Bulgaria & Eastern Europe 1993 - Learning about BG Plan

Photo: Photo: Stefan, Evgeni, Krasi & Sasha

April 9, 1993 Met with Krasimir & Albena on policy definitions. Plamen was writing Munich Re about reinsurance. Before lunch I get passport from Sasha, with news that police registration is OK.

Then Monika, Albena and I took a walk around downtown. In a cafe, Albena first mentions husband: "I hardly see my husband". I ask, "What work does he do" Albena replies, "He is agent for BG PLAN". I ask, "Is it Sasha?" Albena replies, "Plamen."

Albena, my interpreter, had been intentionally concealing her relationship to Plamen, the president, from me. I am a bit concerned how objective my future conversations with employees will be when the interpreter is the bosses wife.

Later we return to office and there is Plamen. He wants to see me Saturday. Fine I say. He also wants me and Albena to go on television with him to be interviewed about private insurance in Bulgaria. I would be there to give some views on how private insurance in USA provides a service to the population. I tell him that would be OK, but I must first talk to CDC.

Photo: Flower vendors on street

BG Plan - First Plan

  • Their main life insurance product, First Plan, is a 15 year endowment that is a copied policy from an Austrian company selling in Eastern Europe.
  • Benefits are paid on natural death, accidental death, and an endowment at the end of 15 years if living.
  • Dividends (bonus) in the contract were guaranteed, though the original Austrian policy did not guarantee their bonus. BG Plan explained that at this time people were suspicious and wanted guarantees, not good intentions.
  • Contractual freeze. A provision allows insurance coverage and premiums suspended for up to 2 years. It was a voluntary action by the policyholder due to the temporary inability to pay premiums. Coverage starts again with payment of past premiums.
  • Hard currency clause. The Bulgarian currency, Leva, was not trusted. The policy was not issued in Leva's, instead Deutshe mark's, a much more stable currency. Premiums and benefits are expressed in DM. Payments are in Leva, which then depend on exchange rate. Example: So first year premium of 5000 Leva is paid, and if DM gains 50% on Leva, then pay premium of 7500 Leva.

Photo: View toward downtown Sophia from apartment