The report “Insurance in Bulgaria – Economic Footprint and Challenges to Development” was prepared in 2022–2023 by the Institute for Market Economics (IME) on behalf of the Association of Bulgarian Insurers (ABZ). It is the first independent study of its kind in Bulgaria, examining the overall economic footprint of the insurance sector and the extent to which insurance mechanisms provide adequate economic and social protection for citizens and businesses.
The report reviews the role of the Bulgarian insurance sector in the national economy, the influence of government policies and regulations, and the direct and indirect effects of insurance activities. It also benchmarks Bulgaria against comparable European markets, providing perspective on the sector’s potential and opportunities for development. The broad and objective picture outlined in the study offers a strong basis for shaping social, economic, and demographic policies that can leverage the untapped potential of insurance for the public good.
Insurance penetration remains low. Despite positive growth, the share of premium income in GDP has ranged between 2–2.4% in recent years, compared to a European average of 7.4%. The market is dominated by motor insurance—mainly compulsory third-party liability—while property insurance remains underdeveloped.
Claims payments sustain consumption. Between 2008 and 2021, total compensation paid by insurers nearly doubled—from BGN 688 million to BGN 1.3 billion. Payouts help maintain consumption and replace assets, effectively generating market demand for goods and services.
Insurers as institutional investors. Investments by insurance companies account for around 3.5–4% of GDP annually. Bulgarian insurers hold over BGN 2.1 billion in government bonds, financing 10.4% of domestic bond issues and 2.8% of Bulgaria’s international market debt.
Fiscal contribution. Corporate tax revenues from insurers grew by almost 45% in 2019, while premium taxes have risen steadily, reaching BGN 47 million in 2020. Although modest relative to total tax revenues, this contribution reflects the scale of the sector.
Regulatory challenges. State promises to compensate disaster losses create negative incentives and discourage broader insurance coverage.
Untapped potential. Areas for further development include climate risk and property insurance, healthcare, digitalization and cyber risks, and life insurance in response to demographic changes and retirement needs.
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