Media: XPRIMM Insurance Report
by Mihaela Circu
XPRIMM: EUROINS Insurance Group (EIG) has expanded its business rapidly in the Central and South Eastern Europe. What opportunities do you see in these regions? What are your focus markets in the region?
G. M.:Indeed, we have been growing our presence in CEE and in the Caucasus in the past few years, however, I would not call this a “rapid” expansion. It this has all been part of our carefully considered strategy, which is built around our group business logic and around a stringent risk-based framework. The major opportunities in the regions are related to the low insurance penetration and density, which have stayed long enough at rock bottom levels. At the same time, this is not an opportunity which can easily be explored – it requires targeted efforts on our behalf, aimed at increasing the customers’ knowledge and awareness and at introducing relevant products and services, corresponding to the market particularities. A fragile macroeconomic and political framework also would not help in achieving growth in the respective markets and these are risks which we are also factoring-in upon the rolling out of our investment strategy. We cannot say that there are specific focus markets out of the ones where we have invested. We have traditional markets for our group, such as Bulgaria, Romania, North Macedonia and also new ones in SEE and Caucasus, such as Georgia, Ukraine. The Central European markets, such as Czech Republic and Poland are also new ones for us, however, they are at completely different development stage and require completely different market strategy, certainly greater creativity, innovation and agility.
XPRIMM: What is your opinion about the risks that can arise from doing business in CEE markets?
G. M.: The risks are well known to all of us, who have operated long enough on those markets. From a general insurance point of view, they are related to great market dependency on motor insurance lines, which, at times can have adverse developments and require greater levels of segmentation and daily control. In those markets, the levels of trust towards insurers generally need to be increased, however, that requires combined and targeted efforts. We operate here in a more volatile political and economical environment, and that’s especially true for countries outside the EU, even though, nowadays, EU membership does not necessarily mean that certain countries are not prone towards adopting some local particularities in the way they convey their economic, financial and social policies and quite often those policies do not help neither businesses, nor consumers. Nowadays, we also see a declining number of young people, who want to work in traditional industries such as insurance, banking etc. and we also need to invest a lot into making our companies a better workplace, more attractive to the millennials and Generation Z. And, we have to face it, that it’s hard to compete with the new industries and players, which offer from the very start greater freedom, work from home, hip office spaces, high salaries etc.
XPRIMM: How would you characterize EIG's actual position and what is your strategy for the future?
G. M.: Currently we are experiencing one of our best periods since our establishment as a group. We are financially sound and moving forward on the M&A lane in a decent pace and yet being risk adverse and looking for market bargains. From a corporate governance perspective, we stand strong and we are trying to constantly develop and grow our human potential and know how. We are compliance-proof and yet agile and extremely fast in our decision taking, which sets us aside from many of our competitors. Our strategy for the future is to become ever more customer centric, more high-tech and better diversified from all aspects – product wise, geographically wise and people wise.
XPRIMM: Would you say that EUROINS is a company focused on individual consumers or on corporate business?
G. M.: We have been known as a predominantly retail oriented insurer and we like to work with individuals. Corporate business, on the other hand is growing significantly for us – especially in Bulgaria, North Macedonia and some of our new markets, such as Georgia. Definitely we want to increase our interaction with business and we are developing special product solutions and sales force, aimed at this in Romania, Ukraine etc. We have attracted executives with great experience in the Corporate and B2B world and we would definitely leverage on their know-how and experience. Our financial capacity is also growing, thus we are getting more open for offering greater coverage ourselves to our key accounts, and we are ready to grow our business, together with theirs. At the same time, we continue to work with A Rated reinsurers and to partner with some of the best known and some of the most innovative players on the Insurance market.
XPRIMM: How did the EIG business evolve in 2018. What are the group’s objectives for 2019?
G. M.: We retained our premium at the same level as 2017, which was a record high year for EIG, reaching over EUR 330 million on a consolidated basis. A slight decrease of our Romanian business was compensated by an increase in the performance of EUROINS Bulgaria and our FoS operations which are growing ever more important and we are certainly considering certain structural and governance model changes there. We had markets, such as Bulgaria and N. Macedonia, where we performed exceptionally well, also looking at our bottom-line perspective. The same is applicable for our travel insurer in Ukraine, which is the definite market leader there, providing a wide range of easily accessible and innovative products. We also grew in Property, Agriculture, Cargo and other segments which were previously underrepresented for us. We remained risk adverse in Romania when it came to MTPL, and we did not enter tricky segments and short-term policies, which kept us floating on the profitable side. For 2019 we plan to keep that pace, to further diversify our portfolio, to add new product lines and new customers. We are eyeing some new EU markets for us, where we hope to grow significantly in the coming years.
XPRIMM: How is the insurance industry responding to the growing role of fintech / insurtech and how will the new technologies change the sector? What is EUROINS doing in order to prepare for the future?
G. M.: In the insurance industry, contrary to the banking one, and especially in our regions, we do not see too many innovative companies or disruptors, who replace the insurers. Rather we see increased collaboration between insurers, the incumbents and tech companies, in order to deliver new solutions, both innovative, accessible and client driven. I do believe that technology is part of the solution for increasing the insurance penetration in the CEE and SEE and we, as a group, are trying to be part of this solution. We see that insurtech companies offer more tailored solutions, which can also be cheaper and can also provide better, real-time risk assessment on behalf of the insurers. Many solutions make the client – insurer relationship much easier, the processes of reporting a claim much easier and shorter and the payment of claims much faster – even if 10% of all insurtech solutions that are born each year are here to stay, I would definitely think, that at least 1-2% of them can revolutionize a certain part of the insurance process (from Underwriting to claims, actuarial and the back-office). We cannot afford to lag behind and we collaborate with a few start-ups on offering certain new solutions on the market, blockchain based and very accessible and easy to understand by the customers. In Bulgaria we also have our own accelerator, giving way to tech startups in the fintech / insurtech fields. So if any such company is interested in collaborating with us or discussing financing, we would be more than glad to listen to them.
XPRIMM: Cyber risks have become lately an important threat to the networked economy and also a challenging business line for re/insurers. How do you see the current status and the possible evolution in this field?
G. M.: Digitalization is ever more entangling and it becomes more and more evident in our life. We are moving towards an omnipresent IoT society. Nowadays even brushing your teeth is often done, using a connected brush, which can send information to you, your dentist and your insurer. In this more connected society, both individuals and companies are, of course, subjected to greater threats to their privacy and their data has hardly been more exposed to threats. Cyber-crime and cyber-vulnerabilities are becoming more present and more sophisticated, with the same pace that technology is moving forward itself. And we as insurers, and our EIG Companies, can only meet such risks, by offering advanced, tailored solutions and by working with professionals, who are a step ahead in the IT / Cyber field. In our markets we have offered certain tailored cyber insurance solutions and we try to be among the forerunners. It definitely requires a lot of investment on our side and we have to look at the whole process through a different, post-modern business lenses.