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Bulgaria Insurance Report Q1 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-2372 Description This report differs from its predecessors in that it includes BMI’s Insurance Business Environment Rating(IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI’sCountry Risk Rating (CRR). It is now much easier to consider the business environment for the insurancesector in any one country relative to the business environment for other industries in that country that aresurveyed by BMI, and the business environment for the insurance sector in other countries.Bulgaria’s IBER is 50.7. Relative to other countries in Central and Eastern Europe, it is not an attractiveinsurance market for foreign insurers. Within the region, Bulgaria stands out for its stable regulatoryframework. Government policies are likely to remain constant over the long-term. However, Bulgaria’sIBER is held back by the very small size of the life segment and its BMI Country Risk Factors,particularly its external risk. Over the forecast period, we anticipate that non-life premiums will grow by 18% annually in localcurrency terms and by 18% in US$ terms. Life premiums are expected to increase by 10% annually inlocal currency terms and by 9% in US$ terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in non-life density from around US$102 to US$178 and an expected increasein life density from US$18 per capita in 2007 to US$26 per capita in 2012. Bulgaria’s total populationis declining. The Bulgarian life market is small, with scope for future growth and development. There are few barriersto entry to either market, and foreign insurers are becoming well established in Bulgaria, although there issignificant room for further expansion. Significant rationalisation is likely in the future and this couldgive rise to new entrants in the life segment from overseas. Both the life and non-life sectors of the Bulgarian insurance market are unusually open to foreignparticipants. This is unusual for the region, where many remain in the control of former state monopolies.Overall, the industry is relatively fragmented - notwithstanding that particular local firms havedominance in particular areas and lines. This means that there is a potential for rationalisation, which isgood news for multi-national insurers. Foreign insurers are becoming well established in Bulgaria,although there is significant room for further expansion. Over the medium term, an economic slowdownmay provide the catalyst for a substantial rationalisation of the non-life segment. There would appear tobe plenty of potential to buy into the market through acquisitions of smaller local players in thelife market. However, an economic slowdown seems likely in the medium term. The life segment is as yet very small,and volatility in Bulgaria’s underdeveloped capital markets might also mean that the insurance marketwill be unpredictable. External risk has been identified as a problem for Bulgaria, and this is reflected inits low IBER. Table of Contents
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