The clients have recognized us as the most innovative insurance company.
2017 was a record-breaking year for our entire Group in terms of our business results. In November of this year, we are going to finalize the implementation of our three-year-strategy and we expect this year to end on a successful note too. After that, we are starting to implement a new strategy that will last until the end of 2021. Generali has recorded excellent results in Serbia too, with 2017 also being a record year for us. We are very successful and valued at the Group and regional level too. As of 1st January this year, Serbia belongs to the region that we, in the company, call Austria, Central-Eastern Europe and Russia.
For years, we have been hearing how the underdevelopment of the insurance market is the main potential for future development of insurance in Serbia. Where lies the growth potential?
– What Serbian market lacks in is the slow growth of the insurance market. Higher living standard provides a real potential for future market growth and these two are directly correlated. I keep making a comparison with Slovenia and Croatia that have a smaller population, but their insurance premiums are twice and thrice higher respectively than in Serbia. We are not talking about very wealthy and strong countries that have a long tradition in insurance, but rather the countries that surround us, which, due to their higher standard of living, have more developed insurance.
One of the prejudices is that insurance is expensive and unnecessary, which is absolutely not true.
I am optimistic when it comes to that, as I am optimistic about Serbia’s development, the growth of the living standard, and the growth of the insurance market. I’m confident that this scenario will happen in the next few years, thus we are preparing ourselves with innovative products for future growth.
Which market niches does Generali Osiguranje see as a place for placement of its products?
– We are recognized by clients as the most innovative company in Serbia. Thanks to operating under one of the three largest insurance companies in Europe, we have enough experience to offer the products that are popular in Europe, we follow the trends and adapt these innovative products to our market.
We have been focusing on the segment of SME in the last few years as this is a niche that is in developing in Serbia. We have created quite successful products for this segment like the one that covers business risks while providing added security which is one of the most innovative products in the market that has proved to be very popular.
Agricultural insurance is something that is very poorly developed in Serbia with nine out of ten agricultural land plots, that are the subject of an investment, not insured. If agriculture is a new development opportunity for Serbia, it is very important to recognize that insurance costs less than the possible damage to the land.
We are constantly working on educating and clarifying the significance of insurance in agriculture, both group-wise as insurance industry and individually as companies. We highlight the benefits of insurance, and we see some progress made, but we still need to send a stronger message together. The state needs to do the same and underline that it is necessary to insure agricultural land as there are clear benefits to it.
What do you expect from a new law on mandatory vehicle insurance?
– The law is currently in the adoption stage and is expected to be adopted by the end of the year. In the meantime, the Law on Traffic Safety has been adopted, which is in direct correlation with it as 90% of policy sales goest through technical check points. Technical checks of vehicles also need to be harmonized with the regulation, and that’s a good direction to take.
Adopting this law will mark a continuation of the activities regarding regulation and regulation of the insurance segment. I expect that this area will be properly regulatd soon, in a way to emulate the regulation in Europe which will benefit everyone in the market.
Is that a step towards market liberalization that could provoke a real war between insurance companies and create pressure to cut costs?
– It is early to liberalize the Serbian insurance market because there are no required conditions for the liberalization. The current premium price is low, it is set by the NBS, and has not been changed for five years now. On the other hand, the prices of spare parts have been growing in recent years, and they are freely formed in the market. This disproportion threatens the profitability of this type of insurance.
Liberalization is inevitably good for the end client, but looking at the countries which have liberalized their insurance markets, their prices fell between 30-40% in order for companies to occupy a better market position, and there is a danger that 30% of the market will disappear. In order to liberalize the market, it is necessary to first align the price of the premium, which, according to some estimates, should be two times higher than it is now.
I think that a few more years need to pass in order for Serbia to be read for the liberalization ahead of the EU accession, when all aspects of business are more aligned with the European values, including the ones in the insurance segment.
The basic characteristic of the Serbian market is the poor structure of life and non-life insurance. Insurance companies, offer of new types of life insurance. How much are they recognized by the public as a source of safety and form of savings?
– The average life insurance policy in Serbia is 10 times lower than in Europe. In order to change this, we need insurance to cover a bigger segment of the population in order to increase the number of premiums, which again comes with the growth of the living standard.
When banks stopped offering favourable interest rates on savings, insurance discovered that niche and offered a type of product that provides a form of long-term savings, but without the mandatory disbursement. Because of this, the savings component is dominant in the life insurance market today. We should have a different situation where the so-called risk compendium dominates. Serbia also doesn’t have appropriate state measures in terms of tax relief. For years, as an industry, we have been trying to explain that this is necessary in order to improve the insurance market.
Generali Osiguranje has an excellent savings – risk policy ratio, and we are increasingly moving towards the risk policies, but we are also continuing to provide savings policies too as long as there is a demand on the market.
As for other products, we were the first to launch the product called Unit Link last year, which in Europe had a 30-40% share in the total sales in the first year. This means that for the first time ever, the client has the opportunity to manage their investments under their life insurance policy. A client who buys life insurance also decides on the investment, on the basis of analyses and statistics, and directly bears some kind of risk. By doing so, he gets a clear picture where about the size of investment returns.
How much did the arrival of foreign companies open up space for the growth of accident and health insurance?
– In the last couple of years, health insurance has been the fastest growing segment in insurance. Generali Osiguranje is the absolute leader in this segment, as we our market share is close to 50%, and we have been the creators, innovators and promoters of this product for ten years.
In the meantime, the state has recognized the opportunity to stimulate faster development in this segment, and has facilitated a tax relief which further opens the doors to companies to invest and provide health insurance for their employees, as well as motivate employees in the long run, who are gaining an additional benefit.
The health insurance segment continues to grow in the individual segment too. We have hundreds of thousands of clients in companies, and only a couple of thousand of clients who pay health insurance for themselves. There is definitely the potential for growth in this segment.
What is your experience regarding the interest that the public shows for voluntary pension funds?
– Generali Osiguranje has two pension funds and we have been in this segment for ten years now. Our current market share is around 30%. There is a good and clear calculation when it comes to investing in a pension fund, but it is necessary to work on raising the awareness of citizens in regard to this segment. Voluntary pension covers a small percentage of the population, and people have still not developed a habit of investing in the future.
The positive aspect and the advantage of these policies is that there is a possibility pausing with payments, in case the client is unable to pay over a certain period time.
This segment has been growing very slowly, it requires a lot of education and the change of consciousness, which does not necessarily mean that at some point this it will not develop at the speed we want. As an industry, we started with the education and we are continuing with it since we want to raise the awareness of the importance of insurance and to highlight the necessity and the need for this type of insurance. Each insurance company approaches the client in the best way, be it through a good experience or an offer. Our aim is to create a sort of tradition through holding Insurance Days and develop a habit to talk about insurance.
Human Safety Net is Generali Insurance’s global project launched in October 2017. What kind of actions and projects is Generali Serbia going to do under the auspices of this global project?
– We are the eleventh country in the whole group that has symbolically entered the world of Human Safety Net. We organized workshops for employees last month, in all of our departments. We have decided to help families in Serbia and create equal conditions for children, regardless of which family they come from, in order to provide them with education and training, so that they can develop their skills and get the proper education.
In this way, we want to give back to the community. We are proud that we are part of this initiative launched at the Group level and in all the countries of the world in which Generali operates, and that this is a process that will last for quite a long time.