009 period, when the figures reported 12.5 per cent.
As at the end of July 2009, the annuity product had the biggest share in gross premium income. The premium revenue, generated by this product was 74 % of the total amount in the sector.

What are the reasons for these poor results of the life insurance business?

During the last couple of years, the growth of the life insurance business was backed by the development of the so-called bank insurance.  Some of the companies have been actively working with the banks, which does not happen in 2009 because of the new restrictive landing policies of the banks. The second reason is the fact that the employers hold back from buying new policies and do not service the already purchased policies. The only contracted insurances are the mandatory placed Industrial accident, and nothing else. At the third place (reason) are the buybacks and the non-serviced policies.

We find the Analysis of the Insurance Brokers Activities, illustrated with tables, on pages 67. The premium income, realized by the insurance brokers in favor of insurers with seat and registered office in Republic of Bulgaria, for the first half of FY2009, amounted BGN 333,674 thousand, or 39.3 percent of the of gross premium income of insurance.

Therefrom BGN 314,254 thousand generated by the non-life, and BGN 19,420 thousand by the life-insurance business. The total premium income, generated by the insurance brokers, increased by 15 per cent, compared to the first half of FY2008 they report a growth of 19 per cent in non-life, and a drop of 23% in the life-insurance business.

The structure of the generated non-life insurance premiums is unchanged -   the motor insurance still keeps its biggest share. According to the figures, reported by the insurance brokers, the annuity product was the driving force in their life insurance business -  90.5 per cent.

            Our Poll is dedicated to the challenges of the Motor Third Party Liability (MTPL) insurance /page 9/. Plamen Yalamov, Member of the Board and CEO, Allianz Bulgaria Insurance Company, shared: We are in line for smooth and acceptable by the clients increasing of the price of MTPL... In principal, the annual, lump sum payment is more convenient for the insurers. However, now and in the foreseeable future we are to show our consideration for the clients, i.e. we are ready to accept quarterly payments for the policy.

Petrozar Petkov, General Director and Chair of the Board, Bul Ins AD expressed a contrary opinion The payment on installments is nothing but headache, Mr. Petkov stressed.

  • On pages 11 & 14, in the column Forum, we carry a material, entitled   Yet another request for change of the health insurance system with catchy headlines:
  •  The Bulgarian practice for unregulated participation of the citizens in the funding of the health services is a sort of world record
  • The abortive attempts to convert the hospitals into commercial companies extremely inconsistent with the selected model
  • The medical services should be funded by taxes with special-purpose designation instead of contributions


            The Second National Conference Financial Stability and Quality in Healthcare, which took place on October 6th - 7th 2009, at the metropolitan Grand Hotel Sofia, Triaditza Hall.

The conference is organized by the MARK Institute with the support of the Foundation Higher School of Insurance and Finance-VUZF.  One of the main reports Healthcare Funding was delivered by Dr.Yordan Hristoskov, PhD, Vice- Rector for Educational Activities, Higher School of Insurance and Finance-VUZF.

            Any proposals for the continuation of the Healthcare Reform are nothing but prescriptions referring to specific  health protection models of different philosophies. Thats why I will dwell upon the main Health Insurance Funding Schemes. We will see what the main menus are, even not compulsory, according to the different models. I think this would help both our discussion and those people who assumed the political responsibility to make the required decision to improve the health protection system. Among other things, the quality of health care itself.

            On pages 15 & 16 we carry some materials from the International Conference Multifunds Implementation and Prospects in the Pension Systems of the Central and Eastern European Countries.

It was held on 18 September 2009 in Sofia, Bulgaria. The conference was organized by BASPSC and is included in the conference calendar of the EFRP for 2009.
Associations and organizations of pension funds from the CEEC countries, including members of the CEEC Forum of EFRP, members of the Sofia AD HOC group, representatives of the European commission and the World Bank, supervising institutions took part in the conference. More than 20 European countries participated in the conference


            Mr. Angel Martinez-Aldama,  Managing Director , Spanish Association of Investment and Pension Funds / INVERCO/and Chairman, European Federation for Retirement Provision (EFRP)  made a presentation Multifunds and the Importance of Balanced Development of a Multi-pillar Pension System.


In this presentation he made participants acquainted with the pension funds assets allocation; Factors affecting Pension Fund asset allocation between  Defined  Benefit (DB) and Defined Contribution (DC) Funds; the multifunds; Importance of 2nd Pillar contributions and the Forthcoming research on DC Schemes.

            Introduction of Multifunds in the Bulgarian Pension System. Readiness for the Start is the report, delivered by Nikola Abadjiev Chairman of The Bulgarian Association of Supplementary Pension Security Companies (BASPSC). The Bulgarian pension system will start offering multifunds in 2010, Nikola Abadjiev, told the  international conference. He presented the Bulgarian pension system.  He also explained that the multifunds are investment portfolios with different risk profiles and the clients of the pension funds would be able to choose where and how their money should be invested.  The introduction of multifunds in Bulgaria is aimed at increasing the size of pensions, Abadjiev added. The change will bring about a series of positive changes. Mr. Abadjiev how multifunds would be introduced, their main principles, designs and investment portfolios, as well as  the legal frame that will regulate them.

            Under our regular column  Hot Topic /page 17/ we published the provoked thoughts of Assoc. Prof. Dr. Petko Salchev, MD,  Department of Social medicine and health management, Medical University Sofia,  on the occasion of the  Proposals for amendment of the Health Insurance Code. In my opinion (and I have expressed it long time ago, we are to set out for  the development and  adoption of a NEW HEALTH INSURANCE CODE instead of making any amendments of the existing Health Insurance. This is a subject of political decision to introduce both competitive fund model  and mandatory health insurance with an open possibility for substitution by supplementary health insurance funds and any forms of voluntary health insurance.

            On page 19  and under the optimistic heading Looking beyond the crisis , we carry the materials from the VIII-th National conference with international participation Insurance and Social Security in the Conditions of the Global Financial and Economic Crisis solutions for Bulgaria and European Union,  held on 11- 12 June, 2009, at the building of  the Higher School of Insurance and Finance-VUZF. On these two days the representatives of both insurance and social insurance business, of the State Financial Regulator and Scientific Circle, debated the themes which are of great importance for the Bulgarian society. The collection of all delivered reports will be published shortly. True to its principles, the Insurance press newspaper is presenting once again the real pattern of the forum as is. In this issue, we publish the presentation, delivered by Assoc.Prof. Dr. Radoslav Gabrovski, PhD, Industrial business and Entrepreneurship Department in the Economy Academy Dimitar. Tzenov - Svishtov, General Insurance Company under the conditions of the turbulent business environment.

            We finish our overview with the news about another literary recognition of international repute of the creation work of Mr. Petar Andasarov , Director, Insurance Press. In the end of August some of his poetry was published in Russian language and received high accolades from Maxim Zamshev, Executive Secretary of Moscow Writers Union, Secretary of Russian Witers Union and Chief Editor of Rossiiskii Kolokol magazine. Petar Andassarov was one of the participants in the traditional Balkan Poets Festival, held on 25 and 26 September in Braila, Romania. At the presence of the Nikolay Petev, resident of the Union of Bulgarian Writers, Mr. Andassarov was bestowed with plaquette and  honorary diploma.

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