Civil Liability Insurance Costs Expected to Rise Amid Proposed Changes in Bulgaria

Insurers have expressed concerns about a potential rise in the cost of "Civil Liability" insurance for car owners in Bulgaria. These concerns stem from proposed amendments to the Insurance Code submitted by the Council of Ministers to parliament.

One significant proposed change is the removal of the 5,000 leva compensation ceiling for individuals outside the immediate family of those killed in road accidents. This cap was introduced in 2018 following an interpretative decision by the Supreme Court of Cassation, which expanded the eligibility for compensation to include grandparents, siblings, and other distant relatives. To claim compensation, these individuals must demonstrate a strong emotional bond with the deceased. Insurers had strongly advocated for the ceiling at the time, citing financial concerns.

The government now proposes eliminating the cap, citing compliance with the European Commission's interpretation of the 2009 Directive on Civil Liability Insurance. According to the Commission, the current 5,000 leva limit contradicts the Directive as it falls significantly below the minimum insurance amounts specified. Insurers have cautioned that removing this restriction would likely lead to an increase in the price of "Civil Liability" insurance.

The initial introduction of the compensation ceiling was meant to be a temporary measure until a methodology for calculating non-pecuniary damages was established. However, no such regulation has been developed to date, leaving the issue unresolved.

Another proposed amendment involves increasing the minimum insurance amounts for mandatory coverage in cases of death or bodily injury resulting from traffic accidents. This adjustment is tied to Bulgaria's upcoming adoption of the euro, which necessitates recalculating the minimum amounts in euro equivalents. The transition has resulted in a roughly 20% increase in these amounts.

The revised minimum insurance coverage would increase as follows:

1. Compensation for non-pecuniary and property damage due to injury or death would rise from 10,420,000 leva to the leva equivalent of 6,450,000 euros per incident, regardless of the number of affected individuals.
2. Compensation for property damage would increase from 2,100,000 leva to the leva equivalent of 1,300,000 euros per event, irrespective of the number of claimants.

These proposed changes have prompted insurers to warn that the combination of removing the compensation ceiling and increasing the minimum coverage amounts could result in higher premiums for "Civil Liability" insurance.

Source: econ.bg