Challenge is our different states with very different cultures

Tusher Thakker, CEO at PERAJ INSURANCE BROKERS talked to Jonathan Höh, GrECo nova Network Coordinator about the variety of languages in India and how excellent client service can lead to long-term client relationships.

HÖH: India will be the most populous country in the world. India has, arguably, greater linguistic diversity than any other large country. The precise number of languages spoken in India is probably over 1,000, but it is often hard to define when one language begins and another ends. How does this affect business? How do you cope with this varieties?

THAKKER: Well, the number of spoken languages, regional, folk etc. is said to be over 3000. However, we have Hindi as a national language which is taught in almost every school. Also, most schools in major cities and towns are English medium schools where Hindi is taught as a language, but overall teaching is in English. Most legal documents including insurance policies are printed in English. Language has never been a barrier in growth. In fact, India has become a huge IT hub because of a very large, young English-speaking population.

HÖH: What are the biggest risks that foreign companies operating in India need to be aware of?

THAKKER: So far, the major risk has been frequent policy changes in various sectors but that seems to have changed. The government seems to have adopted long term goals and have set up policies accordingly. Sometimes, infrastructure projects get affected when there is a difference opinion between state and central government.

HÖH: How do India risks differ from those in other countries?

THAKKER: Infrastructure is not at the same level as in Europe, the US or even China. That can be a “challenge” or a risk at some point. I would say the other “challenge,” which is not so much a risk, is that we have different states with very different cultures, different languages, and different consumer behaviour. That can be an extraordinary situation for companies that want to be present throughout India.

HÖH: What regulatory challenges are companies facing? What types of insurance are mandatory?

THAKKER: The current government is very industry friendly. A lot of new Economic reforms have been introduced and the latest budget presented on February 1st has been very well received. Non admitted cover is prohibited but some multi-national companies still rely on the master policy for D&O cover with no local policy. This can be a big issue and it is mandatory for stock listed companies to have a local D&O coverage in place. Other mandatory coverages include MTPL and a public liability act policy when storing or manufacturing certain, specified hazardous materials. The “cash before cover” law presents a challenge when it comes to global programmes as we often receive invoices / quotes very late and sometimes after renewal.

HÖH: How do you cope with these regulatory issues?

THAKKER: It is a standard practice for us to keep our partners updated with developments in India, be it regulatory or market practices. To cope with cash before cover issues, we keep regular contact with the local fronting company and global brokers well before renewals. Wherever possible (if accepted by the local fronting company) we advise the client to place deposit money, if invoices / quotes have not been received.

HÖH: Can international insurance programmes be implemented? Which special features must be considered?

THAKKER: Programmes can be implemented, all lines. Recent development however is that on PDBI local tariff rates will apply even on programme policies´. One must always remember that India has cash before cover law and that Indian clients are used to low deductibles. In general, local deductibles are much lower than programme policies for almost all lines. We closely interact with controlling brokers particularly on scope of cover. Generally, our observation is that when submitting terms to master insurers, local fronting companies often submit narrower terms.

HÖH: Please describe Peraj incoming business servicing capabilities?

THAKKER: Peraj has been in international business since 1978. We take extreme care to have a diplomatic and delicate approach with clients. We endeavour to spend time and efforts on confidence building with clients. More so when programme policies are to be implemented when local terms appear better. We try to engage clients in conversation, answer all their questions and allay all their fears and apprehensions. Generally, when the appointment is from HQ, the local client tends to get apprehensive. We give them comfort and confidence that we are by their side, to take care of all their issues. The entire team speaks fluent English in addition to local regional languages.

HÖH: Can you tell us about your most complicated case when dealing with international clients?

THAKKER: A large cement producer was setting up a very big and complicated project in this region. The quarry was being set up in the North East border of India and the cement plant was to be erected in Bangladesh, the two to be connected with a closed conveyor belt, 17 km long (longest in the world) crossing the international border and a river. North East was and is still a troubled state with Naxalite activities (insurgency group). The Bangladesh market was too small to be able to write a risk of the size the client was proposing (in fact the entire capacity was just about 5% of the requirement). Owing to challenges mentioned above, international reinsurers were unwilling to write lead terms and we had to arrange most of the capacity from India. The leading broker assigned us the task of placing the risk locally. The year was 1996 and we managed to do what was necessary. This client is still with Peraj although globally brokers have kept changing.

Tushar Thakker
Tushar Thakker is the owner of Peraj insurance broker and leads the broker as CEO and Director for more than 30 years. He is well known in the global risk management community and has strong relations to brokers around the world.

About Peraj
Peraj is the oldest intermediary services company in India for direct/retail broker related services. Peraj is a pioneer with 65 years’ experience in the industry. A very high client retention rate reflects the quality of services and the ability to service all lines of insurance. Peraj provides services not just across India but also Nepal and Bangladesh.

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

“You need to have a detailed strategy to succeed in Japan!”

Simon Wallington, Managing Director at the GrECo nova partner Cornes in Japan discusses with Jonathan Höh, GrECo nova Network Coordinator the rise of foreign investment, regulatory issues of insurance and the importance of “hanko” in Japan.

HÖH: What role does foreign direct investment play in the Japanese economy?

WALLINGTON: By way of background, Japan has had less foreign investment when compared with most of the other major developed nations. This is mainly because for a long time, they have sought to nurture and protect their own companies until they were strong enough to trade and compete in the global markets. In some cases, foreign companies have entered the market and then withdrawn once they found the barriers too difficult to manage. For example, eBay Inc who entered the Japanese market in 1999 but had to withdraw in 2002 due to local competition. Fortunately, the situation has recently changed and foreign investment in certain industries is now rapidly increasing.

Japan is potentially a very attractive market for many overseas companies because it has a very large and sophisticated customer base of over 120 million and represents approximately 10% of the world’s economy. However, it is a tough market to break into because Japanese customers can be very demanding, with different tastes and needs requiring overseas companies to redesign or redevelop their products. Examples of this in the past have included cars, mobile phones and toothbrushes.

HÖH: What are the biggest risks that foreign companies operating in Japan need to be aware of?

WALLINGTON: The size of the market requires substantial investment and there is usually fierce competition from long established competitors (depending on the products and industry). A detailed market research and strategy is an absolute necessity to succeed in this country.

In addition, Japan has always been a very bureaucratic country with lots of regulations, permissions, certifications, procedures, offices and authorities requiring approval procedures. These don’t normally exist to such an extent in most developed countries and it requires a lot of patience to navigate through these.

On the physical risk side, Japan is reported to have around 5,000 minor earthquakes recorded per year (more than half measure between 3.0 and 3.9) and around 160 earthquakes with a magnitude of 5 or higher. Having said that, the building construction regulations are such that most of the infrastructure can withstand all but very strong earthquakes. Other natural perils such as flood, typhoons and windstorms are becoming more regular and stronger as climate changes make their presence felt.

HÖH: What are the main facts of the insurance market in Japan? How do the key indicators compare to European markets like the German insurance market?

WALLINGTON: The Gross Written Premiums of 114,818 million USD in Japan are rather low compared to 126,005 million USD in Germany. This clearly indicates that the Japanese insurance buyers do not purchase as much insurance as these other countries, in particular business interruption insurance.

The major lines of insurance include Motor (40.2%), Liability (19.6%), Property/Commercial (18.4%), Marine (4.7%) and Other (17.1%).

Additionally, the market share of the top big 3 Japanese insurers represents 86% of the Japanese premium, indicate a strong concentration and power base in these 3 insurers.

The largest Claims in FY 2018-2019 were natural disasters including eight typhoons totalling 29.3 billion USD/ snowfall 3 billion USD / heavy rain 1.8 billion USD although this is somewhat less than major earthquakes such as the Tohoku earthquake in 2011 which resulted in 15,782 killed/4,086 still missing/128,530 dwellings destroyed & losses totalled 236 billion USD.

HÖH: Can international insurance programmes be implemented? Which special features must be considered?

WALLINGTON: There are literally thousands of International Programmes in place in Japan through fronting policies for foreign companies operating in Japan. As non-admitted insurances in Japan are illegal (apart from marine, aviation, reinsurance and overseas travel), companies must have their global insurers/brokers arrange for fronting policies to be issued by either their licensed subsidiary in Japan and if they have none, then by a correspondent licensed insurer/broker.

Additionally, when purchasing insurance in Japan it should be noted that the Insurance Policy Wordings need to be first approved by Japanese FSA. In addition, the collection of insurance premiums is critical as Japan is a “cash before cover” jurisdiction and the fronting policies are only effective once the premium is paid to the insurance agency such as Cornes. Insurance premiums need to be paid by a policyholder who resides in Japan in Japanese yen and not from overseas parent companies.

Policy wordings are available in Japanese or English depending on the type of insurance and the insurer. The compliance laws in Japan require insurance agents to explain each type of insurance and get the local subsidiary’s ‘sign off’ that they understand and agree to the renewal terms even when the terms are agreed by their head office.

HÖH: What are the first steps for foreign clients regarding insurance?

WALLINGTON: Once, we at Cornes, are advised of a new client and the fronting policy(ies), we introduce ourselves to the local subsidiary’s contact and the fronting insurer(s). We then re-confirm the terms, run through the insurances with the local client representative (as required under Japanese law), raise an invoice and issue the application forms (one required for each policy every year). Japan is a “cash before cover” jurisdiction so cover commences only once we, acting as the insurer’s agent, receive the premium. Every application form requires the client’s registered “hanko” (stamp) and insurers will only accept the originals of these forms before issuing the policy documents although the pandemic and WHF restrictions has meant that some insurers accept copies for the time being.

Cornes Insurance Agency prides itself on its professionalism and we have established a comprehensive servicing and follow-up system in place to ensure we give every client a friendly and professional service. Our incoming business service capabilities are our lifeblood and we insist that all account managers have a minimum level of English. In addition, we currently have two persons who can also speak and write Spanish and one who can write and speak German.

Our insurance license enables us to not only manage the client’s general and financial risk insurances but also assist them with their Employee Benefit insurance needs – two of our account managers used to work for Japanese Life Insurance companies. All account managers are required to pass the Japanese Insurance Agency exams before being allowed manage clients. In terms of our international business experience, we have an average of 10 years per account manager.

Simon Wallington

Simon holds the title of ACII from Chartered Insurance Institute as well as the NIBA diploma that allows him to practice as an insurance broker in Japan. He worked in 3 different countries starting in London as a trainee in 1977 before becoming account manager and then moving to Tokyo in 1985 where he was branch manager at Sedgwick. After just over 5 years in Tokyo he transferred to Sydney where he managed a portfolio of corporate clients. Afterwards Simon joined JLT as Director of Asian Business Development. His role soon extended to include local Australian and European clients, such as major Japanese and Korean corporate conglomerates. Since 2010, after working for InterRISK in Sydney for 5 years, he joined Cornes as Managing Director responsible for all aspects of the Insurance Division.
Phone: +81 357 301650
Mobile: +81 804 2004459

About Cornes
The Cornes business was founded in Yokohama more than one-and-a-half centuries ago in 1861 by Frederick Cornes and his partner, William Aspinall. Initially trading in silk and tea, the business quickly expanded to include the import of cotton, metals, consumer goods, coal and other raw materials. The company was also a pioneer in the Japanese insurance market starting with its appointment in 1868 as the first Lloyd’s agent in Japan – a position that is still held today. With the development of its maritime and insurance operations, Cornes paved the way for new services-based industries in an age when business was still dominated by trade in material goods.
The 25 employees in the insurance division located in Tokyo and place over 26 million EUR premiums into local and international insurance markets. The insurance division of Cornes has specialised knowledge and expertise across several industries enabling clients to benefit from tailor made programmes that extend beyond the market’s standard insurance products. They look after over 700 clients with global programmes ranging from property & liability, cyber and D&O to Group Life Insurances working in conjunction with the global brokers and agents overseas.

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

Ensuring compliance of international insurance programmes: Eurasian countries

Before the collapse of the Soviet Union and the declaration of independence of many former CIS countries in the early 1990-years, two state companies had a monopoly for all insurance business. Ingosstrakh wrote all reinsurance and international insurances requiring hard currency and Gosstrakh, sometimes via its branches of the Soviet network, covered domestic risks that could be insured internally.

Since gaining independence, the Eurasian countries have substantially been replacing and modernizing their insurance legislation inherited from the former Soviet Union. However, compliance with local legislation remains complex for multinational companies covered by international insurance programmes.

In general, there are multiple ways to cover a Eurasian risk of a multinational corporation under an international insurance programme. One can purchase insurance locally if the market capacity allows or install a local fronting policy and reinsure the risk to a central capacity provider. Other possible solutions include non-admitted insurance or coverage via a financial interest clause.

Local Market Placements

As in some other post-Soviet economies, insurance spending in % of GDP remains quite low, also impacted by constraints in macro-economic conditions, restricted bank lending, and currency devaluation. This results in market premium primarily depending on the compulsory classes of property and MTPL, supplemented by voluntary premiums across all classes related to the major corporate businesses in the oil, gas, energy, real estate and construction sectors.

However, usually local market capacity is not enough to cover large corporate risks of foreign direct investors. Additionally, the wordings do not match the standard of Western European countries and regulatory complications, such as the required filing of forms with authorities, make local market placements difficult or impossible. Therefore, brokers advising multinationals with business interests in Eurasia try to organize global coverage.

Non-admitted Insurance

Non-admitted insurance refers to placement of risks outside the regulatory system of the country where the risk is located and by an insurer that is not licensed in that country. Non-admitted insurance is not permitted in almost all the former CIS countries because the law provides that insurance must be purchased from locally authorized insurers. There are only some minor exceptions for highly specialized risks such as Marine and Aviation.

One exception is Armenia where a foreign insurer can transact business through its locally registered branch, which does not need to be locally capitalized. While foreign insurers are not allowed to market their products in Armenia without having a local license, anyone can buy, quite legally, a non-admitted policy. This is not market practice, and there might be significant practical obstacles for corporate businesses, such as not being allowed to consider non-admitted insurance premium as tax-deductible, and potentially having to treat incoming claims payments as income subject to local taxation.

When it comes to non-admitted insurance, the requirements of the law appear to be adhered to, since it is difficult to effect insurance other than with the locally licensed insurers in the absence of exchange control facilities for non-admitted placements. However, international firms that operate in the Stan-countries (Afghanistan, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, Uzbekistan) are likely to arrange most of their insurances on a worldwide-program basis, placing only those parts of their covers with the local markets that they are absolutely obliged to. Technically, this may be strictly illegal under local law in some countries, since even DIC and DIL (Difference in Conditions/Difference in Limits) covers seem to be proscribed. But, certainly in the case of liability master covers, and particularly when neither premium nor claims recoveries are recorded through local accounts, the law is difficult to enforce.

In the strictly controlled economic and political environment, purchasers of non-admitted insurance are likely to face severe penalties for breaches of the law. Another potential solution could be central coverage via a financial interest clause.

Financial Interest Clause

A financial interest clause (FINC) is a provision within a global or master policy that covers the parent company’s diminution of financial interest when losses are suffered by its worldwide subsidiaries. A loss suffered by a subsidiary causes a reduction in the value of the parent’s financial interest in the subsidiary, for which the parent is indemnified under the FINC in its home country.

However, these are the top 4 limitations to keep in mind:

  • First, because the parent is the only insured under the FINC and the subsidiaries are not actually insured, claim payments must be made to the parent and not the local subsidiary that faced the damage.
  • Second, since the local subsidiaries are not the insureds, providing evidence of local coverage to third parties is not possible.
  • Third, any recovery under the FINC is limited to the parent’s interest, while the subsidiary’s actual loss could be greater than the parent’s financial interest loss.
  • Fourth, no premium should be allocated to or paid by local subsidiaries.

Given the above limitations, GrECo believes that local policies are the most secure option facilitating compliance, local servicing and claims payment in most jurisdictions, including the highly regulated markets of Eurasia. To overcome the capacity restrictions of local insurance markets, fronting solutions are the most feasible option.


Fronting is a recognized feature in Eurasia for many of the larger risks, particularly those with an international connection, because of the general prohibition of placing non-admitted cover.

In most cases state insurers are the only authorized insurers in the country and should a risk require to be fronted, it would have to be through these companies. Some of the state insurers might require assistance in producing wordings for the more complicated risks but welcome every opportunity for involvement in international risk. This is not only for the premium it produces, but also for the access it affords to product innovations that might be turned to commercial advantage in the indigenous market. In the rare cases where there are also foreign licensed insurers the process is much easier since those are usually set up for this specific purpose.

Fronting, and reinsurance generally, are usually subject to a statutory minimum retention by the cedant, and in certain cases, subject also to a withholding tax. In some Eurasian countries the local law requires (re)insurers or reinsurance brokers to offer a certain percentage of the risk to domestic reinsurers before offering the risk to foreign reinsurers. Reinsurers used must have a good credit rating, usually better than A- or B+ Standard & Poor’s or AM Best. Additionally, the state insurers will require a fronting fee, usually in the range of 2.5% to 7,5%.

GrECo Eurasian Desk

Deciding on how to cover exposures in countries with a very specific and strict local legislation is always a balancing act between central control and local compliance. GrECo can be your one-stop-solution for covering the Eurasian countries, which have a challenging trading environment. We have established a regional entry point to provide top solutions and always deliver our high service standards. We coordinate the business via our Eurasian Desk in Moscow while in the various countries, GrECo has established partnerships with leading local brokers. This way we provide constant servicing and ensure uniform reporting to our clients.

Related Insights

Jonathan Höh

Network Coordinatoron

T +43 5 04 04 396

Ante Banovac

Head of Group Sales & Market Coordination

T +43 5 04 04 372

The Transition of Insurance Markets in Eastern Europe

Since the 1990s, countries of Central-, Eastern-, and Southeastern-Europe have largely been transitioning to market economies with democratic forms of government and now participate in global markets for goods and services.

Starting of the Transition

The general transition also concerned the insurance market. Drastic changes had to be made to break insurance monopolies which were in place during the communist era as part of fiscal authorities. Existing insurers were first converted into state-owned companies and then privatized. While this transition was taking place, also new, privately-owned insurers appeared on the markets in all parts of Central and Eastern Europe. However, the former monopolists held on their dominant market share for several years and in some markets are still the major players. This transition was characterized by the high pace of foreign direct investments, also into the insurance market. The number of insurers controlled abroad remains high, even today.

Joining the European Union

One additional major factor in the development of the insurance markets is also the accession to the European Union. By today, most of the countries in CESEE have joined, or are in discussion to join, the EU. Accession compelled the adoption of European Union standards including the ban on state monopoly, liberalization of market access, abolition of price and product controls, as well as finance-related issues such as adoption of EU solvency regulations, tightening of capital adequacy requirements and strengthening insurance market supervision. This included full market access for companies from other EU members which translates to regular use of Freedom of Service coverages in those countries.

Despite the rapid transition towards a free and fully EU-compliant insurance market, the insurance density and insurance penetration are significantly below Western European standards. For example, annual insurance premium per capita is above 2.000 EUR in Austria and in Eastern Europe only between 50 in Albania and 1.000 in Slovenia with an average of 450 EUR.

Main players and impact of foreign insurance groups

During and prior to accession the impact of foreign insurers was significant, as most insurance market leaders in the countries joining the EU in 2004 were owned by foreign companies with Allianz as leading foreign insurance group being the prime example. As of 2018, the major insurance group in CEE is Vienna Insurance Group (VIG) with a presence in 21 countries and a GWP of more than 5 billion EUR in those countries. Of the Top 10 non-life insurance groups operating in Eastern Europe eight are foreign owned. The same goes for the life insurance sector.

The major local players are PZU in Poland and Triglav in Slovenia which both have their roots in state owned monopolies from the communist area. The main foreign investments in the Eastern European insurance markets stem from Europe, namely Austria, Germany, Italy, France and Benelux. Other, less prominent players are groups from the US, Canada and the UK.

Consolidation of the insurance market

In recent years, a trend towards consolidation can be observed. This is due to the very granular structure of the market with multiple rather small countries and unfulfilled growth expectations.

One recent example is Uniqa’s acquisition of the AXA subsidiaries in Poland, the Czech Republic, and the Slovak Republic. This 1 billion EUR merger further strengthens Uniqa’s footprint in Central Eastern Europe while concluding AXA’s withdrawal from the region. “For us, the growth markets in Central and Eastern Europe are our second home market. With the purchase of the AXA companies, the profitable retail business and balanced product mix perfectly match our long-term growth strategy, we are now one of the leading insurance groups in the CEE region,” comments Andreas Brandstetter, CEO of UNIQA Group.

On November 29th 2020, Vienna Insurance Group signed a share purchase agreement to acquire the entities of the Dutch insurer AEGON in Hungary, Poland, Romania and Turkey.
 “The acquisition of the Central and Eastern European business of Aegon is an important step for our Group to sustainably strengthen our leading position in CEE and to take advantage of new opportunities. In Hungary, we are making the leap to the top. In Turkey, we succeed in entering the life insurance market and in Poland, Romania and Hungary we can significantly expand our potential in the pension fund business,” says CEO Elisabeth Stadler about the successful deal with Aegon.

Smaller mergers and acquisitions in 2020 happened in various other countries, such as Romania, where Allianz acquired Gothaer Romania.

Increasing Interest for Corporate Insurance

The insurer landscape and insurers’ risk appetite is undergoing dynamic developments in the CEE region. While the main focus for insurers remains on profitable private lines and standard product offerings for small businesses, an increasing interest for corporate risks can be observed also among pure local insurers.

Due to relatively moderate local capacities and consequently relatively low retentions, usually ranging between 20 and max. 50 million EUR depending on the risk, structured reinsurance is regularly needed when incorporating covers. This trend is expected to continue as corporate clients’ risk awareness increases. Sometimes it reaches Western European standards already today. This will most likely pave the way for specialty risk advisory to become more sought after in the years to come.

30 years of experience in CEE

GrECo has been operating successfully in CEE for over 30 years and today is the leading corporate risk advisor and insurance broker in the region. Over the decades close ties to group management of all insurance companies in the region have been established and are being constantly nurtured. This is the basis for swift and competitive implementation of sophisticated tailored covers for our clients.

With our strong presence in 16 countries via owned offices, excellent insurer relations and profound operational expertise GrECo is in a prime position to deliver first class specialty placements. Our international expertise also allows us to implement fronting solutions for multinational clients efficiently. This is making us the first choice for independent international partners around the world.

We have experienced the transitions of the insurance markets first hand. Having been in the region for over 30 years we have gained insights we are happy to share with our partners.

Related Insights

Jonathan Höh

Network Coordinatoron

T +43 5 04 04 396

Ante Banovac

Head of Group Sales & Market Coordination

T +43 5 04 04 372

„Great potential for the insurance culture in Mexico“

Interview with the insurance broker Howden Mexico

Jonathan Höh of GrECo nova (a global network of insurance specialists) spoke with Howden Mexico about major risks facing foreign companies and the specifics of the local market.

According to statistics, Mexico employs 61% of the workforce in the service sector, which accounts for 60.1% of GDP. The technology-, information- and software development-sector in particular is growing due to the good quality of the workforce and low operating costs. But medical services and tourism are also growing faster than in Western countries thanks to low service-costs. In 2018, Mexico recorded a record number of visitors, estimated at 41.4 million according to the Ministry of Tourism.

Although, according to the Mexican Association of Insurance Institutions (AMIS), the insurance sector recorded a real increase of 5.37% in the first quarter of the year compared to the same period last year, the declines were significant in some sub-sectors such as automobile and accident insurance. In addition, a general decline in business of 5.4% is expected at the end of this year or in the beginning of 2021. Currently all companies in the insurance-sector are suffering from the low demand and also affected by reorientations in their business-activities.

HÖH: Can you tell us some of the key facts about the Mexican insurance market?

HOWDEN MEXICO: The insurance culture in Mexico is weak, so the growth potential is very high. Per capita-insurance-consumption in Mexico is low, compared to other Latin American countries and lags behind Brazil, Argentina, Chile, Colombia – and even Peru. It is important to make insurance accessible to the people by developing technological business strategies. A large part of the population does not even know where to buy insurance.

The insurance with the highest penetration is car-insurance, with 30% of the total fleet of vehicles in Mexico, mainly because a significant percentage of cars are bought on credit and insurance is therefore required. Immediately after this comes life insurance, with a penetration of 10%.

HÖH: What are the biggest risks for foreign companies?

HOWDEN MEXICO: The risk for foreign companies is primarily the legal uncertainty and – due to the current crisis – also the economic uncertainty of the country. We also have a considerable risk of natural disasters such as hydro meteorological risks and earthquake risks. Another risk is the high theft of vehicles and goods. And the health-risk should not be underestimated: too high a proportion of the population suffers from obesity.
In 2017, Mexico ranked fifth in the world in terms of losses due to cyber-attacks, with financial institutions accounting for 20% of these losses. Recently, some banks were again the victims of a cyber-attack that caused almost 300 million pesos of damage (editor’s note: approx. 11.5 million EUR). Therefore, one of our greatest concerns is operational-security and that the information of companies offering services or products online is protected.

HÖH: Can international insurance-programs be implemented? And how does Howden Mexico provide customer service, how do you coordinate with the controlling brokers?

HOWDEN MEXICO: Insurance-programs can be implemented for companies that have are a representative office, partner or a branch of a firm headquartered in other countries. In particular, the requirements for quality, service and KPI standards must be taken into account. This requires a structure with a solid, dedicated and experienced support team for large and/or international business as well as representative offices in the countries of the respective regions. Currently, we have established an international business area within Grupo Ordás Howden that largely meets these criteria. Customer service is provided through the signing of a service-agreement, which is reviewed with the customer at least once a month. The coordination through the controlling broker is coordinated through written agreements, emails, telephone and video conferencing.

HÖH: How many years of experience has your team in international customer service?

HOWDEN MEXICO: We created the capacity for the international insurance business two years ago. The team consists of two people, Vice President Arlen Cooper and a senior executive, Perla Hurtado. Both speak English and have years of experience in international business. Arlen Cooper has been in the insurance business for 15 years and Perla Hurtado for ten years.

HÖH: What about the strong automotive sector in Mexico? Do you have proven capacities for this sector, and what specifics have be taken into consideration here?

HOWDEN MEXICO: Grupo Ordás Howden has a large team in the automotive sector. We are leaders in the insurance market here. This year, however, it will be a major challenge for Mexico, which relies heavily on the automotive sector, to recover and reach pre COVID-19 levels.

HÖH: What regulatory challenges are Mexican companies facing? What types of insurance are mandatory?

HOWDEN MEXICO: Currently, Mexico does not have clear and specific regulations, so the biggest challenge is to maintain information security even without these regulations. Since April 2013, the only compulsory insurance that exists in Mexico is car liability insurance.

HÖH: How high is the tax burden in Mexico, and how strongly does it affect the activities of insurance brokers?

HOWDEN MEXICO: Currently, companies in Mexico must pay 30% income tax plus additional 10% of dividends and 10% of employee profit sharing. However, companies do have access to deductions and often end up with lower rates.

Insurance policies are tax deductible. For example, no value-added tax is levied on life-insurance policies. This is an advantage for companies and it is the responsibility of brokers to point this out to companies.

Arlen Cooper I Vice President International
Phone: +55 797 81083, email:

Grupo Ordás Howden
Founded in 1982, Grupo Ordás Howden is a leading company in the Mexican insurance market with strong expertise in all lines of insurance. Headquartered in Mexico City, the company is characterized by a strong client focus, exceptional talent and an entrepreneurial ethos. In addition to expertise in motor insurance, an experienced international desk and industry practices, an impressive technology platform helps to provide even better solutions to customers in many different lines of business.

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

Special features of Insurance in Slovenia

Damir Pelak, General Manager and Jurij Rožej, Head of International Business at GrECo Slovenia talk about the exceptional COVID-19 year, a well-developed insurance market and some specifics of taxes in Slovenia.

How do the current political developments and economic conditions in Slovenia influence the insurance industry and clients’ risks?

PELAK: Currently we have a center-right Government, led by Slovenian Democratic Party (SDS) in coalition with three other parties. Despite a fragmented political scene, the government appears currently stable. We have a sharp economic contraction and unfortunately a return of fiscal deficits. Our GDP growth is a bit above the EU average, at 2.4% (for 2019).

This year Slovenia’s large tourism sector is exposed to weak consumer confidence across the EU and ongoing travel bans. But the COVID-restrictions also influence the supply-chains of other industries that are closely tied with the Italian, German and French Industry. This presents also a further source of vulnerability.

In which economic segments/industries do you expect increasing investments in the coming years?

PELAK: Due to COVID-19 Situation most likely everyone will be focused to stabilize their operations and planning slow investment increase. In 2021 focus will be to preserve tourism active and there will be few huge construction projects such as Highway and Railroad developments, which will also have positive influence on future operations of Slovenian Blue chips. There is also focus in digitalization and going into direction of being green and energy self-efficient.

What are the biggest risks foreign companies doing business in Slovenia need to consider?

PELAK: They should be prepare on time consuming and over demanding admin processes of public services. Foreign companies should also expect huge taxation on a labor costs but also, which might be interesting, a quite low corporate profit taxation.

How do Slovenian risks differ from those in other countries?

PELAK: Slovenia is geographically and economically well positioned to be a hub for SEE region. In four to five hours by car you can either be in in Vienna, Munich, Venice, Belgrade or Budapest. We have a very low criminal rate and therefore Slovenia is a very pleasant place for young families.

What are the main facts of the insurance market in Slovenia?

PELAK: Although we are small as a country – only 2 million citizens – we can say we are one of the best developed insurance market in SEE. Last year it was over 2,5 billion EUR collected premium, which represented 5,2% of GDP. Non-life represented 70% share of total collected premium.

In last few years we had few mergers between local insurers on the market (e.g. Triglav), ERGO and AXA XL step out from the market. So currently we as brokers are missing broader options of insurers on the market.

What specifics differ from those in other countries?

PELAK: Mostly it is almost the same as in other EU countries. A slight difference is, for example, that as a Registered Broker Legal Entity you are not allowed to deduct a VAT from income or from invoices. Additionally, as an insurance broker you have to pay 8,5% tax of each earned commission.

Brokers account for about 10% of all corporate insurance sales in Slovenia. Is the share the same in life business?

PELAK: No, it is significantly less. Most life insurances are done by Insurers or Insurance Agencies.

How about GrECo Slovenia? How does your approach differ when it comes to Employee Benefits?

PELAK: We are able to provide all services in the area of Employee Benefits our clients require. Additionally, we are focused on Specialties such as Trade Credit, Construction, Aviation, Transport and Affinity.

Can international insurance programs be implemented?

ROZEJ: Yes, they can. Sometimes it is done directly based on FOS – Freedom of Service but mostly we are being supportive to our partners as local service brokers.

How do you ensure excellent client servicing? How do you coordinate with the controlling broker?

ROZEJ: We are fully complied with GrECo service standards, which means “top notch” service provider.

Please describe GrECo Slovenia´s incoming business servicing capabilities?

PELAK: We have a team of eight people, who can handle international business. All of us are fluent in English, but we can also provide services in Italian, German, Serbo-Croatian and Macedonian language. In average the team has 8-10 years’ experience in the insurance business.

When was the last (most recent) bankruptcy of an insurance company in Slovenia? What impact did this have? How do you made preparations to minimize the effects on your clients?

PELAK: As I can remember, it never happened. The Slovenian Insurance Market is well developed and has a long lasting tradition. The majority of insurers have at least Credit Rate A (by S&P) and they are also well prepared based on Solvency II conditions.

Where do you focus on when advising clients and what special expertise have you developed?

PELAK: If we exclude international business, because most of this is already arranged by controlling brokers and we focus on our consulting them, I can say that we are eager to find or develop “tailor made” solutions for our clients. We are avoiding as much as possible using Generic Insurance or as called “Insurance solutions from the shelfs”. We are also putting a lot of energy to be specialized on claims, so we can fully support our clients in those difficult situations.

We have already implemented the Specialties Trade Credit, Construction, Aviation, Transport and Affinity.

Damir Pelak

Damir Pelak

General Manager
GrECo International d.o.o., Slovenia

Damir has a BSc degree in Mechanical Engineering from the University Ljubljana. He started his career at Zavarovalnica Triglav as Corporate Loss Adjuster, then he was responsible for corporate claims and Risk Surveys reports at Allianz. From 2012 – 2015 Damir was President of Special Committee for Fire and Burglary Insurance lines and Member of Special Committees for CAT and Property Claims at SZZ-Slovenian Insurance Association. In 2014 he started his studies of Technical Safety. 2016 he joined GrECo the GrECo Group.

Jurij Rožej

Jurij Rožej

Head of International Business
GrECo International d.o.o., Slovenia

Operational management and care for local and international insurance business. After graduating in organizational sciences Jurij began his career in Triglav Insurance company and today has 20 years of experience in the field of property insurance and 12 years of experience in insurance claim management. He is a specialist in property, liability and automotive insurance and from 2009-2011 he was the head of key clients for the largest construction companies in Slovenia. In 2017 he joinded GrECo as Account Manager.  

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

A recap on insurance in Serbia

Dušanka Talić, General Manager and Valentina Stokić, Head of Risk and Insurance Technics of GrECo Serbia talk about a demanding local administration, life insurance and the importance of construction and infrastructure projects.

How do the current political developments and economic conditions in Serbia influence the insurance industry and clients’ risks?

TALIĆ: Until the very beginning of the upcoming COVID-19 crisis, the economy showed clear and strong development. Namely, the GDP growth in 2017 was 1.9% and it continued to grow by 3.5% and 4% in 2018 and 2019, respectively. In the first quarter of 2020 the GDP growth was even more significant with 5% , but, in the second quarter GDP dropped 0.6% compared to last year. It is expected that GDP growth will drop 2-2.5% by the year end.

Current political and economic developments have a positive influence in the insurance industry which was growing in the last ten years-not only in terms of premium but also in terms of different insurances provided by insurers, namely liability and constructions risks.

In which economic segments do you expect increasing investments in the coming years?

TALIĆ: The biggest driver of economic growth is construction, than industrial production while the more stronger development is expected to happen in agricultural area. Big infrastructural projects like highway and speed railway construction were among the strongest drivers of Serbian industry. Also, there are visible investments in mining and energetic sector while government is putting lot of efforts to develop agricultural sector through numerous subventions and incentives.

Many other big investors are expected to come via government actions and policies, especially in tax segment via tax reliefs for foreign investors.

What are the biggest risks foreign companies doing business in Serbia need to consider?

STOKIĆ: Although it improved a lot, the biggest risk is slow and very demanding administration.

What are the main facts of the insurance market in Serbia?

TALIĆ: In 2019 the insurance market grew by 7.5% and the total premium reached 914 million EUR. The total share of non-life insurance was 76.7%, while life insurance accounted for 23.3%. Three lines of non-life insurance have the biggest growth: health insurance, liability and casco insurance.

During the first quarter of 2020 the growth of insurance premiums was even stronger. Obviously, the legislation activity of the National Bank of Serbia regarding firm control of all market participants and reduction of number of the participants on the market showed positive results.

Corporate insurance is dominant with almost 80% in total premium. Important insurance lines are mandatory third party motor insurance 32.9%, life insurance 23.3%, property insurance 18.7% and other non-life insurance-15.4%.

We can see a fast development of voluntary health insurance since the public health sector cannot cope with the many challenges modern medicine brings. Demand for all types of liability insurance is growing as infrastructure projects keep growing.

What specifics differ from those in other countries?

STOKIĆ: For the last few years, the National Bank of Serbia has been making efforts to harmonize the local regulations with the EU. Still there are some variances which make the local market specific: It is required for insurance companies and brokers, to be registered as domestic legal entities with full initial capital down payment and every risk must be covered via a local insurance company.

Brokers account for about 12% of all corporate insurance sales in Serbia. Is the share the same in life business?

TALIĆ: Over 95% of the total broker sales comes from non-life insurance. Insurance law allows banks and leasing companies to found an agent company which enables them to receive regular commissions in life insurance. Also, since individual life insurance is done mostly via insurance entrepreneurs, brokers have a minimal share in the life insurance sales on Serbian market.

The brokers market share is growing year to year due to state companies requiring brokers more as insurance providers and risk advisors and the growth of foreign investments with foreign companies being used to brokers as insurance intermediaries.

Can international insurance programs be implemented?

STOKIĆ: As already mentioned, international programs are carried out in accordance with local legislation. Excellent client servicing is provided via our Account Managers who are in active contact with, both, clients and controlling broker representatives.

Please describe GrECo Serbias incoming business servicing capabilities?

STOKIĆ: The team of GrECo Serbia consists of 11 professionals with more than 10 years of experience in insurance business each. All of them speak English language. The team is dedicated to service international clients. Since GrECo Serbia is recognized as the main insurance broker in infrastructural projects, especially for Chinese investors, we are able to respond to the specific risk requirements.

When was the last bankruptcy of an insurance company in Serbia? What impact did this have? How do you made preparations to minimize the effects on your clients?

TALIĆ: There was no bankruptcy of insurance company for more than 30 years. In 2001 and 2002 a couple of domestic insurance companies went through a liquidation process and their obligations had been paid through guarantee fond since these were companies dealing mostly with MTPL.

This had a short term effect on clients´ trust and confidence. A legal framework provided by National Bank of Serbia via the Insurance Law managed to regain trust in short notice. The new Insurance Law from 2016 provides mandatory details insurance participants have to provide in order to avoid disputes.

Where do you focus on when advising clients and what special expertise have you developed?

STOKIĆ: Since the economy growth is mostly driven by foreign investments in construction of infrastructure and commercial projects, we are mainly focused on the respective expertise. We developed our specialty team for construction and energy industry and this enables us to provide the best service and tailored solutions.

The other significant potential is in financial lines. Companies with various business activities face greater exposure arising from the provision of their services, as well as exposure to cyber-attacks. We are developing a specialty team in order to be able to provide the Clients with technical advices they need and to offer them appropriate insurance solution.

Dušanka Talić

Dušanka Talić

General Manager
GrECo International doo, Beograd

Dušanka has a master’s degree in economics and more than 11 years of experience in insurance. Until 2009 she worked in banking sector and other firms in the field of finance. In 2009 she founded and developed a company for insurance intermediation which was recognized as a firm that has quality experts, clients and development strategy compatible with GrECo Group. In 2016 GrECo Group bought her company and they combined expertise, knowledge and processes.

Valentina Stokić

Valentina Stokić

Department Manager
GrECo International doo, Beograd

Valentina graduated from the Faculty of Economics at University of Belgrade. Working in GrECo for 15 years, she has gained large experience in insurance business in various insurance lines such as property, financial lines and financial institutions, employee benefit, liability on the Serbian as well as on the international market.

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

Insurance in Bulgaria to the point

Hristo Charkov, General Manager of GrECo Bulgaria, talks about foreign direct investments, fair competition and our multi-lingual team in Bulgaria.

How do the current political developments and economic conditions in Bulgaria influence the insurance industry and clients’ risks?

CHARKOV: Before the COVID-19 limitations and negative effects have been imposed the insurance industry was dominated by an extensive and fruitful penetration development. Following the latest global developments we do already expect an economy slowdown mostly triggered by industry (automotive and related subcontracting processing) lay ups and shut downs. A recovery is to be expected after this economic slowdown, but might take several years.

In which economic segments do you expect increasing investments in the coming years?

CHARKOV: We expect major investments in the sectors of automotive, construction and real estate. However, those might take several years to happen due to the current economics slow down.

What are the biggest risks foreign companies doing business in Bulgaria need to consider?

CHARKOV: At the moment the measures taken by the government as an reaction to COVID-19 pose a significant threat to foreign investments. In general the corruption and vulnerable economy have a significant negative impact on foreign direct investments. In this environment a trusted advisor is vital.

How do Bulgaria risks differ from those in other countries?

CHARKOV: Risks are similar to other countries – it is a question of different risk awareness in each and every economy and the level of proactivity of major insurance players. Risk management is still a terra incognita for 99% of regular business practices. As for the risk exposure we do observe problems with FLEXA and natural catastrophe risks due to also lack of standard risk management approach.

What are the main facts of the insurance market in Bulgaria?

CHARKOV: The total insurance market accounts to 1,5 billion EUR, with 75% Non-Life and 25% Life. 65% is a broker business, but you can hardly distinguish between corporate and retail share – as per estimation of GrECo the corporate share is not more than 300 million EUR.There is still a “paradox” where retail clients get policies by so called “brokers” and corporations and large firms go directly to insurers where they get commission kickbacks on contrary to standard market practices in developed countries. This eliminates fair competition and leads to averse risk advisory and lack of appropriate insurance solutions.

The Bulgarian market itself is not an inventive one – we do follow to 100 % the EU imposed policies for IDD for example, means that what is practice for regulation in western countries similar is applied in BG too.

Please describe GrECo Bulgaria’s incoming business servicing capabilities? How many and what languages are spoken in your international team? How many years of experience does your team have in international client servicing?

CHARKOV: We are able to service fully in English and German, as well as to some extent also in Russian. We have in total more than 50 years in overall experience servicing international customers.

Can you tell us about your most complicated case when dealing with international clients?

CHARKOV: Complications are mostly deriving from the fact that the leading broker does not always get the full servicing mandate. This makes it hard for us to acquire additional lines as we have to deal with issues such as undercover kickback requests, false bribing practices from our competitors etc.

Where do you at GrECo Bulgaria focus on when advising clients and what special expertise have you developed?

CHARKOV: We are the most profound specialty brokers in Bulgaria with focus on transportation & logistics, general aviation, employee benefits and some P&C specialties such as product liability and several financial lines. This is how we distinguish ourselves in the market, we believe to have a strong advantage over our competitors.

Hristo Charkov

Hristo Charkov

General Manager
GrECo Bulgaria EOOD

Hristo has been heading the Bulgarian office of the GrECo Group in Bulgaria and has been supervising all client relations since 2014. After his graduation at the University of Munich, Germany with MA in Insurance, Risk and Banking and in 2004 he had multiple roles in the area of Sales and Business Development in the insurance market in Bulgaria, Austria and Germany for multinational insurers.
He has a proven track record in Specialty Lines such as Transport & Logistics, Aviation, Marine, as well as LoI Property & Casualty and Risk Management and is fluent in German, English, Russian as well as some capabilities in Chinese and Estonian.

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

Africa is the fastest growing region in the world

Jonathan Höh from the global network of GrECo nova insurance specialists spoke with pan-African insurance broker OLEA about the conditions in and peculiarities of that fast growing – but largely unstable – region.

HÖH: Why do we often have the wrong idea when we think about the size of Africa?

OLEA: For a long time, Europe was deliberately enlarged on maps to symbolise its power over other continents and countries. This is why Africa appears much smaller than it is in reality. In fact, Africa has a total area of 30 million km². Compared to this, China and the United States each measure just 10 million km².

HÖH: Are you expecting major growth in Africa in the coming years?

OLEA: Africa is the fastest-growing region in the world, even faster than South East Asia. Six of the 12 fastest-growing countries in the world are in Africa. The emergence of a new middle class and considerable improvements in economic governance are two important factors for long-term growth. Logistics is becoming more and more important, as are telecommunications and energy.

HÖH: What are the main risks for European companies doing business in Africa?

OLEA: Aside from the complicated political environment in most African countries, political violence and terrorism must also be taken into consideration. The World Economic Forum identifies the failure of national governments, financial crises and illicit trade as the main risks in this region. Social instability and the provision of resources are also problematic. Energy price shocks and water crises are possible.

HÖH: What does the African insurance market look like?

OLEA: The insurance market is still very immature throughout Africa – with the exception of a few markets like South Africa. Market penetration is below 3%. Ten countries account for 90% of all premiums paid on the continent. However, many markets in Africa are currently making progress in the insurance market. This development is boosted by an active regulatory agenda and reform, as well as by active steps taken by insurers to improve the immature market practices. The commercial insurers benefit from the growth of the energy, electricity and mining sectors and other affiliated infrastructures. M&A activities are rising, as new investors are being attracted to the continent and interregional activity is increasing, especially from South Africa.

HÖH: What special aspects of international insurance programmes must be considered?

OLEA: We are overseeing an increasing number of pan-African insurance programmes at OLEA. As there are different regulations for insurance policies in Africa, compliance with the local standards of each individual market is really crucial. This is a particular challenge due to there being 40 different insurance regulations in Africa. However, it is possible for the share that has to be placed in Africa due to regulatory requirements to be reinsured by renowned international players. The African reinsurers are rated from A- (Africa Re) to B+ (Continental Re). The minimum capital requirements were recently increased from 1 to 5 billion XAF/XOF (approx. 7.6 million EUR) in order to ensure that the insurance companies active on these markets remain strong and solvent.

HÖH: What regulatory challenges are companies confronted with? What insurance policies are mandatory?

OLEA: Insurance policies are increasingly being regulated in Africa. The CIMA code governs insurance in 15 different (mostly francophone) countries. It stipulates that risks of a member country may only be insured with an admitted insurer. The local obligatory shares have also been increased from 25% to 50% in order to keep more premiums in the countries (certain risks such as vehicles or health are retained completely). It is also important to bear in mind that these are “cash before cover” countries. This means that there is no cover before the premium has been paid. In addition to motor vehicle liability insurance that is obligatory according to the CIMA code, the insurance of imported goods is also mandatory. Even if the insurance in Portuguese- and English-speaking countries is regulated differently, these countries are increasingly tending to adopt rules from the CIMA zone (e.g. cash before cover). It also necessary in certain countries like Ghana, Kenya or Tanzania for local companies to utilise the local capacities before taking out offshore insurance.

HÖH: There are more than 50 countries with different languages in Africa. OLEA has established a network of branches and partner companies to cover such a large area.

OLEA: OLEA currently has branches in 24 countries and partners in 12 additional countries. We offer the same service quality everywhere, no matter whether French, English or Portuguese is spoken in the country concerned. That’s why we have appointed a network country manager in each country, who is able to answer all queries in English and is employed to deal with international programmes. We have also appointed a German-speaker as GrECo nova country coordinator to look after and help GrECo’s German-speaking clients.

HÖH: What do you focus on when advising clients and what special skills have you developed?

OLEA: The OLEA management team is based in Paris and consists of approximately 10 people. We know Africa very well and regularly spend time at our subsidiaries in order to understand market developments and the needs of our clients. It is very important for us to have a subsidiary or partner in almost every African country, as the legal environment, the market and the requirements are very different from country to country.

We established OLEA Specialities a few months ago to help our clients with their specific risks, as it is sometimes difficult to find solutions. We also regularly use an IT tool that is unique on the African market and offers our clients and partners access to all data they need to track their portfolio.

Thank you for your time!

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

The quintessence of insurance in Latvia

Lauris Kļaviņš, Head of Corporate and International Sales, Zane Dreifelde, Account Manager and Aigars Milts, CEO of the GrECo subsidiary IIZI in Latvia talk about the young legal system, the lack of specialists and the Employee Benefits business.

How do the current political developments and economic conditions in Latvia influence the insurance industry and clients’ risks?

KĻAVIŅŠ: Well, before COVID-19 in economics everything was going well, and we were developing faster than established markets. There was good organic market growth in all lines of business, with minor adjustments in some lines depending on tactical targets of insurers.

The political system in general is rather stable, I’d consider the government we have now, one of the best in recent times, as it includes more professionals and sufficient amount of people from new political parties that are more energetic.

In which economic segments/industries do you expect increasing investments in the coming years?

MILTS: This really depends on how the economic outlook will look like after COVID-19. We were quite established in IT sector, financial institutions, timber exports, agriculture produce. More and more innovative manufacturers are created, they are not world-renown yet, but there have been some of our start-up acquisitions already by larger corporations, so we are being noticed.

KĻAVIŅŠ: I think investors value stability, relative geopolitical safety, fast internet. We are blessed with rather modest climate without major climate or natural disasters.
Also, my personal opinion is that Latvia is a good market for larger corporations to experiment on some new technologies and approaches – as the market is small, it supports the ability to quickly test different approaches without risk of large scale failures. I hope to see more high added value manufacturing in our country, as with it comes development of other service industries as well.

What are the biggest risks foreign companies doing business in Latvia need to consider?

KĻAVIŅŠ: I think foreign companies are used to huge numbers, but in Latvia, twice the size than Belgium, but with 6 times less the population will never produce the turnover expected by larger corporations. I believe we have plenty of internationals having come here and found out that the market is too small to bother – that’s a pity, because country is developing and with less competition, the price of some goods or services tend to be higher per capita than in “old Europe”.

MILTS: Due to spare population and high people and talent concentration in the center of country around our capital Riga, there is long term issue of maintenance of infrastructure and life quality in the regions. I mean, we have a rather extensive road network in terms of kilometers covered, but we do not have enough people that can pay taxes to support all the infrastructure. So when an investor is coming here, they have to take account these risks – all will be ok around larger cities, but if the property of interest is located in rural areas, it could be challenge to make it profitable.

The availability of skilled workforce could be of an issue, good market research before investing is needed to understand if there will be enough necessary specialists. The education quality is not bad and younger generation is proficient in English, however due small population, availability of certain specialists could be of an issue.
Considerable issues are also court processes. As our legal tradition is barely 25 years old, there are still many flows both in legislation and execution of fair and logical legal and court process. Foreign investor lobbying groups are working hard to push for more transparent and efficient legal system, so foreign investments would be better (and fairly) protected in courts when business disputes arise.

As a success story I can mention that we have done a lot in recent years in our financial sector and now Latvia has one of the highest compliance levels in the whole world for financial sector and anti-money laundering.

From insurance perspective, an investor should take in account, that generally, the understanding of insurance and risk management is lower here in Latvia if compared to “old Europe”, so they need to know, that their local partners and subcontractors will most likely carry only very basic insurances, that would not always cover the actual risks involved, therefore, it is crucial to employ a competent broker, who can advise also on necessary approach to have partner and sub-contractor insurances at needed protection levels. For our corporate clients, we in IIZI do this type of advising as integral part of our services.

How do Latvian risks differ from those in other countries?

DREIFELDE: The risks for companies in Latvia do not greatly differ from those in Western Europe. As our insurance industry has been operational for only about 20 years, and the loss ratios have been rather good, the pricing for insurance is rather competitive and there is no problem to get good coverages unless the sums insured stay relatively low. Local insurance providers, despite being foreign internationally owned company branch offices, would struggle with anything above 25 million EUR, because of their current reinsurance setups and own ground level capacity limitations, driven by market need for low sums insured.

What are the main facts of the insurance market in Latvia?

MILTS: The total volume in 2019 was around 520 million EUR. The share of corporate insurance was approx. 50% and brokers account for 40% of the market. Looking at the lines of business, life and health insurance account for 15% respectively 20%, motor for 40% while property is rather underdeveloped with 15%.

As in any developing market – liability insurances are growing. Other lines are growing according to economic trends, Employee Benefits (EB) are somewhat limited to tax incentives related to EB insurances and as the thresholds are not changed for some time ago, this limits the premium growth, however, the interest for these products is generally increasing. D&O is slowly gaining ground.

The push from insurers to support their direct and internet sales is rather high, and brokers are lacking in their IT capacities, to keep up with extensive IT budgets of insurers. This might decrease the availability of broker service in the long run. However, IIZI, as the top broker, also offering market leading online solutions, will probably not be affected by this and rather profit from a market consolidation.

What specifics differ from those in other countries?

KĻAVIŅŠ: Latvia is specific in insurer interpretation of some GDPR norms, e.g. insurers consider MTPL loss data a sensitive information, that rather undercuts the availability of reasonable MTPL statistics crucial for large fleet quotes.

Additionally, even the price of MTPL insurance is considered “sensitive data” by some insurers, that is generally driving the purchase process for this simple and necessary product, to ridiculous complications.

There is no insurance tax, but there is “levy” for sustaining the functions of regulatory body (FKTK), that stands at 0.2-0.3% from GWP. This is generally not separated from premium in any transaction and insurers simply pay that based on their GWP turnover, so clients do not feel it.

Brokers account for about 40% of all corporate insurance sales in LATVIA. Is the share the same in life business?

KĻAVIŅŠ: Brokers are more prominent in the corporate sector, where the need of independent advisory service is more prominent. Life insurance is historically dominated by agents, we are not doing it.

MILTS: IIZI BROKERS, however, has invested in the EB capabilities (Health, Accidental Death, Critical Illness – lines that we don’t consider “life insurance”), where our premium placed has grown YTY and now these lines account for almost 30% of our GWP. We have very strong team for EB right now, including auxiliary consultations in EB matters, very valued by HR’s of our client’s.

In total, IIZI BROKERS corporate unit places around 7 million in premiums, almost 2% of non-life market and with our affinity and SME/Private client unit we place more than 13 million.

Can international insurance programs be implemented? How is this done at IIZI BROKERS?

KĻAVIŅŠ: Yes of course. Being part of EU, makes many things simple, including placement and servicing of international programs, nothing particular to worry about.
We have dedicated brokers trained in international business servicing and international business specifics. We probably would not be TOP 5 broker in Latvia, without this excellent client service. As we constantly invest in the education of our brokers, we have a specialization driven teamwork and dedicated claims consultancy capability, I am sure we can provide top service for most demanding clients.
We have been involved with international business since 2013, we have the understanding and capabilities to adapt to the controlling broker’s needs.

Please describe IIZI BROKERS incoming business servicing capabilities?

KĻAVIŅŠ: Everyone in our team speaks three languages – Latvian, English and Russian, and some brokers have even fourth language knowledge.
Both me and Zane have more than 15 years of experience in insurance and many of those years have been spent working with international clients. Both of us have “hand’s-on” understanding of wide range of products, from Employee Benefits to Owner Controlled Insurance Program for Real Estate developers, and we can provide client servicing in English as well.

Additionally, we have our excellent team of 8 specialized brokers and claims manager to provide efficient and specialized services for almost any industry.

What regulatory challenges are companies facing? What types of insurance are mandatory?

DREIFELDE: For some time GDPR and IDD was on the table as in the rest of the Europe, but it is handled now. Motor Vehicle Owners Liability is mandatory, as in rest of Europe. Construction and construction specialist professional indemnity is mandatory, as well as PI for insurance brokers, bookkeepers, bankruptcy administrators and other professionals.
Overall, these mandatory PI policies tend to be very simple and with low limits and we always provide options for better coverage above required minimum.

How do you cope with these regulatory issues?

DREIFELDE: Well, you simply must be compliant and do it in an effective way. I believe this is one of the key ingredients what is required for a broker company to be successful if it plans to work long-term in the corporate insurance sector as we do.

We are auditing and reviewing our processes and procedures regularly. All our procedures are reviewed internally by at least two managers from the management team.
When we develop our internal procedures, even if they can be standard according to local legislation, we would always look if we can improve them to achieve better and more efficient compliance in our Client’s interests.

We are always looking for transparent cooperation with our Clients and have an SLA in place to make sure there is less ambiguity and better protection of Client’s interests.

The level of tax load in other countries – how seriously does the tax burden affect the brokers’ activities?

MILTS: There are no significant taxes apart from normal corporate taxes any company have to pay. I can confirm that IIZI is one of the largest taxpayers in the broker industry of Latvia. Overall, the tax burden in Latvia is relatively low.

When was the last (most recent) bankruptcy of an insurance company in Latvia?

MILTS: A locally owned insurer that was heavily involved in road hauler’s segment went bankrupt in 2013. That has still affected the market, as the payouts for MTPL signed by this company are paid from the securities pool and remaining insurers must make additional payments to the pool, to have it in required level – this increases the prices for MTPL to all customers.

Our clients were not exposed to this a lot, as our corporate clients usually understand the risks involved with placing the business with locally owned insurers that do not have the security of larger shareholder in Europe and good group reinsurance. Also, these insurers are not competitive in larger P&C placements, so that is not a big issue anyways. Right now, there is only one locally owned insurer in the market, and they are trying to sell the business for some time already.

Additionally, the GrECo Group analyses the risks of the insurers in our region as part of the market security service offered. This means, at a holding level GrECo scans the insurer market and advices local colleagues in the broking teams not to work with risk carriers we do not deem appropriate.

Where do you at IIZI focus on when advising clients and what special expertise have you developed?

MILTS: Our team provides wide range of insurance consultancy services, with dedicated specialists for Construction, Employee Benefits, Motor and Manufacturing risks. Additionally, we have separate advisory and assistance capabilities for claims management.

Overall, we provide client with the advice that is necessary in given situation – different clients will need different advice and we believe that is a great value of broker service, to have access to this wide range of knowledge, experience and competences, either for industry specific or general situations, to make the best out of the protection that insurance can provide.

Lauris Kļaviņš

Head of Corporate and International Sales IIZI Latvia

Lauris started in the insurance sector in 2005 after obtaining a degree in political science and government from Vidzeme university of applied sciences. In 2012 he joined IZII Latvia as Product developer and account manager for international clients. In 2017 he was appointed as Head of Corporate and International Sales. He is fluent in English, Russian and Latvian.

Zane Dreifelde

Account Manager
IIZI Latvia

Zane joined IIZI in 2019 as an Account Manager. In 2005 she started in the insurance sector and worked at multiple multinational insurance and broker companies. Zane has an MBA from the RISEBA university in Riga and also studies at the Riga business school. She is fluent in English, Russian and Latvian.

Aigars Milts

IIZI Latvia

Aigars is working in the insurance industry since 1998. He worked at multiple insurers and corporate insurance brokers, since 2005 in management positions. In 2018 Aigars joined GrECo Latvia as the CEO. He holds a MBA from Riga business school and studied business management at the university of Latvia before starting his career.

Related Insights

Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396