Newspaper Insurer Press Issue No 17

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 start our overview with the usual column Between Two Issues (page 2):

- On 9 September the Parliament’s Economic Policy, Energy and Tourism Committee approved the annual report for the activity of the Financial Supervision Commission (FSC) in 2008. The chairman of FSC Petar Chobanov and the deputy chairperson Ralitsa Againe presented before the members of parliament the development of the non-banking financial sector during the last year and the activity of the Commission as regulatory, licensing and supervisory body in connection with the sector’s stabilization in the conditions of financial crisis.

- Emil Atanassov, deputy chairperson of FSC, head of “Insurance Supervision” division approved Marian Hrotka for executive director of Generali Insurance.

- Mr Atanassov made two resolutions for approval of Gerhard Laner for a member of the supervisory board of IC Balgarski Imoti AD and IC Balgarski Imoti Life.

- Gerhard Laner is appointed a member of the supervisory board also of Bulstrad Vienna Insurance Group.

- “Bulgaria Health” Health Insurance Company is a leader on the market of voluntary health insurance for the first half-year of 2009, according to the current data of the reports of the Financial Supervision Commission. For one and a half year, since the company became a part of Festa Holding AD, the dynamics of its development had been unknown until now in this branch. For the first three months of 2009 it was also in the first place with the greatest market share of all health insurance companies.

On the same page we read also the news for changing the name of DSK Garancia. The new names and the logo of the two companies are GROUPAMA INSURANCE and GROUPAMA LIFE INSURANCE, as a result of the acquiring of 100% of the insurance and life insurance companies DSK Garancia and their integration into the structure of the Group.

In News from the Companies we find the comment on the public auction for selling the unbooked rights for increasing the capital of Bulstrad Vienna Insurance Group held at the Bulgarian Stock Exchange on 27 August 2009.

Armeets Insurance Company was an insurer of the 62th congress of CIOR-CIOMR-NRFC.

On page 2 is also the information about the international conference Multifunds – Implementation and Prospects in the Pension Systems of the CEE Countries, held on 18 September 2009 in Sheraton Hotel.

On page 3 is the offer: Property Insurance of DZI – at the price of a bucket of latex.

DZI Insurance Joint Stock Company decided to surprise the schools in the beginning of the new school year. The company made a special wall calendar, which begins from September 2009 and ends with the end of the school year.

The calendar is prepared as a part of the yearly autumn campaign for accident insurances for school-children and children from kindergartens and chreches.

Ileana Stoyanova makes a detailed analysis of pupil’s and children’s insurances in the Cover Story, pages 8, 10 and 11. Nowadays a lot of parents think of ensuring the future of their children with children’s insurance. A positive trend is observed for increasing of the premium income of this type of insurance.

What is it? Accumulation of funds with which the parent to guarantee a start-up capital for his child; yearly accumulation of additional profitability; pay out of a guaranteed saved sum to the child when he attains lawful age; insurance protection during his most boisterous time and plays. There is also a possibility to choose currency of insurance between levs, euro and US dollars, as well as indexation (yearly rise) of the insurance sum with the purpose to be protected from the yearly inflation. Strengthening the insurance protection of the child and making additional installments by the parent by including a supplementary Package Accident. A supplementary protection in unfavourable conditions may be ensured with the person paying the insurance.

Here you can find also the offers of the insurance companies Grawe Bulgaria Life Insurance EAD; Allianz Bulgaria Life Insurance AD;  Uniqa Life AD. The theme continues in the next issue.

On page 4 is the first interview with Petar Chobanov, chairman of FSC.

Petar Chobanov says that the efforts of FSC are directed towards limiting the losses and faster going out of business from crisis.

“At the moment the Bulgarian economics and the whole financial system endure the negative effects of the world financial crisis. As a part of global market Bulgaria had no way to evade those negative trends, which had a strong impact first upon stock market, and from it upon the activity of all segments of the non-banking financial sector. The Bulgarian capital market is comparatively young and the quantity and the prices of the instruments traded on it are highly sensitive towards capital movements. This was one of the reasons for the observed impact of crisis upon it. There is a great development potential on the Bulgarian market, as the role of financial supervision at the moment is to help its qualitative development in long terms and to draw maximum profit from the current situation of stagnation. Now our task is to optimize the activity of the committee, with which to soften the consequences of crisis upon market participants. It is necessary also to have a very good coordination with the other institutions, connected with the development of the financial sector.”

On pages 6 and 7 Albena Aleksandrova makes an analysis of the half-year results, which are a fresh breath to the insurance market. General insurance increases with 1,7 %, life insurance has 12,5% less incomes for the half-year. As it is known, motor insurances are at a loss and generate damages equal to half of the premium. The half-year results confirm the standing for years tendency the incomes in the sector to be generated by motor insurances. The greatest increase of premium income on year basis is registered in credit insurances (123%) and flying machines (82%), which comprise a share of 1, 4% and 1 %, respectively, of the premium income in the sector. The leadership according to premium and market share for the half-year remains unchanged.

Bulstrad Vienna Insurance Group is first with BGN 120,278 million  premium and 16,58 % market share.

DZI – General Insurance is in the second place with an income of BGN 105,021 million and 14, 48% market share in general insurance.

IC Lev Ins AD remains third for the half-year with BGN 77,053 million premium and 10, 62 % market share.

On page 9 is To Be Continued theme of the unconventional sale channels. Yoanna Stefanova’s article is entitled The Comfort of the Highway. The general conclusions are:

-         Human thinking changes most slowly

-         Financial stability is a main priority in a time of crisis

-         There might be mass bill sales on the telephone or by Internet in our country, but this will not happen soon

When one is used to the comfort of highway, he does not think that there are many other roads besides. The unconventional ways of bill sales may be introduced in Bulgaria after insurers reconstruct the systems, says Plamen Yalamov – executive director of Allianz Bulgaria Life Insurance AD. He explains that now the systems of the companies are programmed to issue bills on paper with the signature of the client and a lot of work is needed for their reformation. Besides that, some insurance bills may be sold on the telephone or by Internet, but others may not.

On page 14 in the column Forum is the VIII National Conference Insurance and Security in the Conditions of Global Financial Crisis – Solutions for Bulgaria and the European Union. The second section was Functioning of Insurance Systems in Bulgaria and the Member Countries of EU.

We present the report of Dr. Stanislav Dimitrov The Role of Insurance Agent in the Development of Supplementary Pension Insurance in Bulgaria. It reveals the essence, the problems, the challenges and the possibilities for improving the activity.

On pages 15 and 16 under the same column is the report of Svetoslav Stoyanov Unconventional Models of Managing Catastrophic Risk Portfolios of International Financial Corporations and Insurance Companies. It analyses the full cost of risk, the theory of pyramidal losses, British Petroleum and their unconventional approach to catastrophic losses, and the result of the adopted insurance programme in this respect.

On page 17 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?

We relate the opinion of Plamen Yalamov, executive director of  Allianz Bulgaria Life Insurance AD. According to him SAC has violated the procedure and has not taken into consideration the interpretation of the Court of European Communities.

On the same page in the column Over the World Richard Rahn – a senior fellow of the Cato Institute and chairman of the Institute for Global Economic Growth, chairman of the SB of the Bulgarian Institute for Market Economics, acquaints us with the French Model. The article is first published in Washington Times on 26 August 2009.

On page 19 again in Over the World we learn that the net profit of Allianz Group has increased with 21 % in the second three-month period of 2009. Allianz in New Europe successfully opposes the economic fall down in the first half-year of 2009.

On page 24 we present TBI Broker. Valentin Galabov, executive director of TBI Credit and TBI Leasing answers to questions connected with the creation, advertisement, first steps, products, ambitions and the mandatory insurance Civil Liability:

“I would like TBI Broker to be a popular and liked label, to give confidence.”

 We finish the overview with the column Book Shelf (page 22). Here we present one valuable manual in the field of insurance business – Short Insurance Encyclopaedia with authors prof. Hristo Draganov and Petar Andasarov – director of Insurance Press newspaper. It will be promoted officially soon, and in this issue we offer you the preface to the encyclopaedia written by prof. Draganov.

Selection: Vania Petrova

Translation: Stefka Hrusanova