In its Annual Insurance Report 2021, EIOPA included for the second time data on “Cross-Border Premiums” in the European Economic Area (EEA), which makes it possible to analyze the cross-border activity of life and non-life insurers based on the freedom to provide services (FOS) and the freedom of establishment (FOE).
EIOPA’s statistics show that in 2021, of the 2,383 insurance companies active in the EEA and subject to Solvency II, 34 percent carried out cross-border business – approximately one in three companies. By comparison, in 2020, of the 2,837 companies active in the EEA, 29 percent offered cross-border insurance services.
Measured in premium income, the cross-border insurance business in 2021 amounted to €106.8 billion, an increase of 20.5 percent compared to 2020. This figure excludes business conducted through local subsidiaries as well as reinsurance activities.
Each EEA country functions both as a home country for insurers writing cross-border business and as a host country, and this activity is not limited to neighboring states. This highlights the fact that cross-border insurance is a pan-European phenomenon, not confined to a few Member States. These findings underscore the success of the Single Market project and the need for Bulgarian insurers to take this dynamic into account in their strategic planning.
The most active home countries for cross-border insurance are Ireland and Luxembourg, with exports of €36,632 million and €30,366 million in gross written premiums respectively – together accounting for nearly 63 percent of total FOS/FOE turnover. In this ranking, Bulgaria recorded €90.8 million in premium income from EEA markets, placing 22nd out of 29 countries included in EIOPA’s statistics.
Cross-border (FOS, FOE) gross written premiums by home countries in the European Economic Area for 2021, in € million
Source: EIOPA
As regards host countries, premium income generated through branches or cross-border provision of services is generally correlated with market size. Accordingly, the largest markets – Italy, France, and Germany – are also the largest “importers” of insurance services within the EEA.
Cross-border (FOS, FOE) gross written premiums by host countries in the European Economic Area for 2021, in € million
Source: EIOPA
It is noteworthy that until 2020, the European cross-border insurance market was predominantly life insurance. In 2021, however, non-life insurance not only compensated for this imbalance but slightly overtook life, with gross written premiums of €53.8 billion compared to €50 billion for life insurance. EIOPA’s data does not yet provide a more detailed breakdown by line of business, which makes it difficult to assess whether cross-border activity is concentrated in corporate risks or retail insurance.
Looking at Bulgaria as a home country in the cross-border insurance market, the total premium income of the four Bulgarian insurers conducting sales in the EEA – either directly or through branches – amounted to €90.8 million in 2021. This represents an increase of 15 percent compared to €79.1 million in 2020. All outbound cross-border insurance business from Bulgaria consisted entirely of non-life products.
Inbound cross-border insurance business to Bulgaria in 2021 amounted to €172.4 million, up 18 percent compared to €149.4 million in 2020. This growth was notable, as it exceeded the 13 percent growth achieved by Bulgarian insurers in the domestic market during the same year. Of the total gross written premium generated by foreign insurers in Bulgaria, €76.95 million came from life insurance and €95.46 million from non-life insurance. While the “imports” and “exports” of non-life products are relatively balanced, Bulgaria is a clear net importer of life insurance.
Gross written premiums from EEA insurers on the Bulgarian market in € million, 2020–2021
Source: EIOPA
In non-life insurance, the most active players on the Bulgarian market were insurers from France (€31.2 million), Luxembourg (€17.3 million), Belgium (€9.3 million), and Ireland (€8.8 million). In total, insurers from 17 countries conducted non-life business in Bulgaria on an FOE basis.
In life insurance, the concentration was even stronger. The top three home countries out of eight accounted for almost all inbound business: France (€47.6 million), Ireland (€20.16 million), and Hungary (€9.9 million). Following the acquisition of NN by a Bulgarian insurer, it is expected that the 2022 statistics will show the entire inbound life premium income via branches concentrated in French and Irish companies.
The most striking trend emerging from these statistics is the significant presence of foreign life insurance business in Bulgaria. EEA insurers not incorporated in Bulgaria wrote life premiums of €76.8 million in 2021, compared to €270.9 million written by Bulgarian companies (excluding health insurance). This equates to a 22 percent market share for foreign life insurance branches in Bulgaria. By contrast, in non-life insurance, the share of cross-border activity through FOS or FOE was 6 percent.
