Newspaper Insurer Press Issue no 21 (12 – 26 November 2008)

Newspaper Insurer Press Issue n^o 21 (12 – 26 November 2008) with an accent put on the highlights, hot topics and comments

Dear readers, in the overview of issue n^o 21 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.

Happy new returns and best wishes to all who celebrate their birthday! Let’s wish all lots of love, good health and happiness to our contributors, friends and well-wishers!

Under the regular heading «Between two issues» on page 2 a place is given to the news from the Financial Supervision Commission (FSC). Bulgarian National Assembly passed at second reading the law for the foundation of the State Fund for Guaranteeing the Stability of the Pension System as known as the Silver Fund.

The law is stipulating that this fund which is to compensate for the extra costs of ageing, will buy an array of financial instruments with 90 per cent of privatisation income and 100 percent of concessions income. An additional point is that the fund shall collect 25 percent of budget surplus and other revenues.

The Cover story of this issue is: Hristo Kovachki, acquired the Municipal Insurance Company (OZK). Mr Kovachki paid down the 9.6 million leva price for 65,55% stake of OZK and his total stake in the company became 86%.

    On the same page, (with continuation on p. 9) is the material from the 10^th Southeast Europe Economic Forum. There it was manifested that FSC is to work out new amendments of the Insurance Code (IC). The amendments will provide for sanctions that shall be imposed for insurance intermediaries that failed to report on time the volume of newly concluded policies. Before the newspaper Insurance Press Mrs Againe voiced a hope that the bill for the new amendments to the Insurance Code will be introduced in the Parliament by the end of the present month.

In the column «Forthcoming», the newspaper puts wise about the forthcoming seminar about the challenges of Motor Third Party Liability Insurance (MTPL). It will be held on 25 and 26 November in Plovdiv. The forum with international participation is organized by National Bureau of Bulgarian Motor Insurers (NBBMI), Guarantee Fund and Association of Bulgarian Insurers.

On page 2. Is the Insurance Press Review – an overview of the similar issues in the field of insurance, made by Petar Andassarov.

On page 3, under the heading „For calm and security in the private life of everyone”, Evgenia Dimova, Director, Property Insurance Directorate, DZI-General Insurance AD is presenting to you the renewed property insurance, offered by DZI.

 On pages 4 and 6, in the column „Theme to be continued” is the interview with Maxim Sirakov, Executive Vice-President, Allianz Bulgaria Holding. Mr. Sirakov answers the questions asked by Yoanna Stephanova about the reasons for the financial crisis: „It is rather the aggressiveness and greediness of the investment bankers, than those of all people in the financial sphere that leaded to excessively swollen prices of the secondary market’s products and captivated the other players in their pursuit of higher profitability... If we are to specify the situation with just one expression, it shall be crisis of trust... The global crisis will hit Bulgaria, but to my opinion, its influence will not be so strong ” .

The crisis will impact on the insurance business in Bulgaria hampering its growth rate. In spite of all, the life insurance business will keep growing at high rates, Maxim Sirakov judged. Moreover, he forecasted that the financial crisis would be over faster than estimated by some economists. During the next 4-5 months, the people would be reassured, and the markets would calm down and the financial crisis would fade.

Regarding the tough question about Motor Third Party Liability Insurance (MTPL), he shared that, in his opinion, this year’s campaign will be entered prudently and it will not be that war for clients that it used to be before, for all that “tricks” in the sales.

On pages 5 and 9, Andrey Alexandrov, Senior Business Director. Allianz Bulgaria Life, reveals the essence of the international Health insurance „Allianz Health Gold”. The product is launched in partnership with “Allianz Worldwide Care” Ireland. This product gives possibility to Bulgarian citizens to undergo in-patient treatment in elite hospitals in Europe and over the world.

Mr Alexandrov answered the question about the financial crisis and its impact on our country. In his opinion, aside from the insurance business, the crisis will hamper the growth rate in any other branches. Most probably, the consequences of the crisis would be taken of within the timeframe of the next year, though. About the life insurance market, he considered that the life insurance market would have the high potential, which had been widely discussed for years, but apparently, it is a little bit overestimated from the point of view growth rate forecast.

The premium income of near BGN 44 million strengthened the leading position of Allianz Bulgaria Life Insurance Joint Stock Company on the market.

In the column «Forum» on pages 7 and 21 са are the materials from the Seventh National Conference with international participation: „Social Security and Insurance in Bulgaria under the conditions of eurointegration: challenges before the yet continuing adaptation”.

In some of the previous issues we published the lectures of Larissa Orlanuk-Malitskaya, Prof, Dr.EcS.,Head, Faculty of Insurance Business, Financial Academy under Government of Russian Federation and this of Reader Dr. Jordan Hristoskov, Governor of the National Social Security Institute (NSSI) , in this issue we carry the questions that the both lecturer were asked by the participants. Their answers made it quite clear shall we expect the removal of the pension threshold and ceiling, and how far in the future. What is the impact of the flat tax on the insurance business? What types of insurances are mandatory in Russia and how the state is helping to overcome the consequences of catastrophe events? Whether the proposal for more active participation of the state in the funding of the public pension system would have an impact on the countenance of this system?

On page 8 , under the heading «Analyses: pension insurance» are published the results of the supplementary pension insurance for the first nine months of FY 2008. The net assets accumulated in the field of supplementary old age provision came to BGN 2,381,560 thousand. The main conclusions are for an increased number of insured individuals. In comparison with the first nine months of 2007, the growth is 10.3 per cent. As from the beginning of this year the total amount of the accumulated assets has increased with 2.73 percent. The net assets of the supplementary funds (SPF) and the professional funds (PPF) have increased with 15.8 per cent and 5.6 per cent respectively.

On page 10 we are celebrating together with Higher Scholl of Insurance and Finance the graduation ceremony for alumni`2008.

On pages 11 and 14 we carry the continuation, from issue n^o20, of the table „PREMIUM INCOME PER TYPE OF INSURANCE, REALIZED BY THE INSURANCE BROKERS IN FAVOR OF INSURERS WITH SEAT AND REGISTERED OFFICE IN REPUBLIC OF BULGARIA, FOR THE FIRST HALF OF FY 2008”. The data have been provided by FSC.

On pages 12 and 16 we carry the conversation of Petar Andasarov with Matthias Maak, Managing Director of HDI-Gerling International Holding AG - Germany and Chair of the Supervisory Board of HDI Insurance Joint Stock Company. Mr Maak shared that the German partners have been exceptionally contented with the development of their subsidiary undertaking in Bulgaria.

Regarding the influence of the world financial crisis Matthias Maak commented that in technical aspect the business of the group is strong enough. While the average growth rate of the general insurance market in Bulgaria for the third quarter of this year is 22%, HDI realized a growth rate of 26%. The trend for growth over the average of the market yet continues.

The company is following rather conservative policy, i.e. little investments in stock and mostly in government securities.

The presence of foreign insurers on the Bulgarian insurance market is positive for the market.

Regarding the low price of the Motor Third Party Liability Insurance, гMr Maak shared: “Our understanding is that in case the market does not impose low prices, we are not to increase them because this is equal to lose our business. That’s why we do prefer to turn on other insurance products, so as to be not greatly dependent on the Motor-car insurance.”

In the column «Meetings» , on pages 13 and 23 we meet you with the composer Cyril Ikonomov. He is one of the most popular composers. He is the author of many favorite Bulgarian songs and together with his wife Maya Neshkova they are one of the most successful creative tandems. For him the music is something divine, and the ext – the shortest path of the message to the listener.

On pages 15 and 16 we carry the interview with Todor Kazandzhiev, ember of the Board of directors and Senior Executive Manager of Insurance Company DSK - Guarantee and Life-Insurance Company DSK – Guarantee. He provides information about the state of the both companies that appeared on the market as the bank insurer, servicing one of the biggest banks in the country – DSK Bank. The real fact is that for the last few years the insurer is building its own agency network. Mr Kazandzhiev emphasized “For the last few years the life insurance captured a larger share on the market, and that is good. However, in case we make a deeper analysis to find out, which are the products in the bottom of this trend, we would understand that these are saving or fund-linked life insurance products. The markets will have enough time to regain the levels. Thus the clients can be reassured that they will not lose.

In the interview is treating as well some questions in connection with the contribution to the Guarantee Fund, the problems to be resolved, and which are lately under the consideration of the Life Insurance Commission of the Association of Bulgarian Insurers, the attitude towards the bilateral protocols in case of road traffic accidents, etc.

On page 17 is published the information about the Cooperation Agreement between the NATO Defense College Anciens' Association in Bulgaria, represented by its president - colonel Ivan Ivanov, and the Higher Scholl of Insurance and Finance, represented by Reader Dr. Grigoriy Vazov – president of VUZF. The agreement has been signed on 30 October 2008, at official ceremony in Sofia.

In the column «In the world» on page 19 Iva Ivanova discovers what happened with the insurance branch under the pressure of the crisis. The second in the Reinsurers World Rank – Swiss Re reported on 4 November a net loss of CHF 304 million for the third quarter of 2008 after net income of CHF 1.47 billion in the same quarter of the last year and abandoned its Share buy-back program.

It is of interest the way the China Insurance Regulatory Commission (CIRC) is “pushing” the local insurance companies to purchase more stock in the publicly listed companies in order to support the sick stock market.

And some more interesting news «In the world» on page 21: The nationalization of the pension funds in Argentina is a bad signal to the world; New Brazilian insurer will be holding 17 per cent of the market; The Amrerican insurers could be transformed in banks; New Catastrophic pool started in Romania.

We are finishing our overview with the material “Direct communication between the structures of the insurance business and its partners “ on pages 20 and 22. There is the information about the seminar, held on 10 and 11 October this year in Hisar Resort, and organized by the company Auto3P Bulgaria. The event was attended by Borislav Mihailov – Chairman and Executive Manager of the Guarantee Fund (GF), Nikolay Sotirov – General Secretary of GF, and Yordan Kifov – Member of the Managing Board of GF.

 The program of the seminar included a review of the novelties in the development of the products and services, offered Auto3P Europe; as well as demonstration of the new and improved functionalities of SmartClaiMS - system designated for operating and managerial servicing of the activity for processing vehicles’ crash claims of the Insurance Company.

selection: Vania Petrova

translation: Albena Dimitrova