Economic growth increases people’s disposable income, and this directly affects their decision of buying insurance, commented Nikolay Stanchev, Chairman of the Association of the Bulgarian Insurers (ABZ), during the conference “Finance: Equations and Solutions”, organized by “Investor Media Group.” Managers of the insurance sector agree that stable economic growth is a premise for the development of the insurance market, along with updating the legislation related to digitalization in the sector. In addition to a slowdown in economic growth, other risks facing the sector include climate change, high inflation, and the low level of insurance protection.
“For us, the problem is the low level of insurance protection. It often happens that after a natural disaster, affected homes don't have insurance", said Nikolay Stanchev. The problem with climate risks in Bulgaria is not so much the costs associated with such events, but the low level of insurance protection – less than 10% of homes in Bulgaria are insured, one of the lowest levels in the EU.
“The reason for the low coverage is a combination of several factors. These include consumers’ difficulty in assessing risks and in selecting the most suitable coverage for them. Here, the role of insurance consultants is key. Also common is people’s mindset that ‘it won’t happen to them,’ as well as the expectation that the price of this type of insurance is very high", said Nikolay Stanchev. A positive change could occur if the sector, the state, and the media join forces to raise people’s insurance culture.
The latest results from the consumer attitudes survey, which the ABZ conducts periodically, show an increase in the popularity of insurance products, noted Nikolay Stanchev. According to the data, the number of people who have voluntarily purchased property, health, and life insurance is growing.
Nikolay Stanchev noted that health and life insurance depend heavily on tax reliefs, which have not been changed in 20 years and are due for an update. “In health insurance, we have outpaced medical inflation, which is a problem for us because medical expenses are rising,” explained Nikolay Stanchev. Among the challenges facing the sector is also over-regulation, which is at the EU level. The rules that are adopted apply to all countries, while the Bulgarian market is small, which generates costs.
“Inflationary and regulatory risk is affecting products. They need to be changed. This, in addition to the challenges, also creates opportunities, especially for property insurance”, commented Ivana Dimova, a member of the ABZ Management Board, during the forum. The low share of insured property provides an opportunity to organize various campaigns and for every family to consider what financial losses they would suffer after a possible disaster, said Ivana Dimova.
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