The bonus-malus system does not aim to raise the prices of "Motor-third party liability” insurance (MTPL) for everyone. Its goal is to achieve a better distribution of risk, with low-risk drivers paying a lower price and those with more claims paying a higher one, commented by Nikolay Stanchev, Chairman of the Bulgarian Insurance Association (ABZ), on Bloomberg TV. He explained that the price of insurance is determined based on a number of factors such as the overall frequency of claims and their size, which in turn depends on the price of spare parts, repair work, labor in general, and medical services. Bonus-malus is more of an element of pricing at an individual level.
A few days ago, the regulations determining the rules for the exchange of information between the Guarantee Fund system and insurers were adopted. Once the adaptation is completed, the bonus-malus system will begin to be applied.
“The insurance sector in Bulgaria has been growing steadily over the years. Unfortunately, penetration and the level of protection of the population and the economy are still low. Another feature is that motor insurance – MTPL and Casco – accounts for the largest share of the market. People still insure their cars first, then their health and homes”, said Nikolay Stanchev.
Interest in property insurance is increasing, as shown by both market data and a national survey conducted by the ABZ in May of this year. Compared to the previous survey five years ago, the share of people who have or have had home insurance has almost doubled. Among the main reasons is the increasing frequency and severity of natural disasters, which make people think about protecting their property. Information campaigns organized by the ABZ, as well as the insurers themselves, through this communication manage to convey to their clients the benefits of property insurance.
Agricultural insurance is also enjoying growing interest. A key factor for this is the state aid for subsidizing the insurance premium, financed by the EU. Under it, up to 70% of the premium can be financed under the program, and administrative procedures have been simplified. A similar model, based on incentives – be it through premium financing, tax relief, or otherwise – could also be used for home property insurance. Such practices are successfully applied in other countries. Health policies also occupy an important share in insurance, usually in the form of a social benefit for employees. “We are observing growth in these insurances and I believe that in the future even smaller and medium-sized companies will begin to provide this social benefit to their employees", predicted Nikolay Stanchev.
There is also great potential in life insurance, where relatively few people in our country still have such protection, Stanchev pointed out. The most popular are life insurances with an investment funds, which combine two things – life protection and the opportunity to invest part of the funds.
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