Gr0undZ3r0
Junior Member
European law
Posted: Tue Jan 27, 2009 7:03 pm Post subject: Insurance and Banking
--------------------------------------------------------------------------------
I am not sure that here is the place for this debate, but surely the problem is related to the freedom of markets, so I hope you can help me. Banks in Bulgaria ask you to buy an insurance policy. They are pretty aggressive, and never ask you if you have been already insured. Usually, they press you to make insurance by their broker or insurance company. Of course legally nothing suggests that this insurances are mandatory, however you can hardly take a loan if you don't follow their rules. In addition, some of them are usually working with just one insurance company, and when you go to the bank office you receive the documentation for the loan together with the documentation for the insurance.
The situation with the leasing companies is the same. They use leverage like offering better conditions for the clients using their broker(not officially of course). In addition, the requirement that the leasing company choose the broker is incorporated in the leasing contract. So, if you have a five year leasing contract you can't change the broker. It is stated in our legislation that the leasee is the one bearing the risk, however the leasing company is benefiting from choosing broker for the leasee. The broker is in-house or the leasing companies receive a share.
I know it is a very complicated area; however it is obvious that the banks and the leasing companies somehow, although legal, make you choose their broker/insurance company and then benefiting from not free market conditions. Obviously they use their situation as a lender to make you client of insurance business. I think the insurance business is suffering from that. Finally, in-house brokers of the banks and leasing companies make enormous profit from not market conditions like 75% of the revenues. Thank you for any suggestions.
Posted: Tue Jan 27, 2009 7:03 pm Post subject: Insurance and Banking
--------------------------------------------------------------------------------
I am not sure that here is the place for this debate, but surely the problem is related to the freedom of markets, so I hope you can help me. Banks in Bulgaria ask you to buy an insurance policy. They are pretty aggressive, and never ask you if you have been already insured. Usually, they press you to make insurance by their broker or insurance company. Of course legally nothing suggests that this insurances are mandatory, however you can hardly take a loan if you don't follow their rules. In addition, some of them are usually working with just one insurance company, and when you go to the bank office you receive the documentation for the loan together with the documentation for the insurance.
The situation with the leasing companies is the same. They use leverage like offering better conditions for the clients using their broker(not officially of course). In addition, the requirement that the leasing company choose the broker is incorporated in the leasing contract. So, if you have a five year leasing contract you can't change the broker. It is stated in our legislation that the leasee is the one bearing the risk, however the leasing company is benefiting from choosing broker for the leasee. The broker is in-house or the leasing companies receive a share.
I know it is a very complicated area; however it is obvious that the banks and the leasing companies somehow, although legal, make you choose their broker/insurance company and then benefiting from not free market conditions. Obviously they use their situation as a lender to make you client of insurance business. I think the insurance business is suffering from that. Finally, in-house brokers of the banks and leasing companies make enormous profit from not market conditions like 75% of the revenues. Thank you for any suggestions.
