Catastrophe Risk Management Initiative in Bulgaria


Final results and recommendations from this project were presented at a workshop held just outside Sofia, Bulgaria on May 27, 2008. Participants at the workshop included a variety of representatives from the Bulgarian government, various insurance companies, academic institutes, and the media. Results of the actuarial studies for the project were presented as well as alternative proposals from the Bulgarian Initiative for Catastrophe Risk Management and from Allianz. The event received significant press coverage and was quite successful in further raising the issue of insurance coverage on the national agenda. More details of the workshop are presented in the Outputs section below.



This project was initiated to support research and development activities for the creation of a catastrophe insurance pool for Bulgaria. Despite a very significant exposure of most of the country’s territory to natural disasters, only a small fraction of residences – about 2-3 percent - are insured against catastrophic perils. Coverage for most natural perils can be obtained through additional endorsements to the basic homeowners policy. While local insurers are prepared in principle to provide earthquake cover on buildings and contents, they offer it on only selective buildings thus leaving a good number of houses without coverage.

The scope of insurance coverage envisaged for this program will include private residential properties and their contents, office premises and business equipment of SMEs, and potentially government-owned housing and small community facilities (such as local clubs, movie theaters, etc.).

This project has provided technical assistance to the Bulgarian Initiative for Catastrophe Risk Management (BICRM) – a newly-formed NGO of representatives of the Bulgarian insurance industry, academia, construction industry, and disaster risk reduction specialists. BICRM was formed in 2007 to create a national catastrophe insurance pool, reduce the seismic vulnerability of housing stock to earthquakes, limit the government fiscal exposure to the impact of natural hazards, and strengthen risk awareness at the national level.

The project started with consultations with the local insurance industry, central and local governments and civil society on the type of insurance coverage sought by homeowners and SMEs, analysis of the existing catastrophe risk covers in the market, and actuarial analysis of the available loss data. This analysis was used to design a proposal for a catastrophe risk cover to be offered by the Pool and to develop a business plan for the Pool once it has been legally established.

Building on the experience from the Turkish Catastrophe Insurance Pool (TCIP), it is hoped that this project will serve as a learning platform for developing a model of assistance to catastrophe risk transfer programs potentially applicable in other disaster prone countries such as Indonesia, the Philippines and countries of South Eastern Europe.

This project has aimed to facilitate creation of Bulgarian Catastrophe Insurance Pool by:

  • Developing the Pool’s organizational and business model and 5-year strategy.
  • Developing a preliminary actuarial pricing model for earthquake risk (based on the available data) – including the determination of optimal insurable limits, deductibles and rates to be charged across different risk zones.
  • Increasing awareness of government and civil society about the benefits of catastrophe insurance.


The World Bank's Commodity Risk Management Group and others members of the World Bank Group have undertaken this project in partnership with the Bulgarian government, the local insurance industry, the scientific community and the construction industry.


The project was launched in October 2007 and final project activities were completed in May 2008.

Outputs & events

The World Bank and Bulgarian Government partners held a workshop on May 27, 2008 to present the findings and recommendations from the feasibility study for the establishment of the national catastrophe insurance program in Bulgaria. This work has been carried out jointly by the World Bank consultants and the Bulgarian Catastrophe Insurance Initiative.

The workshop was intended to introduce the main pros and cons for the creation of the national catastrophe pool, compare lessons from similar efforts in other countries, and to examine various options that have been put forth for the developments of such a scheme.

Key documents from the workshop include:

  • The overall program agenda
  • Opening remarks
  • Keynote addresses
    • Roumen Galabinov, Chairman of Bulgaria Catastrophe Insurance Initiative, ‘Catastrophe Insurance Market in Bulgaria – A Vision for the Future’
    • Eugene Gurenko, Lead Insurance Specialist, World Bank, ‘Overview of the main project findings’
  • Key Technical Findings of the Project
    • Luka Dokov, distinguished Bulgarian insurance expert, ‘Proposed design features of the catastrophe insurance scheme’
    • Denisa Dumitru, Project Consultant, ‘Dealing with uncertainty in new reinsurance placements: the case study of BCIP’
    • Tomas Novotny, Benfield, ‘International experience in designing affordable catastrophe insurance products’
  • Actuarial Underpinnings of the Project
    • Alexander Itigin, Project Consultant, ‘Making catastrophe insurance available: product designs and pricing’
    • Vladimir Stejskal, Czech Academy of Sciences, and Prof. Solakov, Bulgarian Institute of Geophysics, BAS, ‘Probabalistic modelling of earthquake risk in Bulgaria - the latest scientific developments’
    • Rashmin Gunasekera, Willis Re, ‘Understanding exposure, vulnerability and insurance loss estimations’
  • More information about the conference can be found at A final report from the project should be released in the next few months.


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