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Interview of the week


Sinziana MAIOREANU, CEO, SIGNAL IDUNA Asigurari de Viata

The plan is for us to start our activity in Q4 by focusing on forming the market and to really "turn on the engines" in 2009, when we will start to concentrate more and more on sales. We will start by launching five agencies and continue by developing the local territorial network in 2009.

XPRIMM: How do you intend to launch SIGNAL IDUNA's activity in Romania?
We will start with the official company launch in Romania event which will take place at the end of October. On this occasion the marketing campaign will also be launched, an education campaign. This makes a very important component of our plans, because we pledge ourselves to inform the target about various aspects such as the health insurance utility, its significance, the way it's functioning, explanations about our products. The plan is for us to start our activity in Q4 by focusing on forming the market and to really "turn on the engines" in 2009, when we will start to concentrate more and more on sales. We will start by launching five agencies and continue by developing the local territorial network in 2009. We will begin collaborating with brokers, which will become the most important distribution channel - from the international point of view, SIGNAL IDUNA has a traditional cooperation with brokers and because the international market is more developed in this way, brokers have a bigger distribution market share. We want the same to happen in Romania, although we are aware that it will take a long term effort, because our brokers find themselves in a mature phase and they are able to enlarge their activities portfolio. This implies for us to build up the market and the distribution partners for more than a year from now on.

We have partnerships with 28 medical services providers right now, with whom we cover more than half a country. We will continue developing the medical services network until we will be able to cover everything and we will launch a first insurance products scale. Since we focus on health insurance, we are first of all thinking about defining these health insurance packs, so that we will have a various product scale, starting with a simple product, with basic coverage and very attractive price and continuing further on with complex packs which will be able to offer even foreign hospitalization at one point.

XPRIMM: Which is SIGNAL IDUNA's first competitor? How do you intend to make your products more attractive in order to face the competition?
Our products will be different from what the market already has as far as the content and the concept go, because we import in Romania SIGNAL IDUNA's more than 100 years experience in health insurance. We have not tried to build a similar product as the ones in Romania, but we want to start developing a market based on similar products as the ones in the West.

We intend to develop the products gradually for now, because if we would have brought complex products from the beginning, the Romanian medical structure wouldn't have been prepared for it.
Regarding the competition, there is a strange situation in the Romanian market because people do not really know what a health insurance is and the definition of a competitor is incomplete. For example, some of the medical services suppliers who are offering medical packs might consider us their competitors, but we are not, because we do not offer medical services. We are aiming to gather the best medical services providers and develop some kind of national network in order to grant all citizens the access to private medical service.

Presently, individuals do not have access to a medical pack (at least not on a large scale). There are very few medical services suppliers that discuss directly with the individual, most of them have contract with companies though. In different words, the individuals segment is not covered, but every year the use of medical services grows with a 40% average per year. So, people need private medical services, especially since the others are disorganized and unclear. That is why we wish to offer access to all Romanians to private medical services, because all Romanian society that pays for social insurance also deserves to have their health insured.

This is how we reached the idea of a call-center, which will be a client access point towards this private system, where his questions will be answered, from what his policy means to guiding through the variety of medical problems he has to manage with - people will be helped to see the doctor they want, when they want, where they want. We are trying to cover the monitoring and the health care. These things we can not do as an insurance company, but only through partnerships. I think that already having 28 medical partners says a lot, they understood that we are not competitors. We are a sales company. We are a distribution engine that also suits the clinics because we bring them clients. Eventually, we all have to something to win. We show the client where to solve his medical problem, we bring clients to the medical partner, we bring insurance premiums to ourselves, so everybody is a winner in this kind of working system. This is why I say that I find it hard to define the competition, because no one has used this concept. The market is very young, there is room for everybody. We would like to have competition because we would take hold of some developing market costs together.

XPRIMM: How many products do you wish to launch and how do they look like?
We have finalized five health products, there will probably be six at the launch moment. On the life insurance side we have support products which supplement both the individuals and our agents packs: there will be two basic products - one unit-linked product with an investment in three funds and one product for protection. We also have "Accident", a product with a different approach: "group accident", "individual accident" and "family accident". Concerning the accident, we can say that it is about the second expertise area the insurance mother-company is operating right now and there are some very interesting products from which we will inspire ourselves in the future. Family insurance are, for example, very suitable to young families who own a health insurance and have the possibility to compensate the rest of the risks with an accident insurance, so that they will be able to concentrate on investments.

XPRIMM: Who do you visit more, individual clients or company clients?
The answer is different depending on the comparison criteria. From the gross written premiums' point of view, there is a 50%-50% connection. If we have the number of insured people as reference criteria, then the individuals sector will obviously dominate.

XPRIMM: Which place do you estimate to occupy on the Romanian insurance market in a few years?
Our objective is to become health insurance market leaders by 2012 having a 20-25% market share (adjustable depending on how the market evolves). We wish for good accomplishments in the life sector too, but we do not aim to be in Top 10 companies because life is not really our segment, we just want these products to help us have a full insurance pack for a family level. At least 80-85% of our business is based on health - we can even say that 90% is, if we analyze our present daily activities.

XPRIMM: How do you see the health insurance present legislation? Does it stimulate this segment or not?
There is not much legislation. The present situation with the fiscal incentive limit of EUR 200 per year for a health insurance - very little - is not a stimulus; let's not forget that insurance (not only health insurance) are considered to be material benefits brought to employees and are being charged with all the social taxes, which does not stimulate the employers to use them. We hope the state will understand that health insurance is an important benefit for it, because once the customers join the private system, they relieve the public health sector of some costs, which would allow the state to better administrate the funds and invest in understructure.

XPRIMM: Which would the annual growth potential on health insurance be? How profitable is health insurance?
For now, without any legislative stimulus, the growth is 25-30% per year; if the law would change, we would have a boost in an incipient phase.
Insurance products are not so profitable, this explains the fact that insurance companies begin to gain profit in 5-7 years of activity and they need big volumes in order to achieve this; but this are the field's specific features. There is a profit margin, but nobody sets up a big profit margin because this would mean expensive products and they should be adapted first of all to the market. We aim for profit in approximately five years (this estimation will prove itself to be more optimistic or more pessimistic when we will actually start the sales).

XPRIMM: The company that you run begins from nothing and you probably wish to increase with the market's growth. Should we understand that you are planning an enormous initial rise?
We are a greenfield in an unknown market (health insurance is still a young market in Romania), so it's true we are beginning from zero and we should register a constant growth year by year in order for us to achieve our goal in the four years to come.

XPRIMM: What is your territorial development plan?
We aim for maturity in respect of the distribution channels as well as the product portfolio until 2012. In that moment we wish to be present in all districts. Until then, we plan a gradual growth starting with large cities where the incomes are bigger and the clients' education level is higher.

XPRIMM: Can you tell us a few words about the group you are part of?
SIGNAL IDUNA is a group founded in 1907 which now activates in financial services, from insurance services to asset management and banking services. We have all three traditional business insurance lines: health, life and non-life. We have a 10 million clients portfolio, from which 2 million are in health insurance. In 2007 annual report we have registered a number of EUR 4.5 billion gross written premiums. We operate in our home country, Germany, but also in Switzerland, Poland and Hungary. We are market leaders in Poland having the biggest medical services suppliers network, about 600 partners and we are trying to implement this model in Romania too.

XPRIMM: How would you describe Bucharest's insurance market?
Bucharest's market is crazy and it represents 70% of the country's insurance market. If we strictly refer to health insurance, the capital city has the biggest medical understructure; here we find the big medical services suppliers; here are the clients (individuals or companies) with the biggest income, with the highest education level, with the most choice possibilities. In other words it is a crucial market. It is obvious that we orient ourselves towards Bucharest as well, first because we have the most advantages here, and then because who wins Bucharest has better chances ahead.

XPRIMM: Do you believe there are differences between a Bucharest client and another one from other parts of the country?
There surely are differences. First of all there are the cultural differences. Secondly, the Bucharest client having more options, even if he doesn't understand very well the market's products, is used to the opportunity of choosing, has a different expectations level regarding all that services mean - the people living in Bucharest are used to being treated like customers. From this point of view, we should all have our standards. We cannot ignore quality because the Bucharest market already punishes you if you do not reach a certain level. It is a very exigent market, very dynamic and aggressive and very well placed financially speaking.

XPRIMM: How do you generally feel about the insurance manpower in Bucharest and particularly in your company?
At least in the financial and insurance fields one of the biggest problems in Romania is a difficult manpower. There are big problems in finding specialists and in motivating them. This means, of course, the employers must be more careful with the remuneration packages they offer and with the way they must motivate their employees. The income rises, that cannot go on forever, are not enough because the country's production wouldn't sustain them, but the employers must have quality arguments. Moreover, the Bucharest market is very difficult because people have a lot of choices and the choice evaluation is not made by very serious criteria.
Unfortunately, employees tend to leave sometimes for things that retain attention, like a bigger salary, but they don't realize that maybe behind that bigger wage there are more disadvantages that they do not have the patience to estimate from the beginning. Luckily, we are in a different stage because we begin from nothing, we have the same team we started the project with, every member has contributed with something in building the company and so the team is more united, more motivated, we all wish to see the train leaving the station in the right direction. We think we don't have these problems and we hope not to ever have them. Moreover, like every serious employer, we want to keep our people close, especially the valuable ones. We will manage this by investing in their education also. About that, we find ourselves in a special position, because we did and we will continue to do the health insurance trainings. We need to align ourselves to the German standards and so all the trainings in insurance come from there. We will constantly invest in the technical staff and also in the commercial one. If we aim for offering solutions to the Romanian employers of keeping their employees, we will begin from the inside to show them that the system works.

XPRIMM: Thank you!

Editor: Mihai CRACEA | Published on 03.11.2008

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