Mechanism of Government Funding in case of Disasters and

the Insurance as an additional alternative in Bulgaria

Lilyana TodorovaMinistry of Interior, BulgariaRalitsa RaychevaMinistry of Finance, Bulgaria

Presentation to the Seminar„Insurance as a method for Disaster Risk Reduction in SEE”

April 24, 2013: Berovo, Macedonia

The state budget financing of all activities related to disaster in Bulgaria:

Funding of already planned expenditure in the budget of the relevant ministries and municipalities

- prevention expenditure and the operating expenses

Funding of expenditure that cannot be predicted - recovery expenses in case of disasters as earthquake,

floods, fires, etc.

The amounts of the Reserve for Unpredictable and Urgent Expenses connected with disasters consequences for the last five years:

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012

years

BG

N m

ln

Series1

Interagency Commission for Recovery and Relief to the Council of Ministries:

The Commission is a permanent organization The victims of disasters have to apply for

funding from the Commission The Commission decides which sites to be

funded and how much to be spend Criteria for assessment of applications

Global economy:

The recovery of the global economy in 2012 Continues with a slower pace

- Process of fiscal consolidation Alternative funding

- Insurance companies

The floods in Bulgaria in 2005 and 2006:

Most significant floods for the last 50 years International humanitarian assistance provided

4-6.08.2005 7.08.2005

23.06.2006

Strazhitsa earthquake in 1986:

8.9 Richter Destroyed 80 percent of buildings Casualties

Insurance Companies and Natural Disasters in Bulgaria:

from 20 insurance, 19 provide coverage of risks against "flood" and "earthquake"

combined risk tariff rate for the risk of earthquake 8.5% of the total housing in Bulgaria are insured

against risk of earthquake

The Insurance is beneficial for:

The Government – reduces the amount of government funds

Insurers – sales of insurance services are increased

Affected population of natural disasters - receive financial resources

Share of Gross Premium Income of Natural Disasters Insurance

18,80%

81,20%

gross premium incomereceived from naturaldisasters insurance

total premium income forall types of insurances

Conclusions:

The state funds are insufficient Establishing an insurance culture Quality and create opportunities to secure

the insurance services Analysis and assessment of the legislations

related to the Natural Disaster’ Insurance

THANK YOU

FOR YOUR ATTENTION!