OZK Insurance expects to be among Bulgaria’s top five general insurers

OZK Insurance was established in 1996 and was majority-owned by the Sofia municipality until 2008 when the municipal stake was privatised. Currently, Bulgaria-registered LM Impex holds 65.73% of the company. With a network of 70 branches across the country, OZK Insurance offers 12 types of insurance policies.

Aleksander Lichev CEO and chairman of the board of directors, OZK Insurance

Where do you see opportunities for growth and where do you see bottlenecks on the Bulgarian market?

The Bulgarian market has been extremely competitive in the past years and this has resulted in more favourable terms for clients. Unfortunately, demand is dominated by compulsory insurance, car insurance in particular. The last few years saw a number of significant changes in the regulation of our activities, leading to a general upgrade of services in the sector. However, two big gaps remain in our regulatory framework – we still lack a standardised methodology for determining the size of indemnification payable for material and non-material damage resulting from bodily harm, and the bonus-malus system for third-party liability Insurance is yet to be introduced.

Bulgaria’s insurance market is relatively young, and this is precisely why it offers opportunities for growth even amid limited economic growth. The first prerequisite for grasping these opportunities is to change our way of thinking. We will see growth to the benefit of our whole society when our society acknowledges that we are all in the same boat and can have a better life only through well-intentioned joint efforts, that insurance is the smartest and most virtuous solidarity model that mankind has designed, and that insurers are not a profiteering enemy but a mediator in this model. The state, the financial regulator in particular, should accept that its role is one of a caring parent who has to educate, control and make sure that the market is in a healthy state and should put aside their formal thinking. They should stop shirking responsibility and should ditch the role of a punishing supervisor with the stick who imposes sanctions post factum, acting from a position of strength. I hope that there is enough common sense left and that cheap populism servicing ill-meaning interests will not always have the upper hand, as this is where all the problems come from, to the distress of all of us.

Do you expect changes on the market as a result of merger and acquisition deals?

According to a recent report on M&A deals by Clyde & Co, a total of 222 M&A deals were registered in the insurance industry the first half of 2019, including 88 deals completed in Europe, as the authors stress that the growth trend continues for a fourth consecutive quarter. In Bulgaria, major changes will take place if the health reform is carried out as outlined in the latest draft made public by the health minister and his team. In that case I believe that we will be seeing a number of M&A deals involving the former health funds which were relicensed as insurance companies in 2013 following regulatory changes. Some of these companies, even though relicensed as insurers, kept their profile unchanged and focused on their main product – health insurance. Now, with the new model and its concept that health insurance should be offered by funds that are licensed specially for this purpose and have at least 500,000 contributors, only a small number of these companies will able to remain on the market.

What are your expectations regarding your company’s development?

Our philosophy is to set realistic goals, define short and long-term measures for their achievement and do our best as far as the environment allows it. We have grounds to believe that we will keep up the sustainable growth pace that we had in the past years and we will be among the top five general insurance companies, as our focus is shifting to diversity and accessibility of the products that we offer, high quality of services and customer care.