Radu MUSTATEA, President of the Directorate, ASTRA Asigurari
"I think this economic crisis was felt especially because of the speed with which we operate today in every field. The crisis went from bank to bank, from investment to investment, the insurance companies were also involved in this process, and the erosion over time has led to the collapse of this structure…"
"… This financial crisis has no precedent, it had a galloping evolution and I believe it will end just as quickly…"
XPRIMM: What are the visible effects of the financial crisis on the
Romanian insurance market and, in particular, on the activity of the
company that you represent? What do you estimate the medium and long
term impact will be?
Radu MUSTATEA: At this time, it is totally false to say that the
effects of the economic crisis are not felt. Regarding the company that
I am managing, the economic backfall was felt since the fourth quarter
of last year, especially in November and December, reaching a peak in
January-February. Starting March, the backfall flatted, at least according
to our sales figures.
In terms of effects, the economic crisis is fully manifesting in some
specific areas: the growth of the compensations level and the growth
of average claim. Also, the depreciation of the national currency was
felt in the relationship with the repair shops and with the spare parts
providers that are trying, in this period, to transfer costs from other
areas on the insurers' shoulders.
Separate from this problem with the repair shops is the situation that
affects the leasing area, as many clients no longer pay either the rates,
or the insurance premiums.
Another disturbing effect would be the proliferation of fraud cases:
clients are torching or crashing the cars, and the insurer bears the
compensation. The client gets off the leasing contract and he also receives
a sum of money, especially if he paid 50% of the value of the vehicle.
If the damage is 80% of the value of the car and the client has paid
at least 50% of it, it is normal to receive some money back. But it is
very difficult to separate actual cases of damage from the framed ones.
For example, we have now a case in which a car was destroyed by fire
just before being recuperated by the leasing company because the customer
had not paid the rates. The case raises some question, but it is very
difficult to prove an eventual guilt of the client.
Another segment that strongly felt this financial uncertainty is represented
by the banking field, which, by slowing or stoping the loaning activity,
indirectly affects the insurance sector; based on the credits granted
by the banks, insurance companies have offered credit insurance, household
insurance, goods insurance and life insurance. In addition to retail,
the corporate segment, from which we receive a negative feedback, is
Besides those listed above, there are other effects: generating unemployment,
which indirectly leads to loss of insurance policies, non-payment of
rates, limiting car sales etc.
Inspite all these, the company ASTRA-UNIQA registered, during the first
three months of this year, an overall increase of the underwritings volume.
We had decreases, on some segments, but they were compensated on the
other lines of business. Personally, I think the market will increase
by 10-15%, if we refer to the national currency.
XPRIMM: What are the main anti-crisis measures to be taken by a manager
or by an insurance company in Romania to face both the effects of the
crisis and the increasing competition in the industry?
R.M.: There are the so-called guidelines, principles of action for
this types of situations, but this financial crisis has no precedent;
it had a galloping evolution and I think it will end just as quickly
as it started.
I think this economic crisis was felt especially because of the speed
with which we operate today in every field. The crisis went from bank
to bank, from investment to investment, the insurance companies were
also involved in this process, and the erosion over time has led to the
collapse of this structure. What saved some companies in collapse was
the governmental support that they have been granted.
XPRIMM: Do you consider that this state of financial uncertainty encourages
the visionary managers or the innovative companies?
R.M.: Yes, normally, just like in war, you must be innovative, come
up with new solutions, because in the current situation if you follow
the old lines you are heading for a shipwreck. The guidelines are materialized
based on previous experiences, but this crisis is not something that
we have faced in the past.
Our company has also applied traditional methods, "cost-cutting"
type, but, in parallel, we came along with new solutions: launching new
products, discovering new markets, developing on niche markets. My personal
guideline is the one of permanent development, in order to compensate
losses on certain business segments.
XPRIMM: Which is the development planned by ASTRA - UNIQA or, more
precisely, which is the company's strategy for the current year?
R.M.: For example, in this period we have two large projects in the
final implementation phase.
The first one is introducing life insurance in the ASTRA-UNIQA portfolio,
an area where we had shortcomings in the past. Since last year, we have
a new team on this field, which we intend to develop.
In this respect, we created a support system for sales on life insurance:
we have now a person specialized on life insurance sales in each branch,
that provides support for the sales force. The sales force of ASTRA-UNIQA
is specialized in selling non-life insurance, and the reorientation is
not an easy one. We had, so far, three such attempts, but now it seems
that we will succeed.
The second project will be the equivalent of a real "earthquake" on
the insurance market: we want to give to each person working in ASTRA-UNIQA
a mobile unit for electronic sale, the size of a wallet. This mobile
unit is composed of a mini-laptop with modem and printer, which may issue
an insurance policy from any location.
The program is already on-going in Bucharest, applied on about 60 people,
and it will be expanded throughout the country. For the insurance market,
this is a novelty; sales force is used with extensive usage of pencil
or pen, the actual sale of an insurance policy taking around 30-40 minutes,
which is quite a lot of time. Of course, this change will be equivalent
to the transition from pencil to cosmic rocket, but the sales force must
adapt to this trend.
I think this is the future of insurance, it will not be easy, but sales
force effectiveness is diminishing the costs, the information comes in
real time, price changes are also taking place in real time, without
dozens of circulars.
For now, the trainings are taking place only in Bucharest, but they will
take place in each branch; in what the IT support is concerned, it is
offered by several companies.
In addition to the sales force that will take advantage of this system,
the people from the repair shops will also benefit from this innovation.
We hope that, by introducing the electronic claims file, we will reduce
the time necessary to solve the respective file.
XPRIMM: How long do you estimate it will take for this system to be
applied on a national level?
R.M.: Within maximum three months, the system will be extended throughout
the country, as the program has already been running in Bucharest for
a month. We bought 1.000 such units, and the investment amounted to approximately
EUR 1 million. We hope to achieve greater savings compared to the invested
amount, besides, we benefit from the ecological side of eliminating paper
forms. If, normally, a policy was written in 30-40 minutes, now we hope
that it will take about two minutes.
There is also another on-going large project, which is reffering to the
quality of the work of the repair shops we work with. Thus, by random
check, we will verify: the origin of spare parts, the work quality and
the repair time, compared to the price charged by that unit.
Being the first company to implement a full-size system for its sales
force in Romania, we hope to provoke a real "earthquake" on the market.
XPRIMM: Implementing the mandatory household insurance is regarded
as the big opportunity of 2009. ASTRA-UNIQA has already expressed its
intention to enter PAID with the maximum rate allowed. What are your
expectations regarding this project?
R.M.: We are the first company that has the approval of the shareholders
to participate in PAID, within the limit allowed by law, of 15%. Personally,
I think the law comes to fill a gap with a symbolic amount, more than
bearable for the owners, which will solve a yearly problem, whether it
is the floods or the earthquakes. An insurance system with a viable solution
had to appear.
Meanwhile, the service is affordable and everyone should take advantage
of it, especially in this year of economic crisis.
From the perspective of an insurance company, the return on participating
in this system is given by cross-seling and by up-selling, because the
value of the policy does not cover the services provided by the company.
XPRIMM: How do you see the implementation of the amicable report?
R.M.: There are many voices that advocate for postponing the introduction
of this project, for two reasons: fraud and disruption of the activity
in the offices of the insurance companies, which will be directly involved
in solving the claims cases, after the withdrawal of the police.
I believe that the implementing of the amicable report is necessary,
whether it is done on the 1st of June or on the 31st of December; most
likely, the situation cannot radically change in six months.
In any case, ASTRA-UNIQA is prepared for this measure. We have done training
sessions, we have processed the materials and I believe our people have
been ready for this for a year.
XPRIMM: Which would be, in brief, the objectives that the company
ASTRA-UNIQA has set for 2009?
R.M.: For this year, ASTRA-UNIQA has set the following objectives:
a 19% increase on all lines of business, implementing the above-mentioned
projects, occupying the third place on the non-life market and a RON
9 million profit. Also, in 2009, we have decided to double the share
held by life insurance in the ASTRA-UNIQA portfolio, up to EUR 4 million.
| Published on 21.05.2009