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Interview of the week


Boris SCHNEIDER, General Manager, ASIROM-VIENNA Insurance Group

The VIENNA Insurance Group has a vast experience in operating by a multi-brand strategy. We believe there is still enough room on the Romanian insurance market for all VIG member companies. Also, competition can only lead to excellent results; thus, given that we have a very good communication across the group, we can even learn from our "sisters".

XPRIMM: What plans for development does the company you run have, considering that the "family" relation with the other companies from Romania, members of the VIENNA Insurance Group, raises a lot of questions?
The VIENNA Insurance Group has a vast experience in operating by a multi-brand strategy. We believe there is still enough room on the Romanian insurance market for all VIG member companies. Also, competition can only lead to excellent results; thus, given that we have a very good communication across the group, we can even learn from our "sisters". For instance, OMNIASIG has some very good parts to it, and the same applies to ASIROM, so we can only learn from each other. In the end, may the best one win!
Looking from a different perspective, we must admit that we discuss about totally different companies, with different market approaches. As a group, however, we build synergies that can be achieved in departments like back-office, IT etc. But these are plans on very long term, which means that, for the time being, there won't be any major changes.

XPRIMM: Is there any initiative of collaboration between VIG member companies in Romania, such as setting common policies and strategies for market approach?
B. S.:
We don't discuss about our commercial strategies; as I said, the competition is free. But if one of the VIG companies in Romania sells a product at half the price of another group company that provides a similar product - I imagine that someone, in Vienna, will start asking questions and investigate the case.

XPRIMM: What do you think is the main threat for the Romanian insurance market?
B. S.:
The price should no longer be the main criterion that differentiates between insurance companies in Romania. I believe this is the only thing we need to make sure it happens on the market as a whole. In fact, this was a stupid mistake we made the previous years and even last year, on the motor third party liability insurance market, when at least one company sold MTPL policies almost for free. This company, just like the other ones adopting this strategy, only managed to achieve a planned loss. In case ASIROM would start selling MTPL at extremely low prices, no one would be left on the market but us, because we have the strongest sales network.
When the Romanian insurance market convenes on official occasions, discussing the problems of the relevant market, everybody agrees that franchise on Motor Hull must be introduced and that MTPL prices are still low. Immediately after these meetings we can see the same companies displaying a behavior that is totally the opposite of what they defended in the official statements made during those meetings. And prices do anything but increase, although the increase would only be normal and healthy for the market.
Moreover, the market is really faced with a problem related to claim rate, especially on the motor segment. At ASIROM we have taken many measures in this respect, the most important one being the introduction, beginning with November last year, of a mandatory franchise for Motor Hull policies. We planned to maintain the portfolio of ASIROM traditional clients and avoid those clients who, every year, shift from an insurer to another. Eventually, Motor Hull doesn't have to pay for damage amounting to EUR 100 or less... the fixed costs are already too high.
Nevertheless, I do hope it won't be long until the Romanian insurance market is truly strengthened. I am fully confident that better times are yet to come. Clients will understand that they shall get only best quality services, as they pay for it.
Things cannot change in just one year, but I am sure we are on the right track.

XPRIMM: What objectives did ASIROM set for this year and what has been achieved so far in this respect?
B. S.:
We've already introduced a dual management system, which shall be put in place through a Supervisory Board and a Board of Directors. The decision was already made at the General Shareholders Assembly, organized at the end of February. All VIG companies implemented this system and it works, based on this solution. Practically, the main advantage is that the company management becomes 100% responsible for development - thus making ASIROM more flexible for the client.
Moreover, at the beginning of May, we shall start a major rebranding process to mark the affiliation to the Austrian VIENNA Insurance group. Also, we plan to improve the positioning of ASIROM as retail insurer.
We also intend to expand the brand's awareness to the small and medium-sized enterprises, which actually represent one of our main targets for 2008. The total investments shall be considerable, and they are still to be budgeted.

XPRIMM: What is the strategy of ASIROM this year, market share or profits?
B. S.:
We are not interested in reaching a significantly higher market share. It would only help if we wanted to impress some financial analysts, but the clients are not at all interested in our market share; the shareholders either, they want profit. For us, the main objective for 2008 is gaining profit, especially since 2007 was a difficult year because of the increasing claim rates we had. At the same time, we intend to complete the ASIROM restructuring process in 2008 and reach a modest increase in the company's underwriting, similar to last year, of about 6-7%.
Another measure concerns the savings at administrative level, in a context where, last year, we had a major increase in costs for workforce remuneration, due to the fact that we offered the employees numerous seniority bonuses. When added to the losses caused by flooding throughout the country, our profitability was clearly affected, hence the need for a capital increase.
The investments for the company's development will, obviously, continue, as in October-November this year we' shall implement the new IT solution - SAP.

XPRIMM: Why was this capital increase necessary?
B. S.:
In my opinion, ASIROM experienced some difficult times with the restructuring, shifting from the old organization system to the VIENNA Insurance group, while maintaining the market share, which was one of the aspects of the strategy adopted at the time. We had to support the development and the restructuring with the appropriate capital. We also took this measure to compensate for the losses of the previous period, and not because we did not have the solvency limit.
ASIROM must become strong again. The capital increase is also a sign for all our employees - showing that we appreciate them and we are a resilient company, part of a strong international group -, and for our clients.

XPRIMM: Can we expect a change in the ASIROM values and brand orientations in the future?
B. S.:
We are the strongest insurer in terms of sales network and we intend to stay that way. We also plan to jump on the SME sector's development train. Moreover, we have already achieved results by winning several tenders, so we are encouraged to continue in this direction as well. We shall equally get involved in insuring Austrian investments in Romania. Vienna will not intervene in this, whoever offers better conditions and services shall win those accounts. Everything will happen in the spirit of the free competition I was mentioning earlier.

XPRIMM: Thank you!

Editor: Alexandru CIUNCAN | Published on 27.03.2008

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