To the attention of Mr. Andasarov newspaper “INSURER”
FEAR and BUSINESS IV - „SI VIS PACEM PARA BELLUM“
Indeed, every decent person is asking themselves the question: Where are you going, Bulgaria? The answer that most often comes to mind is: To the European Union. Yes, we are already part of NATO! So what?...you would say, and give the following example:
Our medics in Libya have already become human wrecks the on death row and even if they be justified like Sergei Antonov was – it is unlikely for them to recover as normal people, at all!? Other men went to work abroad and were taken hostages in Iraq; our soldiers were killed in Karbala, we gave victims in attacks abroad, etc. etc. As if poverty and horror will never end. However, please do pay attention that for everything that we talk about there is always someone else to blame. Someone else is the one who slaughters, hangs, beats, swears and fines people enslaved, as written by Botev the poet. The bad one is never interested in morality, human rights, law and order, traditions…but, these are certain types of behavior that I am about to discuss later.
The general reasons are generally discussed, but as a whole, fundamental Islam is at war against Euro-American democratic values and , what is more, our Bulgarian minds still keep the memory of Batak massacre and the "revival process”. Can we find salvation, or we will meet the apocalypse and even bigger disasters in the place where we want to go? What is really happening? Do we have a clue about the direction- is it the right one or the wrong one? I wonder if our progeny will blame us because we have sold Bulgaria to the EU, similar to the present criticism of those who had the intention to turn Bulgaria into one of Soviet Union’s republics? I can go on like this, but I will stop for now, since black statistics is not what I intend. I’d rather have the maximum of accurate logic.
I personally think that there is an extreme necessity of propaganda of what that has already been done. The media is flooded with information, which makes us feel like we, Bulgarians, are losers. We are poor, and at the same time God has forgotten about us, and Satan is pushing us to new disasters. In the last 15 years, the opposing party spokespeople are constantly trying to infer that we are governed by incompetence. Having in mind that all political parties were in power, and if we believe what the newspapers and other people are trying to convey as a message, the result is that we are in a vicious circle, and it seems there’s no way out. Is that so? The concern visible on the politicians’ faces is easily inspired in the voters’ minds. Let me make the conclusion that the vacuum of the lack of propaganda or PR- as it is trendy to be called now- is filled with mediocrity , and everything becomes even more complicated!
I will stop for a moment to say that if it smells like politics, your nose is almost correct. How does all of this reflect on the insurance business. I will speak about that later, when things become politically clear. The interim conclusion we can make is that the main fragments that fill the public space are Bulgaria’s Euro-American orientation and the war against terror in all its forms. Some authors see the benefits of our EU membership in the financial resources available under certain circumstances. Others would regret: “ what was Iraq or Afghanistan and etc for?” I assume both types are quite nearsighted. Let’s start with the position towards our allies which originated from the unity it’s the only right position because allies share rights and benefits on the one hand, and obligations and failures, on the other. Many would be actively involved in disputes about what is bigger and more sufficient than the advantages and disadvantages of Bulgaria’s alliance with Europe and America. This is a mistake. And why is it? That’s why:
Since we are already NATO members, it is a good idea to take a look around and see which other countries are also NATO members. They will be easily named, but on the way to develop a market economy and given that there are two types of capitalism - South American and North American model, we should answer the half-asked questions such as: “ What is the difference between the two models?”, “Why isn’t Mexico a NATO member?” etc. There is only one answer: NATO states and the growing European Union, including Japan and Australia, stimulate the establishment of a middle class society- this is the North-American model.
The South-American one focuses on the establishment of societies with no middle class.
A handful of super-rich persons keep in poverty and misery others, including via pure terrorism. Since the model of established middle-class society is so fashionable, the ones who are threatened are even having expansion of terror abroad; this resembles a revolution export. However, a difference should be made between acts of terrorism and what’s the society’s notion of terrorism. The short news broadcast is only enough to cover the most important things of terror, i.e. the biggest cruelties. Society assumes that terror exists if there are bombings, gun shots or use of cold weapons. Weapons are dangerous in the hands of a terrorist. A terrorist is an individual deprived of most normal human qualities, such as morality, dignity, ethics, culture and many others – taken together or separately, i.e. it is about an individual with a deformed behavioral attitude. Can Hitler be defined as a terrorist when in the last 12 years of his life he had fired a gun only once- in his own head? A rhetorical question, isn’t it? What are actually the basic techniques of terrorists? If we imagine what happened on September 11th when two airplanes crashed into the World Trade Center, there is much more to gain recreating the terrorists actions before the moment of the crash in the twin towers than after it.
So, firstly the terrorists step on a given territory incognito, i.e. with a hidden purpose, and not with the seemingly announced one. Secondly – they take other people’s property with the intent of crime- Boeing 737. Thirdly- do you think the terrorists told the truth about the hijacked plane? Absolutely not! The passengers were ignorant about what was happening until the very last moment. They were unwary of the whole situation because they were uninformed; they were kept obedient under threat. I will stop now, since I believe in the possibility to draw certain conclusions, but let’s make an interim summary.
Our road to the EU ids the right one, since the EU allows the establishment of a middle class society; there’s no other “salvation”! the establishment of a middle class and a civil prosperity is not part of the super-rich people’s plans; they suppress their people, and this process can be opposed to by terror. Terrorists are called the inspirers and the executors, who do not by all means use weapons; their mutual feature have already been discussed. As a result of bad propaganda or flaws, etc., society is moved by certain inertial forces. Bulgarian people are often suffering from their actions, intentions and way of thinking by demonstrating primitivism. Well, not all of them, however, the confused are quite numerous.
Terrorists are most often associated with fundamental Islam; Bulgaria is on the geographic border between Christianity and Islam, so let’s discuss one more conclusion from the past to interpret the present, i.e. let’s clarify some parts of our way of thinking by considering our relationships with the “neighbours”, and yet using only the truth and analysis. Seljuk Turks become furious with the Christian world during the Third Crusade; later Constantinople falls and there aren’t many who know why history has the Ottoman empire and/or enslavement of the fallen lands, including Bulgaria instead of Turkish empire- I shall discuss this some other time. Kosovo Pojle follows and the death of tsar Ivan Shishman; time of parting; Tahir Aga’ humba from Sliven; Hatihumajun; Levski was hanged on the gallows fighting for “ a pure and holy(meaning secular) republic” in a time when on a world- wide scale the republics are the USA, France and just a few more; Batak, Perushtitsa and Dryanovo monastery; Shipka, Pleven and San Stefano treaty; 1885 - 1908 ; 1912 – Edirne, 1915 - 1918 – allies in the First World War; on 29th September1923 general Kemal proclaimed Turkey as a republic whose capital is moved from Istanbul to Ankara; the Arab alphabet was substituted for Latin- a secular state has been established just 50 years after Levski’s death – today, Bulgaria has the Revival process and is a NATO ally!
This is a path, long and difficult to walk on, together with the reasonable statements that Turkey is the only Islam state which had been and still is of great world importance; it has been on the long way to secular republic. The Turks have never had a treacherous attack against Bulgarians! The atrocities against the Bulgarian peaceful population during the military operations of the Turks had been the act of the so called bashi-bazouk irregular soldiers. There are even cases when the regular militaries had exterminated the irregular soldiers who followed them. It is obvious that we could find different motives of behavour to each other; it depend on how further back in history we would like to go. After Levski and Ataturk, we have to learn to live together. Fundamental Islam will have its Levski and general Kemal, while the terrorist behaviors will go through mutations. What I find necessary these days is to take a look around and spot the contemporary bashi-bazouk, or you may call them terrorists if you like.
Perhaps you would ask yourselves”…where is this person going in his deep thinking? There is a correct interrelationship between politics and economics by saying that politics are a concentrated expression of economics. That’s the reason why I paid so much attention to the clarification of the main behavioral motives.
TARGET
Whenever you start talking about insurance in the last 7-8 years there has been a parallel made between life insurance and general insurance. Since this parallel treats and comments on the premiums in this business branch, all authors agree that life insurance falls behind and the Bulgarian people” value their car more their own lives”. After a comment has been made, it is necessary to make a conclusion that in most cases there is a lack of insurance culture in the population as a whole. This is often true, but in most cases reasoning remains on the surface of events and the main reason for the small rate of premiums in the life insurance is the limited financial status of today's Bulgarian people. It is reasonable to ask the question how do premiums of motor vehicle insurance demonstrate a steady increase. There is a steady rise in the number of cars and the subscribers using mobile phones are 50 % of the population. Questions like this are either not discussed, or they are commented indirectly. The reasons for the “cuts” in the two business branches are generated by the life insurers themselves, to some extent through some market errors, omissions and inconveniences- what are they?
In the first place there are the schemes of life insurance as a product decreasing taxes of the insured people and the insurance expenses of employers. If the parties of such insurance contracts are to be in good financial profitable disposition, the frame of tax and social insurance preferences granted by law includes only the monetary interests of employers, insured people and the insurer; there is no financial resource left for a classical insurance protection. That’s how the life insurers decrease life insurance themselves; they boast on having significant incomes but never comment on the rest fragments of the insurance process. In fact, insurance is not just money raising and its immediate expenditure without the final business result taken into account. No matter how strange it may seem, this process shows to the expert analyzing bodies that the market of financial and insurance services is looking for the immediate result of its activity, however, the meaning of this is that the immediate result is used elsewhere, in a direction different from the present one, which will be discussed later.
Secondly, as a wrong setting of the problem, we find the life insurers racing to cover as many risks as possible at the lowest possible price. Anyway, both fragments are wrong, because any insured person would feel bad at the thought of weakness, sickness or death, and they subconsciously block out and postpone the positive decision to conclude a risk insurance no matter how various it could be. The tendency of life insurance prices to go low is generated by the so called procurement. Insurers find the granted procurement a whole-sale deal, and with the allowance of the customer and the competitors they begin lowering the price of risk. No comment on that, since it’s really unpleasant that some governmental organizations dare to “twist the arms” of the insurers in the above mentioned way! If we analyze this effect, which is visible in general insurance as well, it becomes obvious that in general insurance the effect is on possessions and properties, while respectively in life insurance the price dumping has an effect on people.
We can help making the optimistic conclusion that in spite the defeats in some battles, life insurers can still win the war. The weapons by means of which this war will be won, are not the products but their expansion. But let us remember that even the best weapons can prove ineffective in the hands of amateur soldiers!
Firstly: the products which will conquer the market of life insurance are to be referred to the solution of European problems such as the aging population and how the elder people will be socially insured. Consequently, the products should be risk- saving, i.e. endowment insurances as we call them.
Secondly: the gross insurance premium serves, in the way of communicating vessels the following risks: surviving the expiry of the insurance, on the one hand, and all types of risks, on the other. The most precious on the market are insurances with an emphasis on savings. The total rate of the insurer’s obligation when the expiry of the insurance is survived(or the insurance sum) are affected by: the risk taken within the term of the insurance, the insurance-technical scheme, death rate and the interest factor. The skilful combinations of these factors make the products good, yet having in mind what is constantly changing in them, we have to draw the conclusion that the products should be long-term and all risks related to the risk of “survival” are supposed to be in the background, in contradiction to our previous beliefs.
Thirdly: it is often believed that long-term products are not easy to sell- this is not true, if you only apply some effective skills to direct the close at hand financial interest, which we have already discussed, towards the agents’ work, and not towards the clients’. In the past 2003 it was demonstrated that this is the only alternative to the deadened tax and social insurance equilibrium.
I would like to make a short opinion conveyance of insurance taxes. The priori tax incentive of 10% over the income is necessary and enough, however its priori nature supposes priori taxation over the insurance premiums, since the organic relation between politics and business is the fisc; this relation should be fair as a mathematical derivative is. So, in my opinion the taxation of life insurance premiums is fair.Ñëåäîâàòåëíî è ñïîðåä ìåí, îáëàãàíåòî ñ äàíúê âúðõó çàñòðàõîâàòåëíèòå ïðåìèè â æèâîòîçàñòðàõîâàíåòî å ñïðàâåäëèâî. I believe it would be OK the tax rate over the premiums should be decreased to zero in relation to the duration of contract, i.e. the increase of the duration should lead to a decrease in the tax rate. The best solution would be, in the endowment insurance, the expiry of the contract to imply no tax at all.
In the general insurance, things are completely different since at the beginning there are no tax incentives; as a result, I find the opinion of my general insurance colleagues as authoritative.
Regarding the expansion of life insurance products, which I think is the most important for the time being, two main points are crucial. Firstly, this is closely related to the short-term products, i.e. the risk life insurances. At first glance, the short term things are primarily considered insignificant and people think of risk insurances when it’s too late. Consequently, the best management approach is to insert short term life insurances in the society which is defined to be informationally developing; people should encounter these insurances all the time. This approach is really useful since people rely on the National health Insurance Fund. Its counterpart in the USA experiences financial difficulties.in other words, even overseas life insurers have a nice life. The most important thing that should be achieved is that people live with the notion that there is an absolute necessity to have insurances, after that everything will be easier.
The most skillful advancement of life insurance sales are the long term saving insurances. The short term insurances are a market foundation of long term ones; they should be considered separately. What’s the situation so far?
Skilful advancements, or as I call it aerobatics, should be carried out by well trained performers, i.e. sellers( I purposefully use this term instead of agents, or consultants). There are people willing to this kind of job, even though there is a widespread shortage of such professionals. Are they really prepared and trained? No, they aren’t. The majority of life insurance agents or assistants of the insurance brokers are not prepared enough; their desire is larger than their capability, which shortens the period of motivation and self-motivation; bizarre things ensue. The desire is purely commercial; despite the efforts on the achievement of qualification, there is a demonstration of illogical actions that portray incompetence. What’s the matter; what’s the reason for that; is there a cure? In order to support my conclusions with facts, I will use reality where we can see the well known face of the so called
NATIONAL BULGARIAN LEADERS
… or we’d better say agitators. Their will for action is obvious; their actions are purely commercial, and the knowledge and loyalty- doubtful. A real situation: you may find it funny, but there is a case of an agent, whose aim is to do an effective and up-to-date job, gets a company property with a protocol from the insurer who employs him. He concludes an insurance contract and receives the negotiated commission. Shortly, under various considerations, this contract is transformed under a different tariff with the same term, insurance premium and commission received. After the transformation, the contract implies a commission lower than the received one. Instead of refunding a part of this commission, the agent claims to have an additional commission for the insurance after the transformation. I am reluctant to go deeper in this case; this is a situation of obvious incompetence, a lack of logics and something more. The person in questions refuses to return the company property since his claim, no matter how absurd they can be, are not fulfilled and he even commits a crime regarding some insured persons by misinforming them and placing them largely into embarrassment. Does this sound familiar? Do you find similar traits with the actions of those who have already been mentioned? This is shameful for the insurer who employed this person; interestingly, this person has already been employed directly or indirectly by some of the leading insurance companies. So, what is the conclusion?
What makes this vacuum of inaction, insolence and arrogance, unique is that: after a client files an insurance application, the conclusion of the insurance policy is delayed as well as the delayed payment to the insurer; then the client, who filed the application, is grandly deceived and forced to hesitation so that he/she is inspired to give his insurance up, meanwhile the client is misinformed that he/she will get 100% of their insurance premium. There is a mean intention that this trick will work, and the premium will be deposited with another insurance company so that the master of this “crafty trick” gets a second payment. I have never witnessed a more severe violation of law and morality, or disrespect of the interests of the insured person!
There some other erratic agents who belong to another category. For about a year they have been circulating between the insurers at the frequency of diffusion. They are attracted to different net market systems or the so called MLM. The reason for this circulation is the bargaining about different rates with new employees; this is due to the fact that they have reached their own limit of incompetence and they have exhausted their resources. Usually they have their followers. After the bargaining about the personal profits of the group’s leader, is ended, then the leader presents the events to his/her followers in the most positive fashion and terminates relationships with old employer in another fashion- “divorce Italian style”( I do not think that Italians are gypsies). The followers are the most endangered since a part of the manipulation is that the followers conclude insurance contracts with the new employer while the leader gets a commission from the “old clients”. I was shocked by the case of a dead insured person who has concluded five insurance contracts with different insurers all of which were invalid!
To avoid being misunderstood I will once again state my view over MLM- this a way of commission distribution; it’s arithmetic- that’s what it is. There is nothing wrong about this! Where is the solution of the problem? Obviously, MLM is not to blame. But, if motivation is to be exposed, MLM advertisement suggests the participants practice free professions. Free professions are most often hired by their employer by a task order contract: that’s the case with insurers(including powers of attorney). Production contracts are also used, just like the craftsmen work. Both types of contracts are regulated in the Law of obligations and contracts. The problems are generated by the mixture of rights and obligations, i.e. rights as an insurance agent and obligations as a craftsman. This mixture is inspired by the “agitators” themselves! It seems absurd, but this is the most common case. Present day society is strongly divided not only form a financial point of view, but also from the point of view of different beliefs. The administration is the only right approach, having in mind all those events and processes. If the insurers have the agent’s work experience record, they will be able to interrupt the negative actions in the very beginning; self control will be at better levels; the service record will have it all. I believe it is time for true professional attitude and the entertaining mass practices will be history. I can find many more supporting points, but these are enough. I am sure that there is hardly any insurer has never been subject to hindrance of terrorist nature. I am thankful that God teaches and leads us in his mysterious ways. I was honest!
Boris Georgiev, Chairman of Mutual Insurance company “Medic- center”
