Life Insurance Penetration Drivers in Bulgaria

The need for security and protection of human life and health is the very cornerstone behind life insurance demand which has become larger with the current COVID-19 atmosphere. Life insurance penetration is significantly lower in Bulgaria compared to the EU average, while studies on the subject of how this development came about are almost absent. In that regard, this article is focused on the influence of major macroeconomic, demographic and competitive factors over life insurance penetration in Bulgaria. When it comes to the methodological aspect, the study is based on the theory of demand and industrial organisation by applying the descriptive and correlation analysis methods. The results underline that despite the positive trends in life gross premiums, written for the period of 2009-2020, Bulgarians prefer to allocate their excess funds towards alternative investment opportunities. To a large extent, this is attributed to the low amount of income and the low productivity of the economy as well as because of the lack of effective competition between the small number of insurance companies. From the customers’ point of view, this leads to a lack of awareness of the benefits of insurance, distrust and the absence of insurance interest, all of which are intensified during COVID-19. Responding to the market in relation to new business, supplying flexible, personalised and hybrid varieties of products, omni-channelling and development of positive attitudes among the population are all regarded as basic guidelines, used to improve insurance penetration. This article, therefore, serves as a foundation for a more in-depth study of the Bulgarian life insurance market, a stimulus for increasing the financial literacy of the Bulgarian populace and a subject of interest for insurance companies themselves in their fight to promote activity and to unleash market potential.