Webinar “Cyber risks in Food & Agri industry”

Cyber risks in agriculture

In our recent webinar “Cyber risks in Food & Agri industry” we shared information about the role of cyber insurance, case study examples of claims handling and Security Operation Center (SOC) as a service.

The food and agriculture industry has adopted the use of smart technology, such as automated farming techniques or automated high-bay warehouses. In addition, the industry is highly dependent on automation to keep prices low and distribution running smoothly. With all the benefits of digitalization, it is important to address the cyber exposures that come with this technology reliance.

In our recent webinar “Cyber risks in Food & Agri industry” we shared information about the role of cyber insurance, case study examples of claims handling and Security Operation Center (SOC) as a service. With more than 70 internal and external participants, we dived into the topics of cyber risks in the food and agriculture industry with a desire to show the importance of proper cyber insurance solutions for clients in this industry.

Speakers included Stephan Eberlein, GrECo Group Practice Leader in Liability & Financial Lines, Rob Lloyd, Director ASL, and Alexandra Rusnakova, Cyber security analyst at AXENTA CyberSOC.

You can find the full webinar recording on our Youtube profile.

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Maksym Shylov

Group Practice Leader
Food & Agriculture

T +48 22 39 33 211

Make mental health & wellbeing for all a global priority, every day!

According to research by Deloitte in 2022, the total annual cost of poor mental health to employers increased by 25% since 2019, totalling between £53-56 billion in 2020/202

World Mental Health Day, October 10 and the theme for 2022 is “Make Mental Health & Wellbeing for all a Global Priority”. World Mental Health Day provides an opportunity to talk about mental health, how we need to look after it, and how important it is to talk about things and get help if you are struggling. As a society, we now live with permanent uncertainty – this will become part of life – but we also need to reflect on the toll these continued uncertainties are having on our wider health and wellbeing.

Whilst current figures are being assessed, the World Health Organization (WHO) reported in 2021 that one in four people globally will be affected by mental or neurological disorders at some point in their lives. They go on to say that around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide! Anecdotal evidence is strongly showing that the “post-Pandemic” figures will show a significant increase to what is already a staggering number of people living with mental health disorders.

According to research by Deloitte in 2022, the total annual cost of poor mental health to employers increased by 25% since 2019, totalling between £53-56 billion in 2020/2021.

Mental Health Data

But is mental health and mental illness the same thing? In short, no they’re not! By understanding the differences provides some insights into why, sometimes, we can overlook when someone needs help, and ensure they receive the correct treatment. The Centres for Disease Control (CDC) points out that many individuals with poor mental health (our emotional, psychological, and social wellbeing, affecting how we think, feel, and act), have not been formally diagnosed with a mental illness (including: anxiety, bipolar disorder, depression, or schizophrenia). Also, many people who do have a diagnosed mental illness “can experience periods of physical, mental, and social wellbeing.”
This is when the stigma attached to mental health / mental illness causes further issues, discrimination and sadly creates a situation where people don’t talk about what is worrying them – some would say this coupled with a general lack of understanding between mental health and mental illness impacts on the way we interact with others, handle problems, and make decisions.
The way mental health and mental illness is handled is different across the globe, and the approaches that each country takes are sometimes at different stages especially in how they perceive the condition culturally! For this reason, having discussed this very topic recently with a number of senior HR professionals, all agreed one key challenge to having a robust wellbeing strategy is how to embed it across different countries. It is important, therefore, to adapt their wellbeing polices accordingly.
Central, Eastern and Southern Europe, not unlike other regions, the stigma around mental health (and mental illness!) is prevalent. It remains a barrier for people to openly discuss or access the right level of care – and in some countries, the limited infrastructure remains a further problem. For many countries across Eastern Europe, institutionalised care remains a barrier for those with mental health disorders – there is also a wider issue when it comes to professionals in these countries moving away, creating a backlog with limited numbers of people able to properly care for those who most need help!

Mental Health Data

A report from Notes from Poland, set out how the three-stage system in Poland aims to move part of the burden of mental health support from psychiatry wards to local institutions offering services of psychologists and counsellors. The system includes improvements to hospital infrastructure, launch of a round-the-clock helpline, online support and prevention programmes, as well as easier access to specialists.
In Lithuania, considerable stigma around mental health remains – the country’s mental health system is largely lacking clear pathways for care, with a heavy reliance on hospitals to provide what support they can.
A worrying yet consistent observation is the lack of care pathways available for mental health-related illnesses across Eastern Europe. For example, research on the state of the Serbian mental health system conducted by the German Association for International Cooperation, conducted in 2022, showed that approximately one-third of the population of Serbia have clinically significant disorders that can be related to the symptoms of at least one disorder, while one-fifth showed symptoms clinically indicative of two or more disorders.
Having talked with our team in Turkey recently about mental health and wider disorders, the growing number of people being diagnosed, and seeking treatment is growing there too! Anxiety and depression has significantly increased, and according to the data of the Ministry of Health of Turkey (MoH), nearly one-fifth of the population face mental health issues, over three-million people suffer from depression, and of a population of about 83 million, some 9 million people seek mental health support in Turkey each year.
More proactive and preventative measures, coupled with ongoing reforms (and financial support) is needed in order to continue building a culture where employees (people!) feel comfortable talking about their mental health (and mental illnesses). It is unlikely the stigma will be removed, but collectively we can work towards removing this across as many cultures and countries as possible. One of the 17 United Nations’ Sustainable Development Goals is “good health & wellbeing”, and the management of employee health and wellbeing must therefore remain a key agenda leadership agenda item, and core element of an employer’s employee value proposition.

Mental Health Data

Looking inwardly, at GrECo, we take a proactive approach when it comes to our peoples’ wellbeing – it is not a “tick-box” exercise for us! We have made employee wellbeing a priority that forms part of our culture, embedded within the DNA of our business.
For GrECo, looking after our people’s mental health is every day! The truth is in the pudding…by offering access to counselling, “wellbeing days off”, yoga, healthy food, stress prevention tools, and listening to what is not being said has created an environment where some of the stigma attached to mental health and mental illness has been broken down. Whilst all of these initiatives are great, having recently discussed this with our Head of Group HR, we are the first to admit our approach is not perfect yet, but it is a continual topic on our senior leadership agenda. For example, this forms part of regular discussions I have with my country Health & Benefit leaders to ensure our people are being listened to, supported, and importantly watching out for the “unseen” changes in behaviour and health. We believe a “one-size-fits-all” strategy is no longer an option, our people are all different and in return they should have a safe environment to be able to talk about what is affecting them and be reassured a more tailored approach to looking after their mental health is in place!
Whatever the differences in regions, all employers need to focus on developing a mental health and wellbeing strategy that promotes more openness around mental health and ensure they are supporting to people with mental illness. It can’t just be a tick box exercise. A “one-size-fits-all” approach is unlikely to be effective, as different countries are at different stages in their awareness of and acceptance of the issues related to mental health and mental illness.
The working culture, and making sure it’s not contributing to high levels of stress and anxiety is a key area to assess, on an ongoing basis. Offering greater flexibility and the ability to work at home could help employees deal with stress. Creating a working environment where people feel comfortable and able to ask for some time off if they need is all part of providing a supportive and open culture. Ensuring people know how to access help is vital too.
Often companies have mental health programmes in place, but employees don’t know where to go or feel uncomfortable asking, so focusing on communication around mental health support and ensuring employees know how to access appropriate pathways are key. Over the next few months, globally, we will have further occasions to also consider how to support our people such as World Menopause Month, Men’s Health Awareness week, International Stress Awareness week, Talk Money week, and of course not forgetting our children during Children’s Mental Health week – all forming part of the three core pillars of Financial, Mental and Physical Wellbeing.
So, as we approach World Mental Health Day on October 10, it creates an opportunity to really consider how we can create a more open  culture and consider how wellbeing strategies can support their employees’ wellbeing. Without doubt, prevention and early intervention is key, but reducing stigma is also important when talking about mental health, mental illness, or asking for help! Every day provides the opportunity for employers to demonstrate the steps they are taking to ensure their employees’ wellbeing is high on boardroom and leadership agendas, and how this is embedded within the company DNA!
We have come a long way already. Wellbeing is a complex dynamic between the culture of the company, the work environment, and the mental, physical, psychological and social health of its employees but more needs to be done to ensure this discussion becomes an intrinsic part of the day-to-day company culture.

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Adam Riley, Cert PFS 

Group Practice Leader Health & Benefits

T +44 (0) 7507 788 144

Affinity Solution for Electronics and Mobile Phones Launched in Slovenia

In co-operation with our partner ENAA, GrECo Slovenia launched comprehensive and innovative Affinity solutions for electronic devices and mobile phones- ENNA Double Guarantee and ENNA Mobi Guarantee. Customers of ENNA now have the perfect opportunity to insure their newly bought electronics and mobile phones at extremely favorable price with attractive and easily understandable coverages and fast and simple purchase process.

ENAA is one of the largest e-shops in Slovenia with over 420,000 registered customers and a wide range of products. They are known for the exceptional quality of products and service and this is exactly what ENAA insurance stands for.

Interested to know more? Visit ENNA e-shop at www.enaa.com, choose your new electronic device or mobile phone and buy insurance to protect your new purchase!

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Alma Ribanovic

Group Practice Leader Affinity

T: +43 5 04 04 349

Cyber-attack – the heart attack of the companies

Cyber-attack – the heart attack of the companies

From a cyber perspective, there are only two types of companies: Those that have been hacked and those that will be hacked.

When an agricultural producer gets hit by a ransomware attack, it comes close to collapsing its business. The last two years of our lives will forever be marked as the years hardest hit by the global pandemic COVID-19. But this period has also brought us other threats, namely the digital pandemic in the form of the rise of Ransomware cyber-attacks.

What is Ransomware?

It was an ordinary morning for the agricultural company which is one of the main dairy products producers in the region. The director of the company arrived, as usual, sometime before the workers came to the factory, turned on his business laptop and noticed a disturbing message: “You are under a ransomware attack, please follow the link for further steps.”

Ransomware is a type of malicious software or encryption program, placed by a hacker, that works by encrypting data on a network. To regain access to the data, it asks you to pay a ransom in exchange for a decryption key. Some researchers (Coveware) show that a minority of companies that choose the ransom payment route, end up being forced to make additional payments or never getting access to their data.

Ransomware attacks have been one of the most common threats in the last couple of years. Business interruption periods increased from an average of 15 days (2020), now to an average of 23 days (2021). It should be also noted that the business interruption costs sometimes are as high as the ransom payment, or even exceed the amount. IBM’s 2020 Cost of Data Breach Report shows us that it took around 280 days to even identify a breach in a system, which gives us an insight into the ability and power of hackers to move stealthily and silently through a victim’s system.

Cognyte company, the security analytics agency, claims that the Manufacturing and Financial Services industries are the leading targets of ransomware hit, followed by the Transportation, Technology, Legal and Human Resources industries. Some examples are:

  • In 2016, Delta Airlines faced a major network outage that lasted for five hours and cost the company 150 million USD.
  • In October 2016, there was a DDoS attack on Dyn, a company that administers a major element of the web, that took down widely used websites such as PayPal, Twitter, Netflix, Amazon, and others.
  • In 2017, Maersk, a Danish shipping company, faced a cyber-attack that disrupted operations for two weeks, resulting in a loss of about 300 million USD.

Weak point RDP

According to the UK security company Sophos, one of the most distinguished ways is the widespread use of Remote Desktop Protocol (RDP). RDP is a system which allows remote users to connect to the desktop of another computer via a network connection. Usually, it is used by organizations to allow employees to gain access to their networks while they are working remotely. If the port, that an organization uses for RDP access, is exposed directly to the internet, it is easy for malicious actors to find it, and they then attempt to gain access to an organization’s computer systems.

After the hackers gain access to the system, the next step is to break into the organization´s local administrator account. This means that the attackers are using a computer program trying to crack the passwords by trying various password combinations in quick series. The longer and more complex password, the more difficult the job will be for hackers to crack the system. Unfortunately, in our case, the local administrator´s account had a weak password combination. Additionally, the absence of Multi-factor authentication (MFA) for RDP access, allowed the hacker to gain access to the organization’s network without having to go through a second verification procedure, such as entering a verification code.

The production was blocked and unfortunately, the company did not have an offline backup stored on external storage that could be used to restore them. After the activation of the business incident plan and connection with the external incident response team, the company decided that a ransom will be paid. After the payment and receiving the decryption key, recovery was started. As the whole process was time-consuming, it took around 14 days for the system to get fully recovered.

The benefits of cyber insurance against a cyber-attack

Due to having a cyber insurance policy, the company was able to carry out the whole process of recovery of data and ransom payments with highly skilled IT professionals. The costs which were covered under this cyber-attack were, above mentioned ransom payment, business interruption losses, business incident response, forensic investigation costs, crisis PR, privacy liability, and compliance with the data protection regulatory bodies (GDPR) under the law regulated time.

Some important statistics (Indusface):

  • Organizations saw a record 225% increase in losses from ransomware attacks in 2020;
  • 53% of attacked businesses stated that their brand and reputation were damaged after a successful attack;
  • Around 26% of enterprises had to shut down operations permanently because of a ransomware attack.

If you are interested in the possible insurance offers and the level of vulnerability of your company to cyber threats, contact us and a team of our specialists will provide you with all necessary information about the further steps.

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War in Ukraine and Cyber Insurance

Since the start of the war in Ukraine, fears of cyber-attacks due to parallel hybrid war are increasing. In this article we explain how the insurance industry is reacting and how the war clause affects conditions.

Read more …

Bogdan Santovac

Bogdan Santovac

Liability & Financial Lines Specialist

T +420 778 521 276

GrECo lecture at German GVNW Symposium in Munich

Georg Winter and Andreas Krebs showed in their lecture at the GVNW the newest details on the economic consequences of the war and the cut-off of local insurance markets in Russia, Ukraine and Belarus

Following a very successful webinar held by GrECo Holding in April this year, GrECo was again invited by GVNW – the leading association of insurance buyers in Germany – to give insight and information on the war situation in Ukraine and its implications for local and international insurance coverage. After pausing for two years due to Covid, the conference was organized as an in-person event with a participation of about 800 persons, all insurance specialists from big industrial clients, insurers, brokers and other annexe professions. The main topic of this German-speaking event was the perspectives in connection with the oncoming contract renewals and how to tackle problems like disruptions of supply chains, inflation, the war in Europe, climate change and ESG, to mention the most important issues.

Georg Winter and Andreas Krebs showed in their lecture to a breakout group of about 100 participants the newest details on the economic consequences of the war and the cut-off of local insurance markets in Russia, Ukraine and Belarus. They relied on reports received from GrECo and MAI colleagues in the countries concerned, which made this report more direct in its vivid description of how the markets work with the focus on maintaining insurance services despite the setbacks and difficulties caused by war operations, sanctions and disruption of international insurance.

In their conclusion, both GrECo speakers pointed out that a general exclusion of the territories of Russia, Ukraine and Belarus from coverage, as is suggested by some international insurers, is hard to understand and, in most cases, not justified. There can be no doubt that insurance is not possible for activities and goods that are underly sanctions as well as for risk locations in war zones, but most businesses are not immediately affected by the military conflict.

There has been a lot of positive feedback from the audience during and after the lecture. This incentivizes us to continue its permanent observation of those markets and provide clients and partners with substantial and original information.

Ukraine war – effects on your corporate risks

In view of the rapid developments in the war between Russia and Ukraine, GrECo Holding has set up a Task Force responsible for gathering all information on the current crisis and for reactions in all fields of our activities.

We will provide information on all topics and developments linked with the situation on our website for the information of clients and partners.

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Petra Steininger

Head of Group Communications

T +43 5 04 04 – 175

‘Our only focus is on our client’s and people’s needs’


Ante Banovac, a member of our Executive Board, shares his thoughts about future risks facing the insurance industry, the state of the insurance market in Serbia, Slovenia and Croatia and the role that risk specialists have in a world full of increasing risks. The interview was originally published in the Svet osiguranja, an insurance specialized publication issued in Croatia, Serbia and Slovenia. 


Insurance today is facing a number of challenges posed by the risks of the new age that are constantly increasing. What are the biggest risks today that companies should pay attention to as insurance brokers?
At GrECo we see four mega trends and their consequences as the main risk changers driving a fundamental transformation of our client’s risk landscape. These are the challenging development of our environment, leading to climate risks such as an increasing impact of natural hazards as a result of climate change, but also the reaction of the global industry adapting their business models to reach their sustainability targets. Furthermore, the digital transition leads to great opportunities for innovation with the result, that corporate assets and therefore the risk landscape of a company nowadays is increasingly affected by intangible risks such as cyber or reputational risks.

Another area that keeps our clients busy is the limitations which are arising from our globalized economy. The global pandemic and the current war in Ukraine lead to dramatic impacts on supply chains impacting prices and therefore also endangering our level of welfare. Finally, all industries are more and more struggling with the enormous lack of skilled labour, and this leads to a war for talents and changes in the labour market where employees are more and more dictating the rules.
And what do you see as the biggest challenge for insurers in responding to those risks that companies and citizens face? Are there risks that are in danger of exceeding the capacity of re (insurers), which have been insurable so far? (The issue of cyber risk, supply chain disruption due to the pandemic, and also due to other risks is mentioned …)
The situation for insurers is not easy. The new risks are challenging them and are very difficult to calculate, leading to a rather cautious approach with respect to coverage and limits. For example, capacities in the cyber insurance market are currently very scarce and insurers and reinsurers cannot provide sufficient balance sheet protection for our large corporate clients, where insurance should traditionally be the last line of defence in a corporate risk management strategy.

Another example of their difficult situation is the need to contribute to a carbon-free future. Companies must change their processes and sometimes even business models in order to fulfil their new sustainability targets over time. These measures lead to new risks. To react to those necessities insurers are looking into their ESG agenda and for example blacklisting carbon-heavy industries such as coal, because they must. At the same time, proper solutions helping this industry to manage the challenges of transformation in front of them are somewhat disregarded.  

Serbia is generally the least developed when it comes to insurance compared to Croatia and Slovenia. What do you think could and should be better? In which segments should changes be made?
I think the key components in a long process are financial education for younger generations and stable, strong and reliable domestic insurance markets together with a growing overall economy. You see, how insurance is perceived in the mind of citizens is strongly influenced by claims experiences made in the past and the reliability of institutions in general. Changing perception to the positive requires time. Serbia has some very good insurers today. Jointly, constant efforts need to be made to educate insurance takers, both private and corporate, to keep conducting image campaigns and convincing through professional and transparent claims handling. GrECo is a corporate specialist broker. We have been pioneers in developing risk awareness and understanding of insurance as one possible tool for risk mitigation in Central- and Southeast Europe for more than 30 years. Together with our insurer partners, we are continuing to contribute to this development every day.
What type of insurance do you think has a better chance of developing in Serbia, and is not sufficiently represented now?
Next to the classical and established coverages like Property damage and motor insurance lines, we see a rapidly growing need for Health & Benefits solutions. This is mostly connected to the already mentioned war for talent and skilled labour as companies are looking for ways of attracting and retaining employees. Another area which from our point of view is not yet developed enough is all lines of liability including specialty casualty lines. Those require specialist knowledge and proper consultancy, so clients would see their huge benefit. Increasing awareness of liability risks would also contribute to the overall development of the acceptance of risk consulting and advisory in Serbia.

When we talk about the activities of insurance brokers, can you compare these three markets in which you are present? What is the situation, where it is most developed, who uses your services the most in terms of the industry that is most represented in your portfolios?
In all three markets, I’d say that most registered insurance brokers are acting as generalists, offering services in all insurance lines, mostly collecting offers from the insurance market and focusing on product and price comparison, leaving claims handling completely to insurers. Those are competing with insurers and their agents directly, especially in the retail segment, servicing private individuals. A few brokers take it one step further and are also assisting clients with knowledge and expertise during claims handling, but still being generalists. Very few brokers are offering true risk management and specialty advisory with innovative solutions to improve a company’s corporate risk management. Being a strictly corporate & specialty broker, we belong to the latter group and we believe this is where true value is created for corporates. To do this in Slovenia, Croatia and Serbia you need patience in explaining the difference between a pure product comparison and price-driven approach on the one hand side and highly skilled, often very specialized teams on the other.

We are not insurance dealers, but risk advisors. Major industries we specialize in and we are advising are financial institutions, construction, Oil & gas, Power generation and distribution, Food & beverage, Tourism, Transportation & Logistics, Aviation, and Telecommunication. The need for professional risk advisory has developed and grown over the years and we believe it will continue to grow as economies in all three countries continue to grow over the longer term. Recently, the fragility of global supply chains became apparent due to the pandemic. We expect to see certain effects of nearshoring in the future. Countries like Slovenia, Croatia and Serbia have the chance to benefit from this development.

Insurers have recently faced major flood damage, but on the other hand, most assets are still uninsured against such risks. Only 35 per cent of economically relevant climate losses are currently insured in the EU. How to bridge that gap? Will insurance become more expensive precisely because of the growing climate risks?
Climate change represents one of the most critical challenges in the future in general and for insurance companies as Nat Cat risks are clearly on the rise. Because of a rapidly changing exposure arising from climate risks, there are limits to insurability and economic affordability of insurance covers for corporations. Current risk transfer strategies, relying on traditional insurance solutions alone, without adapting their facilities to these changes, will not bridge the gap. While insurers and risk consultants like us are constantly developing new, innovative concepts of coverage, corporations who have not yet done so will still need to think about Nat Cat Management – meaning analysing and understanding their risks properly, then managing, i.e., mitigating those risks technically. In the longer run, we believe those whole industries will have to transform their business models, factories, and supply chains to increase their resilience and adapt to climate change. Therefore, also our business models are transforming as we are increasingly becoming risk specialists helping our clients to thrive in a changing world.

Although insurance companies have shown great resilience in volatile times over the past two years, how will the current geopolitical instability still affect the work of insurers? And in what way? How much do you think all this geopolitical tension will disrupt general stability, the economy, and finances in 2022 when it comes to this region (Adriatic)?
The insurance industry is one of the most resilient industries and will continue to be one. The consequences of geopolitical instability in the insurance sector that we have seen so far relate to the revocation of coverage of international insurance programmes in Russia because of imposed sanctions, but also in Ukraine. Further, after many years of ultra-loose interest policies of the European Central Bank, inflation has now manifested itself in Europe while economies are not really growing significantly. We are looking at stagflation. Inflation will for instance lead to higher unpredictability of losses as higher replacement costs can be expected, but it is difficult to predict upfront how much higher. The ongoing instability of supply chains also affects replacement times, adding another element of uncertainty. So, predominantly the work of insurers, but especially professional risk advisors and brokers is affected in the way that an even higher level of diligence needs to be applied when consulting clients to safeguard them from such significant, unexpected losses. The ones best technically skilled and prepared to provide professional risk management and advisory will even benefit.

When it comes to the Adriatic region, I believe the same principle of increased diligence applies. It is difficult to say how current geopolitical tensions will translate to this region during the rest of the year and look further ahead, but I hope that we will see a general trend of de-escalation. Economic interdependencies between nations are significant and it is hard to imagine that further escalation would do any good, economically and also from a civil and social perspective for the people in the region.

However, challenging times have always also been phases of opportunity to than in calmer times innovate, adapt and improve. I am very happy to see that corporations, including insurers, became more agile, by showing efforts towards necessary transformation and adaption to this constant crisis. The insurance industry is, thankfully, wide awake and moving ahead.
Although the Croatian insurance sector has so far proved to be relatively stable during the corona crisis, could the effect of the crisis on insurance companies occur with a certain time lag?
That depends on whether we will see new, again significantly more dangerous variants of the virus or not. If yes, it is fair to assume that protective measures like further lockdowns will fuel the current stagflation and make another serious dent in the Croatian economy. This may then also influence the results of insurers. If not, I’m quite positive that such a scenario will not occur.
How should risk monitoring be approached in these unstable times (pandemic, war, disturbed international relations, pronounced climate change)?

As I stated already in the beginning, from my point of view it is most important to include a proper risk prognosis within a company´s risk management process. This means, that forward-looking companies adapt early to uncertainty by constantly applying methods for assessing their business model and their supply chains, checking vulnerabilities and potential impacts. The risk management department must be aware of these changes at the earliest possible stage, to anticipate the possible impact on their specific risk landscape and develop appropriate treatment strategies. Therefore, it is now more than ever of utmost importance that risk advisors and insurers are finally much more included in the clients’ strategic planning. We are increasingly rendering such services and we see more and more clients understanding and appreciating this. This is a good trend.

Croatia is intensively preparing for the introduction of the euro, on January 1, 2023? How will this affect the insurance industry?
Yes, after a long process of preparation and fulfilment of EU requirements Croatia will be taking this major step, which I personally welcome. In the best scenario, this will contribute to increasing foreign investment which in turn could create additional value and increase the total amount of economic assets in Croatia, leading to increased demand for insurance. The pure change from HRK to EUR itself will have no major impact on insurers. In fact, the HRK has been linked to the EUR for decades now. Many major economic transactions in the country have effectively been executed in EUR. It remains to be seen whether insurers will try to use the currency change for (unjustified) price increases. However, the insurance industry is a competitive market with sufficient choices for clients, so I believe this risk shouldn’t be too pronounced.

Croatia has a relatively developed insurance market. Where is insurance in Croatia most developed in comparison to the region? Where does the market in Croatia still need to catch up with the more developed countries in Europe?
Interesting question. Yes, I would agree that Croatia’s insurance market is generally relatively well developed when comparing it to other economies in the region, but there is not a huge difference. In fact, in the Adriatic region, the Slovenian market seems to be the most advanced. This is also reflected in the per-capita expenditure for insurance in general which is highest in Slovenia. In general, we see well-established Lines of Business and really good products, especially in Property and Business Interruption, of course, motor insurance, but also general liability coverages and to a certain extent in Health & Benefits across the region.

Unfortunately, and this is the major difference to more mature western economies, the focus for many companies seems to still rather be on basic protection of assets, based on a Casco mentality translating into possibly no or low deductibles. This shows that understanding of risk- and insurance management is still on a level which offers potential for improvement. This is where we need to catch up. However, this is changing for the better. The understanding of benefits and the value of professional risk management is increasing among Croatian corporations and in fact, there are some very mature companies in this respect we service in already for many years. Those companies are blazing the trail for others and the number will increase.

We observe that the understanding of risk and risk management today correlates with the size of the business rather than with any specific country in the region. The more mid-sized companies learn how to analyse and calculate all their business risks – hence, knowing their total cost of risk (TCOR), the more we will see purchasing behaviour moving closer to more developed western European insurance takers. At GrECo, we are passionate about helping companies increase their awareness of a holistic approach to risk.

GrECo recently acquired MAI CEE. What exactly will that acquisition bring you?
We like to see this transaction rather as joining forces than an acquisition. This is a strategic investment into a joint future. Unlike private equity or other financial investors, our shareholders are thinking long-term and our full focus is on servicing our clients, being a trusted and loyal partner to them offering first-class specialist solutions. After thirty years of dedicated work, GrECo is the leading independent insurance broker & risk advisor in Central Eastern and South Eastern Europe today. This region is what we call our home territory. We are constantly striving to improve and strengthen our leading position by offering talented people from the region a superb platform to develop and grow. MAI is also an independent broker, traditionally rooted in CEE and SEE, just like us.

Also, MAI is home to many incredibly talented and motivated people. I know this first-hand, as I have been deeply involved in making this transaction happen. Together we will be expanding and improving the portfolio of our professional services for our clients. MAI brings, among many other things, superb expertise in servicing international business, first-class international network affiliations and strong Health & Benefits and HR advisory into the Group. We are proud that MAI has chosen to shape the future of risk advisory in Eastern Europe together with us.

Until recently, you were at the helm of GrECo nova, an international network of brokers. Who is gathered in that network and what is its basic role?
GrECo nova is is our global specialist insurance broking network which provides our clients with decisive benefits in all their global ventures. What we do here is ensure GrECo’s quality of service for our multinational clients worldwide. We are having a wide range of long-standing partnerships with other leading independent international brokers in their parts of the world. Under our network GrECo nova, we foster active collaboration of insurance experts who are sharing our culture and values. As the international broker landscape is dynamic, we work with them on a non-exclusive basis, constantly monitoring the quality of services via a sophisticated process. We go the extra mile and have a team that is travelling extensively meeting partners in person around the globe. This way we build trust beyond the usual level and our clients can feel this in the international servicing we put together for them every day.

How much can a broker actually contribute to a company in terms of choosing the right policy and achieving the best price?
The broker is the client’s advocate and expert. He represents the client in front of the insurance market. If the client understands the value of a broker, then the broker is selected carefully, maybe in a broker tender, and appointed exclusively. The broker speaks thoroughly with the client in the analysis phase, gaining a full understanding of all aspects of the risks the client is facing and forming a risk mitigation strategy. Then, the professional broker and risk advisor – not only the insurance dealer as described previously – can engage in a serious process of what we call marketing the risk, or broking. He can approach all insurers, locally and if needed internationally, making it clear that he is appointed exclusively, and the negotiation is about the best possible terms for the risk coverage at the best possible price for his client. This very often means designing the coverage instead of selecting an existing insurance product. The outcome for the client in such cooperation is usually very good. The value of the cooperation between client and broker is then periodically assessed, say once a year, or every three years.

This still happens too rarely in South-eastern Europe, unfortunately. What we often see is that companies appoint multiple brokers, very often not engaging in a risk dialogue before. They think the more brokers they appoint, the better the result will be because there is a higher probability that someone will bring the best price to them. However, the opposite is the case. This is very important to understand: when multiple brokers are appointed, then the brokers who are supposed to be the clients’ advocates and experts are having a difficult task. All those brokers go to the different available insurers. The insurers then have the difficulty of not knowing which broker will be the one whose offer will be selected by the client and hence, usually settle on one offer and send it to all the brokers to maintain fair competition. A deeper conversation about the risk between broker and insurer is often neglected and the risk is not marketed in the best way. The outcome is that, while the offer may be cheaper, it may often also be lacking fundamental aspects of coverage and is hence not the best possible solution for the client. Although not in anyone’s interest, the broker in this case in effect becomes an agent of the insurers, an insurance product dealer. This can seriously harm the client in case of a major claim when the client then finds out what he has bought.

So, the right broker, appointed exclusively, can bring enormous value to the client when engaging in a risk dialogue first, setting the right risk mitigation and insurance strategy, before approaching insurance markets. Then, marketing the risk as the exclusively appointed broker can make all the difference.

GrECo is a family business, does it give it any advantages over other brokers that are mostly owned by funds?
I believe yes. At first sight, it might seem that for a client it does not matter who is the owner of a broker. But, what does matter is the people performing services for the client. Now, there is a saying that when you care about your people then they will take care of your clients with all their hearts. I believe this to be true and we are offering a lot to our teams.

The first is stability. GrECo has a long tradition of sticking closely to its people, especially during difficult times and providing them with a very stable business environment. For example, during the pandemic, there were no layoffs and no salary cuts at GrECo.

Second, continuity at the management level. We are a hands-on, flat organisation and management is very much approachable to everybody, decisions can be made quickly and without complicated processes. Also, management is carefully selected, and there for the long-term. There is no hire-and-fire mentality. This helps us to set a strategy, pursue it and establish much deeper trust with our people. In our daily work, we don’t need to focus on some financial investors’ or stock market analysts’ expectations. Our only focus is on our client’s and people’s needs. We believe that this is more attractive to skilled employees and talented young people than working for PE-backed brokers who are strongly EBIT-focused and interested to resell the company after a determined period. While we are a very successful company, those owners are in the investment banking business, not in the corporate insurance broking business. We are. And people, as well as our clients, can feel this.

You recently became a member of the Executive Board of GrECo Holding. Where did you come from in insurance and among insurance brokers, how did your career develop and what do you think brought you to that high position?
Yes. And I am very grateful that our supervisory board and our shareholders are placing so much trust in me. I started my career in 1997 in Germany as an apprentice, working for one of the major German insurers. I went through all departments from property-, motor-, liability-, and health- to life insurance and claims and enjoyed a very good, classical insurance education. I went into sales and client servicing after this and learned what it means to understand and satisfy clients’ needs while running my own brokerage company. During this time, I also studied insurance management and economics in Munich and attained my bachelor’s degree. I continued my professional education at the Chartered Insurance Institute in London and became a Fellow of the CII. Finally, I completed my studies with an MBA in General Management in the UK. I joined GrECo in 2014 and had the chance to contribute to our Group’s international development, always putting people first, working hard and (hopefully) smart. I guess when you love what you do this is visible to others and can be inspiring.

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How bad was drought this year in your region and how much insurance would help to protect against losses?

How dry has it been this year in your region and how much insurance would help to protect against losses?

How dry has it been this year in your region and how much insurance would help to protect against losses? Our GrECo Soil Moisture Deficit Monitor can provide the answer about 10 850 locations in Central and Eastern Europe!

2022 breaks all records in some parts of Europe, being one of the driest and hottest years! The dynamics of soil moisture in dry 2022 compared to 2021 can be clearly seen in the video below.

The browner the area in the chart above remains for a significant time (more than 30 days), the more hostile the drought is.

Drought negative outcomes

Such a big drought leads to many negative consequences in many industries, especially in agriculture, energy, logistics, and forestry. For example:

  • Expected decrease of corn yield in Hungary (30% more)
  • Massive livestock death in Italy;
  • Big shortage of water in the UK, France, Spain and Portugal;
  • Hydropower generation, which relies on water to produce electricity, has fallen by 44% in Spain, and 20% overall; 
  • Some nuclear plants in France have had to reduce output as the rivers have been too low and warm to cool the plants;
  • River Rhine’s water level fell so much that shipping was affected;
  • Low water levels in the Danube River exposed the wrecks of dozens of German warships, sunk in late 1944 to block passage to the Soviets;
  • In 2022 as of today, there is 735 000 ha of burnt forest in EU countries or currently under fire, which is already 2.3 times more comparing the annual average for 2006-2021! How much Europe is burning at the moment you can see in the charts below.
Fire danger forecast
Percentage of burned areas

Why is drought on the rise?

This is believed to be the result of a global warming trend that is due to intense human activity, especially in the last 50 years. We witness the increase in greenhouse gas in the atmosphere (more than 30% compared to the 1950s) and deforestation for agriculture (40% of forests were lost). It led to the shift in the average temperature by 1°C compared to the pre-industrial era, and thus resulted in large changes in the weather produced by ocean streams. This is evidenced by more extreme temperatures, heat waves, higher wind speeds, more hail, and uneven distribution throughout the season leading to no rain when plants need it or, vice versa, heavy destructive rains and floods.

How to quantify the severity of a drought event?

To quantify and visualize it, we use soil moisture data set from ‘ERA5 hourly data at single levels from 1959 to present’, provided by the European Space Agency. The data is stored in 25 x 25 km grids as in the picture below.

Soil moisture data set

We have developed a monitor tool that clients can use to get calculations from us by sending individual requests. Once we identify your location in CEE/SEE region from the drop-down list, a simple Excel tool will identify the ERA5 grid and extract data for further analysis and calculations.

Examples from several places are as follow.

Debrecen data
Extent of soil moisture deficit
Bratislava data
Extent of soil moisture deficit

As we see from the charts above, in areas around Debrecen and Bratislava, the 2022 year was the worst compared to the last 30 years, at least. For example, in Debrecen, it was 45.8% dryer than the average year in this region. The farmers would get insurance compensation in the amount of 25% of crop value if they signed a parametric drought insurance policy.

Why is the satellite soil moisture index the best parameter to insure drought?

  • Direct factor, impacting crop development/quantity for food processing
  • Combination of rain, temperature, wind, crop density, soil
  • Parameter independent of the parties to the insurance contract
  • Its value can be double-checked by the farmer/food processor
  • No field inspections are required
  • No paperwork to indemnify the loss
  • Fast insurance pay-out

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Maksym Shylov

Group Practice Leader
Food & Agriculture

T +48 22 39 33 211

The Winter is coming: Can renewables break dependence on Russian gas?

One thing is clear – Europe needs to cover gas demand with alternative sources. The EU energy security is compromised if there is no diversification to cover Russian gas imports.

One thing is clear – Europe needs to cover gas demand with alternative sources. The EU energy security is compromised if there is no diversification to cover Russian gas imports. EU gas imports account for over 1,500 TWh and need to be switched into an alternative source.

Energy security concerns are sparking lively debates not only in the politicians’ offices, boardrooms, and conferences. This topic has made its way to family dinner tables, parties, and pubs. There are wild stories to be heard with opinions being polarised and swaying in both directions. Although it may seem that we are facing the impossible task of shifting from fossil fuels to renewable energy sources, public polls actually show a high degree of consent (9 out of 10 Europeans agree) regarding the EU’s energy policy priorities to ensure secure, clean, and affordable energy for all Europeans, according to a new Eurobarometer survey published by the European Commission.
The main questions are evolving around the feasibility of energy transition and the corresponding timeline. It is not a matter of if, but how and when. Our Energy, Power & Mining team looked closer into this issue.
As of March 2022, 85% of the EU gas demand was imported. Thereof 34% came from Russia and only 17% from Norway. The dependency on Russian gas has grown significantly within the EU, some countries being fully dependent on the single source, as the diagram below indicates.

Source: GlobalData, Eurostat

Over 30% of the imported Russian gas is being used for power and heat generation, and an additional 25% is used by the residential sector followed by industrial production with 21%. It is hardly a surprise that Russia’s ability to weaponise energy only accelerated pressure on consumer prices, global supply chains and the labour market.

The road towards alternative energy sources

One thing is clear – Europe needs to cover gas demand with alternative sources. The EU energy security is compromised if there is no diversification to cover Russian gas imports. EU gas imports account for over 1,500 TWh and need to be switched into an alternative source.
The International Energy Agency (IEA) has elaborated a 10-point plan for Europe. The plan is divided into 4 major action fields as follows:

Gas oriented actions

  • No new gas supply contracts with Russia (15 bcm contracts to expire by the end of 2022, and 40 bcm by the end of the decade.)
  • Replace Russian gas with gas from alternative sources (30 bcm from other countries)
  • Minimum gas storage obligations to enhance market resilience (higher injection will add to gas demand and push up the prices.)

Energy efficiency oriented  actions

  • Speed up the replacement of gas boilers with heat pumps (reduces gas use for heating by an additional 2 bcm in a year)
  • Accelerate energy efficiency improvements in buildings and industry (reduces gas consumption for heat by an additional 2 bcm a year)
  • Encourage a temporary thermostat adjustment by consumers (reduce gas consumption by 10 bcm a year(!))

Renewables oriented actions

  • Accelerate the deployment of wind and solar projects (could bring the gas use by 6 bcm)
  • Maximise generation from existing low-emission sources such as bioenergy and nuclear (can bring 70 TWh reducing 13 bcm of gas use in electricity)

Market oriented actions

  • Enact short-terms measures to shelter vulnerable electricity consumers from high prices
  • Step up efforts to diversify and decarbonise sources of power system flexibility

Research shows that the successful implementation of the plan can eliminate the demand for Russian gas by 2030. The renewable share of Energy has been growing steadily since 2004 currently reaching 23%. Hydrogen is perceived as a support to the gas sector. Renewable Energy Directives (RED) are assessing the possibility of installing blending obligations for increasing the sustainability of the European gas system from currently 1% to 20%, but not without major grid and infrastructure adjustments.

Apart from reducing the dependency on Russian gas, which now seems possible, there are various other aspects of the energy transition to consider as well. But for the moment, keep calm and follow the plan. So far so good.

What about the risks?

We read and hear surprisingly little about the uncertainties, unknowns, and associated project risks of such undertaking. Known unknowns are what drive many scientific experiments, business intelligence and data analytics and refer to information whose existence is someone aware of but does not possess. They can also represent potential risks. They can also represent potential risks. Far worse are the unknown unknowns, pieces of unidentified information, or “things  we do not know that we don’t know”.

The plan addresses several items, which carry inherent limitations in their nature and can, therefore, be considered severe project risks. For example, selling and installing 30 million heat pumps in the shortest term possible is a challenge even without limited manufacturing capacity globally, supply chain pressure and logistical difficulties.
Accelerating renewable energy generation capacity (EU requires over 900 TWh additional capacity by 2030) seems extremely unlikely for the reasons mentioned above and impossible without the addition of new manufacturing facilities, ideally closer to home, and not overseas. This means that technical and technological sacrifices will need to be made to accomplish the colossal task in a very short period. Furthermore, new personnel must be hired and trained to a very high standard demanded by the ever-increasing complexity of the renewable generation machinery (especially wind turbines). The recent crises caused by post-COVID shortages of staff in European road transport and air travel industries demonstrate just how difficult is to mobilise and ensure the supply of qualified labour to meet the demands of the green energy business.
Also, the grid, gas transport and storage infrastructure will require more than a major overhaul to adopt hydrogen blending due to the physical and chemical properties of hydrogen (highly corrosive, existing networks were not built with that in mind).
Lastly, it would be interesting to read the estimates of the capital expenditure required to upgrade the entire EU’s transmission and distribution grid systems to accommodate the change of topology coming from the replacement of a small number of centrally dispatched generation assets (located near the largest industrial electricity users) by a large number of distributed renewable sources located across the entire continent and in the neighbouring seas.
Until then, Europe will have to keep its coal-fired plants going (for example, Germany has already initiated a legal proceeding to abolish the prohibition of operating thermal coal plants beyond 2022-23).
Besides, 2030 is still 7.5 years away, yet the winter will be upon us in just a few months.

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Zviadi Vardosanidze

Group Practice Leader Energy, Power and Mining

T +43 664 962 39 04

Adam Riley becomes new Group Practice Leader Health & Benefits for GrECo

GrECo has appointed Adam Riley as Group Practice Leader Health & Benefits, a newly created executive leadership role, to run, build and develop GrECo’s specialist Health & Benefits business across 17 countries throughout Central & Eastern Europe (CEE).
Adam joins from Howden Group where he was Director of Global Sales, Employee Benefits, part of their specialist Global Employee Benefits Practice Group. Adam was also the Howden One International Network Global Employee Benefits Manager for Howden’s own international network. Previously, Adam held senior roles at Aon, Portus Consulting and Pannells in the UK.

Georg Winter, CEO GrECo Group commented: “We warmly welcome Adam to GrECo and are delighted he has joined us at this very important juncture in our growth. Adam is highly regarded and well-respected across the Health & Benefits profession, he brings significant experience, insights, and importantly as we have already seen, a fresh outlook to GrECo. On behalf of the Executive Board, I personally wish Adam every success in the role.

So, Adam, welcome to GrECo! Why did you decide to join GrECo?
Following the acquisition of MAI CEE, GrECo has become the leading specialist insurance broker & consultant across CEE. The creation of my new role to run, build and develop GrECo´s growing Health & Benefits (H&B) business reflects the demands of clients and employers across countries in which they operate. We will relaunch our H&B offering across CEE, and wider international markets and thus follow our growth strategy to become the leading Health & Benefits consultancy across CEE, which further enhances the value proposition for clients, partners and carriers.
What key topics are you seeing employer’s discussing?
Beyond insured benefits, employers are looking at other factors which are part of the wider HR & organisational strategy. Areas such as, ESG (Environment, Social and Governance), alignment of benefits with corporate objectives, employee value proposition and achieving a balanced work / life harmony across their domestic and international workforce, are impacting decisions around benefits design and strategy.
What do you feel employers are looking for from a H&B partner?
A great question! Employers want to work with a trusted loyal partner who will provide greater support and tailored and progressive solutions, coupled with expert and professional advice, ensuring they have the right benefits, strategy, and direction in place to meet the changing needs of their employees and business.
Tell us about the Adam, outside of work:
I’m married, with two daughters. I also love SCUBA diving – and am a PADI Assistant Instructor. When I’m not talking H&B, the two most fantastic places in the world are either being with my family, or underwater!
Thanks, Adam. A final word from you?
Joining GrECo in their next phase of strategic growth is hugely exciting and provides an amazing opportunity to build and run their H&B business. I am hugely excited to be part of this team and its future strategy.

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Beyond International Programs – Cover Exclusions for Russia, Belarus and Ukraine

Insurance cover exclusion papers

For ongoing insurance programs with inception before the start of the Ukraine war, there is in most cases still insurance cover through the agreed home country Master contracts, DIC and FInC covers until next renewal.

The European insurance and reinsurance markets are currently not providing any new covers for property and business interruption risks in the territory of the Russian Federation, in Belarus and, with a few exceptions, in Ukraine. For ongoing insurance programs with inception before the start of the Ukraine war, there is in most cases still insurance cover through the agreed home country Master contracts, DIC and FInC covers until next renewal.
However, the geographical scope will be restricted for all upcoming renewals and new contracts, and the countries mentioned will thus generally be excluded from insurance cover. This primarily affects the designated locations previously insured under the programs, but the exclusion goes beyond that and applies equally to any non-specified risk and assets located in those territories. In the past, such risks were included in standard insurance contracts, for example, by special clauses for small foreign risks (offices, small storage places etc.) or by the automatic temporary inclusion of “New business locations”. In Business interruption, all supply-chain disruption and NPDBI endorsements may be concerned.
It should therefore be checked in all upcoming renewals whether there could be a gap in coverage because of the general exclusion of those territories, which has to be discussed with the client.  Unfortunately, the only remaining alternative is to try to buy insurance cover for these risks from local insurance companies with the support from our local co-broker.
Even if property insurance is the main topic here, it should be noted that a similar exclusion for risks that arise within the affected countries can also be expected to prevail in the other lines of insurance.

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