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Captive Insurance on the Bulgarian Market

With the introduction of the new Insurance Code in January 2016, the concept of the captive insurer (and reinsurer) appeared for the first time in Bulgarian insurance law. The classic example of a captive insurer is a holding company that establishes an insurance undertaking as its subsidiary (observing the laws of its incorporation, with an insurance license). Unlike ordinary insurers, captive insures exist only to meet the basic insurance needs of the parent. The parent company exclusively measures the insurance risks which its captive company shall insure while the captive insurer sets the insurance premiums, issues insurance policies, collects premiums and pays insurance claims.

Companies are inclined to establish or acquire a captive insurance undertaking due to:

  • the reduction of risk optimization costs;
  • responsibility to cover all or part of the parent’s losses;
  • keeping funds from insurance premiums within the captive company;
  • facilitating risk management, flexibility in selecting insurance products, stability and security of insurance premium levels, etc.

Companies who wish to establish a captive insurance undertaking must comply with the legislative, regulatory and financial requirements for incorporation of an insurance company and verify that there is capacity to assume more players in the insurance market.


Portrait of Antonia Kehayova
Antonia Kehayova