PRIMM: What is the situation in the territory for the company you represent and what are your intentions with regard to the development of the territorial network?
Bogdan ANDRIESCU: At present, we only have an office in Bucharest, although we have analyzed several options of opening representation offices in other counties and reached the conclusion that the moment has not arrived yet for such a step. Actually, some brokerage companies present in the territory limited their presence there. In fact, the existence of branches in the field is justified for the companies operating mainly in life insurance and motor insurance. I must mention that brokers from the field have motor insurance as their main activity.
Cristian FUGACIU: MARSH Romania currently has offices in Bucharest, Cluj and Timisoara and coordinates the activity from the Republic of Moldova, which is still in its beginnings. Over a 1-2 year horizon we do not plan to open any other offices in the country and I believe we can offer very good quality services to all our customers through the existing network, depending on the evolution of the territorial spread of our customers, but also on the opportunities to expand our businesses on efficiency criteria. We do not overrule the possibility to approach other cities in the country on medium or long term.
Stefan FLOREA: INK Broker has its headquarters in Bucharest where we also have other two working points. During this year we consider the opening of a new working point in Bucharest and another four in the country, the extension of our activity in the territory being the main objective for us in 2007. On medium term we plan to open working points in all cities where ROMSTAL Leasing is present, as this company is part of the KBC Lease Holding NV group, like us.
Gheorghe GRAD: The territorial development of SRBA consists of 5 units, of which two are located in Bucharest and one in each of the following localities: Braila, Baia-Mare and Suceava. We plan to open this year another two units, in Barlad and Galati, and in case there will be a major business opportunity, for sure we will capitalize on it.
Radu MANOLIU: FINANS Broker operates only in the headquarters from Bucharest, however the company’s presence is felt in other towns as well, through regional representation offices of certain business partners. Taking into consideration the evolution of the business volume in the territory, we might set up, in the next 2 years, regional representation offices in Brasov, Cluj-Napoca, Constanta, Iasi and Timisoara.
Ioan Mircea PETRICA: Now we are present in all the regions of the country, with a higher percentage in Ardeal (Cluj-Napoca, Arad, Oradea, Zalau, Satu-Mare, Baia Mare, Alba Iulia, Deva, Timisoara, Targu Mures, Bistrita, Brasov), then in Botosani, Iasi, Suceava, Piatra Neamt, Bacau, Focsani, Buzau, Ploiesti, Bucharest, Targu Jiu, Craiova, Constanta and Tulcea, and at the moment we plan to develop representation offices in the other counties as well.
PRIMM: What do you consider to be the main factors that lead to the current configuration of the territorial representation of insurance brokers?
Cristian FUGACIU: The factors that influence the territorial representation of an insurance broker are related to the need of servicing the existing customers, but also developing new business. Generally, where the population has high incomes, where the investments are concentrated or where the volume can secure the efficiency of opening a new office, this is where brokers are present, with own offices. Naturally, brokers have as target group the individuals, so they need more offices, compared to brokers that have legal entities as target group, lower in number and requiring a smaller number of offices in order to provide services. Brokers, in general, travel a lot to visit their customers, not being physically present for a customer, through the agency of an office.
Stefan FLOREA: The low economic development of SMEs and the low number of local entrepreneurs, as well as the fact that many sectors of activity do not record significant increases lead to a lower demand for services and personal goods. At the same time, we need to mention the way of operating in the case of foreign companies that develop large projects in different areas in the country, but are insured based on international programs and prefer to work, in Romania as well, directly with the representation offices of large brokerage companies, which are usually located in Bucharest.
Gheorghe GRAD: The local economic concentration and development, in its entirety, determined, as it was only natural, the development of related services. Of course, all major brokers who wanted territorial development wanted to be present in the most important cities in the country. I believe that good results can be obtained also in less developed towns, where there is no competition. Practically, if we take a large market and divide it between 5 -10 competitors, the unitary result might be weaker than if you are on a small market. Of course, there is also the mirage of the big metropolis, where it is easier to recruit the specialists you need.
Radu MANOLIU: I believe the official low penetration rate of brokers in the territory is due mainly to the high concentration of business in Bucharest, but also to the limited resources (financial and logistical) most insurance brokers must work with.
Ioan Mircea PETRICA: The primary factor leading to the current configuration of the brokers’ territorial representation is the mentality in the area, and the secondary factor is the economic power of the respective area. Most brokerage companies have in their portfolio a high percentage of legal entities. EUROBROKERS is an insurance brokerage company with individuals as customers in the portfolio (over 80%) and a balanced portfolio between life insurance (over 35%) and non-life insurance, of which almost 40% consist of motor insurance. This explains our territorial development.
PRIMM: How do you estimate the insurance brokers’ evolution for the following 3-5 years, in terms of their presence in the territory?
Bogdan ANDRIESCU: It might be that in the future the territorial representation of brokers increases, but right now, maintaining the branches is not financially justified. The most important aspect we need to consider is, as I said, the profile of each insurance brokerage company.
Cristian FUGACIU: I believe that, in the next 5 years, the number of offices opened by the brokers that will remain on the market, among the existing 400, will increase as a result of the brokerage activity development, the market growth, the increase in the brokers’ profitability and the economic growth in general. I think that in 2012 there won’t be a county in Romania without a representation office of a broker among the Top 50.
Stefan FLOREA: Romania’s accession to EU shall lead to the diversification of offers through the entry on the market of new brokerage companies, and the competition will cause the market to mature. An important aspect in the evolution of the insurance brokerage market shall be the training of the sales force and the opening of new working points in the counties, given the development of the SMEs segment which will lead to an increase in the demand on the property insurance segment, but also on the third liability insurance segment. Agricultural insurance represents a great potential, as for this segment EU is earmarking major funds for development.
Gheorghe GRAD: I believe that in the next period of time we will see some restructuring both in terms of the number of companies on the market, and the market share they have. Commercial expenses are higher and higher and there are only two solutions in the future: the investment in qualified personnel and the territorial development of the company that can ensure a position on the market, otherwise one has to give up this business. I foresee the reduction in the number of operators on the market, but also their territorial development, which will represent a real benefit for the insured and for the whole market.
Radu MANOLIU: In a time horizon of 3-5 years we shall witness a real boom of the official penetration of insurance brokers in the field and, moreover, I consider that Romania’s borders will no longer be the territorial limit for this type of development.
Ioan Mircea PETRICA: In the next 5 years, the present of insurance brokers will be more obvious in the territory, depending also on the novelties brought by the legislation in the field. The percentage of insurance intermediated by brokerage companies will increase towards 50% from the level of the insurance market; at the same time, insurance will penetrate massively in the less developed areas in the country, through the development of local brokerage companies and through the higher receptivity of potential customers to insurance.
Conclusion
Profit is the stake of all companies, and insurance brokers are no exception. Any step taken in the territory is carefully measured and, in the end, efficiency and financial return on investment cause the making of the decision on to be or not to be on the local market. It is not enough to check on the map the presence of a working point if its operation and productivity are not justified from the point of view of the return or if the presence in the territory is not motivated by coverage rate or servicing of major, existing customers.
It remains to be seen when the development strategies of the insurance brokerage companies shall be implemented and thus lead to the presence of at least one broker among the top 50 in every county of Romania.
Alex ROSCA
