-
STRUCTURAL CHANGES IN THE PRODUCT PORTFOLIO OF BULGARIAN INSURANCE COMPANIES
The structure of the portfolio of insurance companies shows what consumer preferences to different insurance products are. The comparison of product structures makes it possible to determine whether there is a change in the pattern of insurance consumption, to outline the reasons if there is a change and insurers to take adequate actions in line ...
The structure of the portfolio of insurance companies shows what consumer preferences to different insurance products are. The comparison of product structures makes it possible to determine whether there is a change in the pattern of insurance consumption, to outline the reasons if there is a change and insurers to take adequate actions in line with new trends in consumer demand.
The objective of this article is to assess the strength of the structural changes in the product portfolio of Bulgarian insurance companies. The assessment of the structural changes is done by tracing the dynamics in the distribution of Gross Premium Income by insurance sectors and insurance classes and also on the basis of the values of the integral coefficient of structural changes. The thesis defended is that tracking changes in the product structure makes it possible to identify the dynamics of the market shares of the insurance sectors and the insurance classes, to outline the trends in their market positions and to assess the degree of change in the consumer preferences.
In order to achieve the objective and to prove the thesis, the following tasks have been formulated: formation of the structure of the insurance market by calculating the market shares of general and life insurance; formation of the structure of the product portfolio in general and life insurance by calculating the market shares of different types of insurance; establishing the changes in the positions of the individual insurance sectors and insurance classes in the product structure; characterizing the strength of the outlined structural changes.
The survey results show that there have been changes in consumer preferences for different insurance products during the period under review. The changes in the product structure of life insurance are the most significant.
-
INFLUENCE OF THE LEGAL FRAMEWORK
IN DETERMINING THE REQUIRED AMOUNT
OF TECHNICAL RESERVES FOR MOTOR THIRD PARTY LIABILITY INSURANCE
The problems arising from the recent global financial and economic crisis have led to a rethinking of many texts both in local laws and at Community level. New rules and regulations have gradually been introduced concerning all economic agents operating within the European Union. The introduction of these regulations in the field of insurance is ...
The problems arising from the recent global financial and economic crisis have led to a rethinking of many texts both in local laws and at Community level. New rules and regulations have gradually been introduced concerning all economic agents operating within the European Union. The introduction of these regulations in the field of insurance is associated with the adoption of Solvency II Directive. The implementation of the Directive in the Bulgarian legislation was realized with the adoption of a new Insurance Code, effective as of 1 January 2016 and Financial Supervision Commission’s Ordinance No 53 of 19 January 2017, which determines the order and method of allocation of technical reserves by the insurers working on the Bulgarian insurance market.
The study assesses the impact of the regulatory framework on the technical reserves of insurance companies offering Motor Third Party Liability Insurance. It outlines the problems that insurers have to deal with and the effect that the methods, used for calculating the required amount of technical reserves, have on the insurance company’s balance sheet.
The study has shown that there are differences in the methodologies described in the Solvency II Directive and Ordinance No 53 of Financial Supervision Commission. They concern the valuation of insurance companies’ assets and liabilities, the recognition of cash flows and the treatment of insurance income and expenses. Therefore, legislative changes are needed to synchronize the requirements of Bulgarian legislation with the European Directive Solvency II, with a view to optimizing the amount of technical reserves for Motor Third Party Liability Insurance.
-
RELATIONS BETWEEN GOVERNMENT DEBT
AND INVESTMENT ACTIVITY,
A PARALLEL ANALYSIS OF THE PROCESSES
IN BULGARIA AND GREECE
The present study aims at a parallel analysis of investment, and in particular stock exchange activity and government debt, as well as finding a dependency between the dynamics of these processes and highlighting those stock indicators, for which the relationship with the debt dynamics is of greater significance. The study is based on the thesis ...
The present study aims at a parallel analysis of investment, and in particular stock exchange activity and government debt, as well as finding a dependency between the dynamics of these processes and highlighting those stock indicators, for which the relationship with the debt dynamics is of greater significance. The study is based on the thesis of presence of a strong influence with inverse dependence of the debt burden on the investment activity. We also maintain the hypothesis that the sensitivity of capital markets to the dynamics of government debt is stronger than that of the real-sector investments, driven by the nature of indirect investments and the rapid transfer of capital through liquid stock markets. As a theoretical basis of the survey we have set up a systemic methodology for government debt management and highlighted dependencies on key macroeconomic factors. The methodology of the survey includes a selection of the main measures for the structure and burden of government debt and specific indicators, and indicators for analyzing the investment activity. In order to investigate the dependencies between the two processes, we apply specific comparisons between debt and investment indicators, as well as correlation analysis. We analyze in parallel the debt dynamics and the investment activity in the real sector and the stock exchanges in Bulgaria and Greece for the period 2007- 2017. The results show that the activity of both stock exchanges have had a pronounced negative trend since the beginning of the global recession, which has been going on for ten years now. We have established a strong reverse relationship between the Athens Stock Exchange activity indicators and the Greek debt in its structural components. As far as Bulgarian capital market is concerned, these dependencies are less expressed. We have found arguments for a critical negative impact of the debt burden on investment activity in the real sector, expressed by the correlation between debt dynamics and direct investments in the national economy and foreign direct investments. Our hypothesis for a stronger impact of the debt burden on stock exchange transactions than on real sector investments has been confirmed.
