The insurance industry in Bulgaria has a long and varied history that has seen the country go through some major changes. In 1886 the pension insurance sector was born, with the focus initially on injured military personnel. This was then expanded to include teachers, clergymen and civil servants during the early part of the 20th century. The Law for Public Insurance was introduced in 1924 and this made Bulgaria the first country on the Balkan peninsula to have an overall social insurance system, with a range of insurance types - including accident-at-work and professional disease - introduced.
An independent and autonomous body was set up in 1941 to ensure the insurance industry was operating properly. Today, the Financial Supervision Commission (FSC) has responsibility for this role and it reports directly to the National Assembly of the Republic of Bulgaria. One of the most significant changes in the insurance industry happened in 1997, when market reforms opened up the sector to foreign companies. This has led to a major increase in market size, as companies have sought to take advantage of this opportunity.
The non-life insurance segment is by far the biggest in Bulgaria, as it accounts for over 80 per cent of all premiums underwritten. According to industry estimates, this sector is also expected to grow in the future. Figures from the FSC showcase just how important motor insurance is to the sector, as it is responsible for 69.2 per cent of all deals. The next biggest sector is fire, natural forces and property (17.6 per cent), followed by accident and sickness (five per cent). One of the main reasons for the growth in property insurance has been the ongoing risk of natural disasters, which has concentrated the minds of the public about the requirement for protection. There is also heavy concentration in the sector - six companies account for over two-thirds of premiums.
Almost all of the major life insurers are owned by foreign entities. The segment is the second-largest in the Bulgarian insurance industry - in 2012 it was responsible for 15.2 per cent of gross written premiums.
Part of the problem with life insurance is that many households either do not fully understand the benefits of taking out such a policy, or they are too poor to use the offerings of life insurers in organised savings.
Indeed, in an effort to boost profitability a number of life insurers have altered their business structures in the past few years, Business Monitor reports. This includes VIG, which has merged two subsidiaries in the country - Bulstrad and Bulgarski Imoti - as it looks to realise synergy benefits.
Insurance brokers are also regulated by the FSC and play a very big role in the non-life sector, where they are responsible for over 40 per cent of new business premiums. To enhance transparency in the sector, the FSC publishes an annual ranking of the most successful licensed insurance brokers by market share. In the most recent list, SDI Group emerged on top with a 6.4 per cent market share, putting it ahead of I&G Insurance Brokers (5.8 per cent) and UBB (3.9 per cent). Collectively, the top ten are responsible for 35.4 per cent of the market.