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Interview of the week


Marie KOVAROVA, General Manager, Responsible for GENERALI group's operations in Romania, GENERALI Romania

The main trends on the motor class, insurance and the difficult economic context, the main objectives and motivations of the merger between GENERALI Asigurari and ARDAF, but also the details of the development strategy of GENERALI Group in Romania are only some of the topics we invite you to read about, in an…

XPRIMM: How was insurance affected by the difficult economic context? What consequences are we talking about and when do you estimate a revival of this market?
Marie KOVAROVA: Clearly, the economic context has strongly affected the insurance market in Romania, considering that this field depends on a number of other sectors (banking, real estate, auto, constructions) where decline has been fully felt. Overall state of the economy and the insurance industry are in a relationship of permanent dependency - a negative or positive development of the economic environment will certainly influence the insurance market.
On the other hand, lower living standards, rising unemployment or tougher credit conditions, amplified by a lack of confidence in economic recovery, have strongly affected the retail segment. Already bought insurance has been wrongly perceived as sure source of liquidities, clients surrendering policies before maturity. Furthermore, the decision of buying new insurance has been postponed indefinitely. In more developed countries of Western Europe, such as for example France, Germany or Italy, we have witnessed a totally opposite phenomenon – the insurance market increased during the crisis, because people have become aware of the safety that insurance offers.
Going back to local level, in Romania, the consequences of the crisis were felt in the figures reported by insurers. After the spectacular double-digit annual increases, the Romanian insurance market declined by around 1% in 2009 and by 5.7% in 2010.
Making an analysis of the last years and taking into account current economic data, as well as forecasts of financial specialists, we can estimate a one-figure decrease of insurance business for the current year and a slight increase during 2012-2015.
However, on the long term, the Romanian insurance market is maintaining its development potential. This is also the opinion of international financial analysts, who consider that Romania, together with Poland are the countries with the highest potential for medium and long term development. And, if we consider the current insurance penetration rate in Romania, we can clearly conclude that there is room for growth. Of course, this achievement will be possible only in a stable economic environment, favorable for evolution.

XPRIMM: The motor segment wasn’t the "growth engine" of the market anymore, on the contrary, the Motor Hull decrease is one of the most significant negative evolutions in 2010. Which are, in your opinion, the 2011 trends on the motor class?
M.K.: Decreased share of the motor segment is an essential measure in the process of market development, and it is determined by increasing sales on other business lines. Although motor insurance is still dominant, in the last year I have seen efforts of the insurance companies to balance their portfolio by supporting and promoting other insurance segments. This situation is a direct consequence of shareholders pressure for profitability. In conclusion, companies can no longer afford to run only after market share, ignoring profitability parameters.
According to our estimates, the motor market will continue the same descending trend, closely correlated with the phenomenon of clients giving up the voluntary motor policies. According to the specialists, we expect a decrease between 5 and 10% of the entire motor business lines, particularly influenced by Motor Hull insurance.

XPRIMM: How profitable is the motor segment for GENERALI companies? Is the claims rate higher in this period?
M.K.: Thanks to measures taken by GENERALI Asigurari and ARDAF regarding MTPL and Motor Hull insurance, technical results were significantly improved compared with 2009.
The actions that have contributed to the improvement of these parameters include: prudent underwriting, the adequacy of the premium to the risk presented by each insured and reducing the administration costs of both companies.
We believe that these measures are healthy for both the company and the customers, which will continue to benefit from quality services. Let's not forget that, for years, GENERALI is appreciated and rewarded by specialized institutions for the quality of services, therefore our efforts are permanently focused in that direction.

XPRIMM: How do you counteract the negative effects induced by motor evolution, at company level? Which are the main directions that you will follow in terms of balancing the portfolio?
M.K.: Our main goal is a healthy and profitable business, that cannot be achieved without prudent underwriting philosophy and without a balanced product portfolio. In recent years we have taken a series of measures to limit the share of motor insurance and to develop other business lines. We obtained significant increases (even three-digit ones) on the non-motor segments: credits and warranties, travel, professional liability, household and fire insurance against industrial risks.
If we look at Top 10 insurance companies, established in late 2010, GENERALI has the most balanced portfolio, meaning that the motor segment represents only 50% of the portfolio, compared with the other insurers in the top, where the motor segment has a share ranged between 70% and even 96%.
Also, we are trying, through marketing campaigns, to select within the motor portfolio a core of responsible, cautious in traffic customers, whom to reward by preferential tarrifs and additional services.

XPRIMM: Household insurance is seen as the opportunity of the year 2011. What do you think will be the evolution of this segment and what is the company’s strategy in this regard?
M.K.: From our point of view, household insurance segment is a key pillar of growth for the year 2011, too, and we will make serious efforts for its development. The population began to realize the importance of such a product and to be interested in real offers. We will encourage the demand with new and attractive products and campaigns, adapted to the clients needs.

XPRIMM: What are the main goals and motivations of the merger between GENERALI Asigurari and ARDAF?
M.K.: GENERALI group considers Romania a key market, with high growth potential in the insurance field. Accordingly, the decision regarding the merger came as a logical step for the Group's future actions on the local market.
The transaction represents an unique opportunity to use, at the highest level possible, the excellence of GENERALI processes and operations and the coverage of the ARDAF distribution network.
Last but not least, the new entity will benefit of a better and stronger position on the market, with broader coverage at national level and with an extended portfolio of products, offering us the possibility to address a larger number of customers. Our strong points, that we rely on, are the highest quality standards products and services.

XPRIMM: What are the main directions of the new multi-brand strategy that you will adopt? How will the GENERALI Romania brand be presented in relationship to the GENERALI Asigurari and ARDAF brands?
M.K.: GENERALI Romania is the name of the company (the name of the resulting entity name), and the commercial brands are GENERALI Asigurari and ARDAF, each with a clear positioning in the market and addressing different customer segments. We chose to operate this way because both brands have certain recognition among customers and, in addition, we will have a broader national coverage. We will be closer to customers' needs and we will be able to offer them quality services, resulting from the shared experience of both companies.

XPRIMM: What is the development strategy of GENERALI in Romania from now on?
M.K.: GENERALI Romania will position itself as a quality services provider, with an extensive range of products, that will bring added value to all its customers.
The new entity will benefit from a stronger position in the insurance market (currently being number 4 in the insurers top), with wider coverage and high quality services for all its customers. Our objectives for the coming years are to strengthen the market position and to maintain a healthy and profitable business.

| Published on 21.04.2011

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