Florina VIZINTEANU, President of the Board, BCR Asigurari de Viata VIG
It is necessary to go a little deeper with the analysis. In the broader category of life insurance we have a segment that has generated growth and which marked a significant evolution, both last year and this year - investment-type insurance: unit-linked insurance, index-linked insurance.
XPRIMM: The whole insurance market has experienced negative
dynamics in the first six months of this year, life insurance being the
only segment that has seen an increase. How do you comment this reality?
Florina VIZINTEANU: It is necessary to go a little deeper with the analysis.
In the broader category of life insurance we have a segment that has generated
growth and which marked a significant evolution, both last year and this
year - investment-type insurance: unit-linked insurance, index-linked
It is very natural because, since the end of 2008, the range of investment
possibilities has greatly restricted. The real estate market is still
in a state more or less uncertain, so a real estate investment is not
very attractive right now, unless there are some special opportunities.
In no case do we have the situation from 2005, 2006 or 2007 when there
was a great effervescence on the real estate market. Regarding the stock
exchange, we are still in the situation in which the Bucharest Stock Exchange
is not the most dynamic investment environment.
In this context, great accent was placed on financial and banking products.
We, as life insurance companies, come with packages that come in addition
to what a bank traditionally offers: the bank comes with a range of savings
and investment type products, and life insurance comes to complete these
XPRIMM: What is the profile of the Romanian client interested by index-linked
F.V.: We can say that those who came to this area were those who had financial
resources. Basically, the life insurance market has developed on the medium-plus
segment. If we talk in terms of bancassurance - mass-affluent and
above, not mass-market.
Three years ago, we were talking about a development on the mass-market,
because we were talking about products that were related to a credit.
But now, we return to a market of those who clearly have above average
income and who can afford to save money. Moreover, we must keep in mind
that this increase is not spectacular. We are talking about an industry
where life insurance penetration is very low. And it was low, even in "boosting" years
- then we were witnessing very high growths because we were starting from
very small volumes.
Indeed, every year there have been very large increases that were somehow
related to the economic growth, but even in peak years the penetration
rate was very low. Density and penetration rate were very low, even when
Romania was on an economic growth trend - this is because when we were
on a trend of economic growth, but also of consumerism, and automatically,
life insurance was not even then a priority, but consumption was. Currently,
we are on a negative trend in terms of economic growth, so automatically,
life insurance is not a priority now, either, for the simple reason that
people no longer have the available financial resources.
Also, we must keep in mind that there is the effect of the 24% VAT, which
automatically comes with an impact, because from the moment people pay
extra for all goods, this automatically reduces the financial resources
that could be spent on life insurance.
XPRIMM: In terms of life insurance share in the total market, we had
an almost constant 20% in the last eight years. At this point, life insurance
increases, while the rest, the other classes, are experiencing a decline.
How do you think the share of life insurance in the total market will
evolve in the future?
F.V.: Its share will increase. In fact, it has already risen, for we had
at one time even 26%, we also had 17%, but I do not think we will go over
the psychological threshold of 30%.
We see the development of the country "through the lenses" of
the economic growth, following several macro indicators. But when we analyze
the insurance industry, there are some indicators that position you closer
or farther away from certain areas of Europe. And I am not talking about
Western Europe, I am talking about the Central and Eastern Europe area,
where we are basically in, and anyway we are below that level, both in
terms of ratio general insurance versus life insurance, as well as regarding
penetration rate, density and average premium.
XPRIMM: In this context, how do you see the evolution of life insurance
sales? But that of sales through the bank? Are we heading to one stop
shopping, to the financial adviser who can provide a wide range of services,
from banking to mutual funds, or do we expect a separation and a specialization
of distribution channels?
F.V.: Initially, we had specialized channels. We were going straight on
the direct sales force channel on life insurance, and then the banking
channels began to develop. In parallel, those networks that sold financial
products, loans etc. have appeared. Somehow, I believe that a selective
development is not the best solution right now, and I am not talking strictly
from the point of view of the CEO of a life insurance company, but from
the point of view of the individual, the counselor who sells life insurance.
Because he already becomes a person who has experience in the area, who
has developed, and who needs much more.
XPRIMM: Given the context of this crisis, how will insurance continue
F.V.: It is obvious that the life insurance advisor is a character who
becomes increasingly better educated and increasingly more complex. When
he can offer life insurance in a professional manner, he has already entered
the area of financial counseling, as life insurance itself has crossed
Basically, we talk about a border industry between insurance and the financial
area. For example, we do not simply sell life insurance covering the risk
of death, everyone in the market offers, in fact, life insurance covering
the risk of death, but it comes in addition with financial protection,
it is savings insurance. In fact, this is how the market has developed
from the beginning.
XPRIMM: There are big companies that will come or have already entered
the market and have quite sophisticated products. Do you think the market
is ready for such complex products?
F.V.: If we talk in terms of sales force, the answer is: the market is
definitely ready. As long as we have successfully managed to sell an index-linked
type product, which is very complex, the market is certainly ready. But
the customer is not very well informed. He is still not educated enough
for these products, and it will take years to educate the client.
But the highly sophisticated products are already here. And if the companies
address those segments to which these products are dedicated to, naturally,
they will succeed. Any company that comes with a sophisticated product
knows that the product addresses a specific market segment. Again, we
are not talking about mass-market, because you can not discuss about something
like that in life insurance and especially in a country like Romania,
with its insurance penetration rate.
XPRIMM: What do you think is the most pressing problem facing the Romanian
life insurance market?
F.V.: The major problem at this point is related to the Romanian economy - it
is the problem that affects us all and it will continue to affect us.
Yes, we have an increase in the present, but I am speaking of substantial
growths - they will come back a bit later after the economy recovers,
this is obvious.
Moreover, the impact of the difficult situation from the public sector
over life insurance industry is a major one. I am talking about the general
decrease of the salaries, about reduced employment. Life insurance companies
and banks had a very good customer base, very serious and healthy, in
this area. There were people who had above the average income, with a
quite high level of education. The impact of the measures adopted in the
public sector will have on the life insurance industry can not be measured
yet, but there is a risk, from my point of view.
XPRIMM: Returning to life insurance area, there are at least two major
players entering the market this year. How will the entry on the market
of two important names, that have been very much expected, change the
landscape of Romanian insurance market? Do you estimate that this will
determine overall changes?
F.V.: Not in the near future. Companies that are currently on the market
have years of development behind them. It takes time to set up the basis
and to get the whole operational process of a life insurance company to
work. So then, in the next period of time, I do not see dramatic changes
in terms of life insurance market structure.
What I do see and I wish to emphasize, however, is the positive side:
any new player entering the industry gives us a positive signal. It is
a market where there is enough place - returning to what I said
earlier, we have a very low penetration rate, so there is and there will
be enough place for development. And any new entry in the market, especially
if it comes with know-how and it is a company that has experience, can
only bring value to the market. From my point of view, it is an encouraging
XPRIMM: What are the objectives for the coming years?
F.V.: At BCR Asigurari de Viata level, basically, this year we've covered
all lines of products that could have been launched through the banking
A month ago, we launched a scholarship annuity product. The campaign slogan
was "Your dreams will come true" - both the dreams of the child
and of the parent. We considered it was a time when the need for such
a product was obvious in Romania, given both the negative issues the educational
system in Romania is facing and the parents' lack of material resources
for their children's education.
As you have seen, there is a tendency to go to university studies abroad,
a trend that can be very beneficial for our society, and such a product
can support at any time such objectives of a child from a family with
an average income. Moreover, we believe our client is a client dedicated
to his child. This is the Romanian family structure, as the parent generally
wants what is best for his child - and we come with this product exactly
in this direction.
This is the product we have launched, in addition to investment type products
that have high demand. It is a product very "dear" to us and
we believe that, through it, we will manage to reach important objectives.
XPRIMM: Thank you!
Editor: Alexandru CIUNCAN
| Published on 02.12.2010