Newspaper Insurer Press Issue No 15-16

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.

We offer our best wishes to our contributors, friends and well-wishers, who celebrate their birthday or name-day.

Many happy returns!

We start our overview of the double issue with the news published on page 2:

- From the column Between Two Issues we learn that at its meeting on 29 July 2009 FSC credited Robert Wassner with a partial capacity of responsible actuaire in the field of life- and general insurance, which is acquired out of the Republic of Bulgaria in a member state of EU.

- In News from the Companies we read that Insurance Company Uniqa Bulgaria AD has a new finance-director general. Nikolai Genchev will be a member of the management board and a finance-director general of  IC Uniqa Bulgaria AD. He will join the new managing group of the company, with members Todor Kazandjiev – president of the management board and chief executive officer of IC Uniqa Bulgaria AD, and Claudia Roznak, member of the management board and executive officer.

 - In the same column AIG Life Bulgaria and UBB - AIG Life open “a new page”. On 6 August 2009 the central office of AIG Life Bulgaria announced the change of the company’s name into ALICO Bulgaria Life Insurance Company.

The company has been on the Bulgarian market since 1999 with a 100 % participation of American Life Insurance Company (ALICO) and offers life insurance, life insurance for loan holders and accident insurance for individual and group clients.

 - The news from the Financial Supervision Commission shows the conditions for covering the risks of flood and earthquake in Bulgaria. 10 % and 9 % of the houses in Bulgaria are insured against those risks.

 - FSC was also a host of the meetings of the Expert Group for Inner Models. For the first time on 20 and 21 July 2009 in Sofia a meeting was held of the Expert Group for Inner Models at the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).

 On page 3 we relate about the new motor insurance “Casco+” of DZI. On 15 July 2009 DZI presented on the market its new product – motor insurance “Casco+” with new innovative solutions of the insurance coverages and flexible prices.

On pages 4 and 10 in Cover Story – Insurance in a Time of Crisis, Gergana Ivanova, manager of the insurance brocker FINSALES EOOD searches for an answer to the question: Does financial apocalypse provoke the optional methods for bill sales?

The big competition between insurers increased also in the virtual space. The latest evidence of this is the release on the market in Internet of the mandatory insurance Civil Liability. Those who have taken out insurance on the Internet use preferential prices with payment in cash on the delivery of the bill. Another way of payment is also the system of eBG.bg or ePay. Each insurer is instructed to facilitate the users. One could pay on-line also installments to the bill or to order motor or property insurance. One could also check the condition of the damage. Because of many reasons there are minimum expectations of on-line insurance bumm.

Distant marketing is too revolutionary for the conditions here according to some insurers. They consider the real sales of insurances on the telephone impossible until each Bulgarian starts to carry three credit cards in his pocket. In spite of this, there are some fears that after a couple of years, companies from the European Union could attract a great part of the solvent Bulgarian clients by distant sales without even registering a company here.

On the same page Yoanna Stefanova with her article Out of the Highway (continued on page 11) searches for an answer to the questions: Does crisis provoke insurers to look for new market possibilities? Will the time for “experiments” come and when? Are insurers searching for new, unconventional sale channels?

On pages 6 and 7 there is an analysis of pension insurance for the first half of 2009. The assets of pension companies reached a growth of 11.34 % for the half-year. An overcome of negative trends is observed.

Maintaining of conservative policy continues. For the first time after the beginning of the financial crisis the net assets of the additional pension insurance funds show growth according to the recently published data of FSC about pension market for the first half-year of 2009. The amount of net assets accumulated by the four kinds of funds is BGN2.661 milliard by 30 June 2009. In comparison to the same half-year of 2008 these show an increase with 11.34 %.

In the analysed period 3 713 437 persons have been insured in additional funds and in comparison to June 2008 the increase is 4.78.

 On pages 8 and 23 in the column Hot Topics the material by Dr. Petko Salchev PhD, MD The Voluntary Health Funds Market in Bulgaria. Applicable Benchmark Approaches continues from issue No 14. Attention is paid to the mathematical model of counting.

 On pages 9 and 31 there is the interview with Konstantin Velev, president of the management board of Generali Health Insurance Protection AD. We talk with Mr Velev how the leadership of a comparatively young and fast developing market as health insurance is achieved and kept? Which is the greatest challenge as a President of the management board of Generali Health Insurance Protection AD? What is the difference between private and state health insurance from the viewpoint of ordinary people? Why some people prefer to make health insurance in private company although they are obliged to pay health insurance to the state?

 On page 12 is Our Inquiry. In connection with the affirmed by a five-judge body of the Supreme Court of Administration fines levied by the Commission for Protection of Competition on 14 insurance companies on charge of cartel agreement as regards the mandatory insurance Civil Liability, the newspaper Insurer Press organized an inquiry among insurers with the following questions:

- What is your comment to the imposed penalty and what will be its reflection upon your activity in the period of financial and economic crisis?

- Because in Bulgaria there is no a higher instance, where you could appeal the judgement of SAC, what steps will you take?

 Their answers were:

Rumen Yanchev, president of the management board and executive officer of Bulstrad Vienna Insurance Group: “As I had said before, our aim was to protect the insurance market and the companies from financial problems in the conditions of unhealthy competition at sales of Civil Liability. It was not by chance that a conversation was held with the Financial Supervision Commission and especially before the Commission for Protection of Competition approached itself on the matter.

It is interesting that our warnings and suggestions were applied later in practice by the Commission itself. Now we can see that the stocks of the companies are in much better condition than before. If the sanctions are fair, then we should reconsider the legal system of this country…”

Lyubomir Modev, manager of legal compliance in Interamerican Bulgaria: “The sanctions will have a negative effect upon the financial results of the companies”.

Konstantin Velev, member of the management board of Generali Insurance AD: “The sanction was heavy, but it did not afflict our activity.”

Radoslav Dikov, executive officer and member of the management board of IC Bulgarian Real Estate AD: “We are studying the possibilities to appeal at the Court of European Communities.”

Pages 13 and 22 inform us that AIG Bulgaria changes its name to Chartis Insurance Bulgaria. On this occasion an interview was made with Venislav Yotov, executive officer of AIG Bulgaria Insurance and Reinsurance Company EAD. Mr Yotov said: “Till the end of the year we will be a branch of the French Chartis Europe CA. Most of our corporative clients continue to work with us, we even have new ones. We will not cut down the staff, but will apply new personnel.”

 On page 14 in Insurance Portfolio we will find out what is the “invisible protection of a hotel”. A hotel is obliged to have three insurance products in order to be protected like a fortress – property insurance, hotel-keeper’s liability and insurance of the hotel’s guests.

On pages 15 and 18 we talk about the problems of pension insurance with Nikola Abadzhiev, president of BASPSC. “Bulgarian pension companies have hard times in connection with financial crisis, but in comparison to the funds in other EU countries they do well, because in the last few months their results improve and the investment profits of most of them are positive.”

On page 15 we publish also the opinion of Petar Ganev from the Instutite for Market Economics: “Pension installments should be made simple and reduced.”

On page 17 in Insurer Gallery we find the interview with Lazar Georgiev, head of Sofia Corporative Centre of IC Lev Ins AD. According to him: “When you create something and see how it grows in front of your eyes, you cannot help being glad.”

 On page 19 we talk with Zhivka Slavkova, head of department Regulatory and Market Analysis of Insurance Supervisory Bureau in FSC about Solvency II. The directive was adopted by the European Parliament on 22 April 2009 and will come into force in October 2012. The directive Solvency II will replace the present Solvency I, introduced in the 1970s.

Mrs Slavkova explains the introduced by the directive new regulatory framework optimizing the financial stability of insurance industry.

 On pages 20 and 27 there is the material from the VIII National Conference “Insurance and Social Security in the Conditions of the Global Financial and Economic Crisis – solutions for Bulgaria and European Union.”

Dr. Yordanka Daneva, MD, executive officer of POK Saglasie, read a report on the theme Investment Policy of Pension Funds in the Time of Crisis.

 On pages 21 and 22

Assoc. Prof. Stoyan Prodanov, executive officer of IC Bul Ins AD, sees through the crisis. His report at the VIII National Conference is on the theme Challenges before Insurance Investments in the Conditions of Crisis. It reveals the history of the crisis, its impact on insurance investments of Bulgarian companies, the reflection of investment problems on the operative activity of insurance companies, conclusions and prognoses.

One of the main conclusions is that the maintaining of investment security by reducing the quota of investments in shares with low volatility continues.

On page 26 in the column Over the World we read that “the use of Internet as means of communication with potential and present clients, as well as the on-line sales of insurance products become a more important theme on German insurance market.”

From the previous issue the report of Dr. Mimi Vitkova, MD, chairwoman of the Association of Licensed Voluntary Health Insurance Companies, about the development and the problems of this insurance continues.

 On page 27, again in the column Over the World Richard Ran explains what is worse than deficit. This is a cycle of export fall-down and loss of jobs.

 On pages 28 and 29 we reflect the meeting carried out at VUZF where the future of year prizes in non-banking financial sector was discussed. There is a need for relevancy between the increased prestige of the branch and distinguishing the best in it.

 In the column Women in Insurance (p. 32) we talk with Zlatolina Mukova, executive officer of Euroins Insurance Group EAD and president of the management board of IC Euroins AD. Mrs Mukova answers frankly to questions about insurance, Euroins, values and life style. We finish with her words: “When you make things with love notwithstanding if this is your work or your attitude towards your relatives, you have not lived in vain.”

                 ;               &nbs p;               &nb sp;               &n bsp;               & nbsp;               Selection: Vania Petrova

Translation: Stefka Hrusanova