Банкеръ Weekly

Briefs

HAILSTORMS PUT INSURANCE BUSINESS TO TRIAL

As in the socialist joke about the rainy weather and the drought which were impeding Bulgaria's economy, this year's storms, hails and floods, hit a heavy blow on the country's progress. Both farmers and citizens, whose property was destroyed, suffered losses. The total amount of all damages is yet to be calculated, but experts are adamant that it will be sizable. The trouble is that insurance companies will have to thrust deep in their pockets. According to them, the 2001 summer season would be one of the most difficult over the last decade, with the exception of 1999, when the State Insurance Institute (DZI) alone paid about BGL8MN for damages, caused by both natural and deliberate fires.
The compensations for losses, which the top local insurer DZI should now pay, exceeded BGL3MN by July 1. The amount for July alone is almost BGL1.8MN. DZI representatives announced they have already compensated about 40% of their clients.
Agriculural insurance, encashed by the general insurance company Allianz-Bulgaria exceeded BGL1.3MN. The company has so far paid compensations for some 10% of the damages, but throughout the previous week its experts were inspecting various regions of the country which suffered losses. The insurance companies Vitosha, Orel, Armeetz, Evro Ins, and others, will also have to pay considerable amounts in compensation for damages. The isurance companies have so far paid about 30% of all claimed damages.
Yambol, Stara Zagora, Silistra, and Targovishte, are among the regions, which were most badly hurt. Bad meteorological conditions will be persistently presenting surprises and the amount of damages will be considerably greater than currently. The season of summer fires has not passed yet, insurance experts recall.
The really suffered losses are much greater than those reported by insurance companies, as only a small part of the population has insured its property.
According to data of the insurance companies, only 15% of the agricultural crops and about 10-12% of the livestock in Bulgaria are ensured. For comparison - the share of insured farmers in Central Europe exceeds 25 per cent. This shows that local agriclultural producers still lack insurance culture. This is definitely a fault of the insurance companies themselves, who do not succeed to market their products. A survey by journalists has shown that only a few of them are inclined to make public their tariffs for agricultural insurance. Naturally, the company secret is the motive for that refusal. But how can a client be attracted if he is not allowed to know how much the security costs?
Another problem is that farmers usually lack money for insurance. Even agricultural producers who have made insurances, have not ensured the entire crop but just a small part of it. Moreover, Bulgarians have got used to the vicious practice that the State will intervene to solve any serious problem that might arise, regarding their property. The budget of no one state, no matter how stable its economy might be, can afford the Treasury to cover the damages, caused by natural calamities.
Now, after the farmers have already burnt their fingures, they realized they cannot rely on any compensation from the budget and will have to pray to God only, although insurers could help them a lot.

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