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.

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.

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.

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.

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

PALUSZYŃSKI: The GDP has been growing between 4-5 % per year over the last 3 years. In the COVID-19 pandemic period, the Polish financial system entered into good shape, resistant to shocks and without significant imbalances. However, the World Bank has revised its forecasts for Poland’s GDP for 2020. According to the WB, the economy will see a 4.2% decline in GDP over this period. Growth will return to 2.8% in 2021. In 2019, the value of collected insurance premiums amounted to EUR 14,8 billion (EUR 0,3 billion more than the year before), of which life insurance accounted for more than 33%, and property insurance for about 67%. It is difficult to estimate how the Covid-19 pandemic will affect the insurance market this year – data for Q1 2020 were optimistic.

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

PALUSZYŃSKI: Poland is a coal country: around 70% of its electricity comes from either coal or lignite. By 2018, renewables accounted for 20% of electricity generation, mostly from wind energy. The importance of gas is growing. Its share in the energy mix was 7.2% compared to 5.6% in 2017.

Taking into consideration changes in the climate strategy (Energy Policy of Poland until 2040) and investments which are related to this policy it is a big opportunity for GrECo Poland to be part of the process. Assumed spending in the field of investments related to CO2 reduce until 2050 is estimated at approximately 116 billion EUR.

The construction sector in Poland provides many of the opportunities especially now in the COVID-19 times as one of the engines of the Polish economy. At the moment, the situation in construction in could be better, like in the overall economy. But this also can create more selectiveness and financial impacts of the part of the sector. During 2020 there were delays in procedures and almost no new contracts have been signed. Now the construction companies can focus on increasing their backlog and securing a positive cash flow and also can be prepared for the price war as there is a big competition on the market.

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

PALUSZYŃSKI: Risks for foreign companies do not differ from those, that Polish companies face. The biggest risk is unstable legal environment which makes the situation here in Poland very challenging for all investors.

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

PALUSZYŃSKI: The overall financial results of insurance companies in 2019 were better than a year ago. Higher results were obtained by both life insurance companies and non-life companies. A growing importance of non-life insurance in the entire insurance sector has been noted.
At the end of 2019 total assets of Polish insurance companies amounted to EUR 43 billion (in 2018 it was EUR 42,7 billion). In 2019 claims and benefits paid by Polish insurers reached almost EUR 9,3 million. Accessible data for 2018 showed the combined ratio of 103,3% for total Polish Insurance market (Life – 123,5%, Non-Life 91,9%).

What specifics differ from those in other countries?

PALUSZYŃSKI: All insurance regulations are is in line with the EU regulations, IDD & GDPR were implemented. For sure there is some differences to other countries: there is no insurance tax in Poland, brokers must pass the professional exam organized by Polish Financial Supervision Authority (KNF) and must have an obligatory Professional Indemnity policy.

Brokers account for about 17% of all insurance (Life and Non-life) sales in Poland. Is the share the same in life business?

PALUSZYŃSKI: We do not have the data for 2019, but the value of premiums placed in insurance companies through brokers in 2018 amounted to EUR 2.377 million which means an increase of the indicated category by over 50% in relation to the previous reporting year. In Section I (Life) there was an increase by 31,09% and in Section II (Non-Life) an increase by 59,13% as compared to 2017.

The early 90’s Polish insurance market opened itself to foreign companies entering the market. The know-how, new approach to risk pricing, innovative products, IT developments, competition, these factors shaped not only the market players but also influenced our clients. There was a growing educational effect and insurance knowledge among clients. That reflects in their approach to insurance, high service level demands and overall readiness to conclude insurance contracts. The new products, regulations and laws being introduced make it difficult for clients to choose products, suppliers. The role of the intermediary is to collect, compile and present their recommendations to clients, conclude contracts on their behalf and provide service and advice pertaining insurance matters.

GrECo’s role is to help its clients to find the best resolution to their changing needs making sure these are in line with laws and regulations. GrECo also needs to closely observe changing conditions surrounding our clients and inform them accordingly. For example: In the COVID-19 pandemic Greco has proactively take the following measures: outgoing information about epidemic and Insurers T&C exclusions, information about COVID-19 products availability and setting up new policies in 1st week of product life.

COVID-19 pandemic has also shown the weakness of the state run health system, or rather it’s collapse. This certainly would mean private health providers are going to be considered not only as alternative but a definite necessity. Obviously, it means that providers need huge investments and further development of their networks and services. Medical insurance, subscribed medical services should be considered as one of the business areas that would enjoy rather steady perspective of growth. In terms of market reality there is growing competition, definite leaders but also a fair number of small locally operating medical centers frequently cooperating with market leaders are building up.

Can international insurance programs be implemented?

PALUSZYŃSKI: Polish legislation does not specifically address international insurance programs, so this kind of insurance coverage is subject to the same rules as any types of insurances.

It should be underlined that unauthorized insurers cannot carry on insurance activity in Poland.
Insurers from European Economic Area (EEA) states (European Union member states and Iceland, Liechtenstein and Norway) may provide insurance under freedom of services legislation, provided that they have filed an appropriate application to the supervisory authority in their home country.

An insurance company with headquarters in a non-EEA country may undertake and perform insurance activities in Poland only through a main branch, following an authorization from the supervisory authority.

International programs are quite common for international companies, but they do not always take into consideration the local specifics and risks. It is our job as brokers to address this to the client and the controlling broker.

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

PALUSZYŃSKI: Entrepreneurs may face a lot of challenges in the Polish legislation. Mandatory insurances are one of them. Different insurance experts recall different numbers of compulsory insurances, which give us the idea of how tricky this area is. A report prepared by the Polish Chamber of Insurance calculates that about 160 mandatory insurances are in force in Poland, which includes different types of liability, property and accident insurances that arise from local legislation, EU legislation, as well as international law and international agreements.

How do you cope with these regulatory issues?

PALUSZYŃSKI: We as GrECo Polska support our clients to find themselves in the legislation thicket. As professionals we have to be up to date with the current legislation status and ready to advise our clients if they subject to any compulsory insurance and if not, what other risks we can identify.

Please describe GrECo incoming business servicing capabilities?

PALUSZYŃSKI: GrECo Polska has been servicing incoming business since the beginning of its presence in Poland. We employ currently 53 high skilled professionals. International accounts are handled by multi line account managers with many years of experience in insurances (some of them have been working for GrECo for more than 15 years). They speak Polish, English, German and Russian.

Apart of standard policies based on master programs (PD/BI, CGL) we handle Construction /Erection Risks, D&O, Cyber, Employee Benefit and many others specialized insurance lines.

In GrECo Pl are also prepared to handle non-standard international premium payments, for example:
– premium for non-admitted policy to be paid by local (in Poland) entities directly to foreign insurer in USD, but GrECo coordinates issuance of premium invoices and premium monitor premium tracking
– premium paid directly to GrECo Poland by customer’s HQ abroad
In local policies based on master programs, GrECo asses local clients activity to extend local policy with necessary additional (ex. Tenant’s Liability, Employer’s Liability etc.).

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

PALUSZYŃSKI: We pay special attention to the analysis of the risks which may affect on clients. By creating a recommendation for an optimal insurance programme for them, we offer protection ensuring coverage of all his risks or draw their attention to GrECo’s service approach: risk analysis, insurance strategy, insurance solutions, claims management and insurance controlling.
An important part is using of GrECo internal IT solution to manage our client relationships. And when risk materializes and damage occurs, we are always with our client.

In last years we focused on developing Specialty insurance, specifically Energy, Power & Mining and Construction & Real Estate. Very important are our competences in Health & Benefit, Financial Institutions/ Financial Lines and recently – Affinity Business Insurance.

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

BOROT: When the Velvet Revolution in 1989 started, Slovakia changed from an agricultural country to a more and more industrialized one.

– On the 1st of January 1993 Czechoslovakia split into Slovakia and Czech Republic.
– Slovakia has been a member of European Union already since 1st of May 2004.
– In December 2007 Slovakia joined the Schengen zone.
– In November 2009 the Euro has been introduced as our currency.

All these developments led to a strongly export focused economy with close ties to Western Europe. One good example is the automotive industry. Slovakia is the biggest producer of cars in the world related to produced car per one habitant. The biggest automotive suppliers and car producers are present in Slovakia: Volkswagen from Germany, Kia from South Korea, PSA Peugeot Citroen from France and Jaguar Land Rover from UK. In 2020 Slovakia will produce 1,350 000 cars.

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

BOROT: Political stability and political risks: The recent election will change things, but it is very difficult to foresee the effects. Slovakia will still strongly participate in EU & NATO. The industry is very export focused and therefore the free market is vital for Slovak development. The newly elected prime minister promised to crack down on corruption in his campaign. This sounds very promising.

There is also the issue of economic stability: The looming recession will have a strong effect on Slovakia, due to its export focus (France, Germany, Italy). Also foreign investments play a strong role in the Slovak economy.

How do Slovakian risks differ from those in other countries?

BOROT: The risks are quite similar to those in Central and Western European countries. In terms of natural hazards it can be said that they are generally low and only floods can be observed (even though the dams are constantly expanded). Terror risks are not observed – coverage is available via the insurance market.

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

BOROT: Due to the Soviet history Slovakia has a couple of big heavy industry firms, big car producing factories. These risks are written abroad. The amount/share of mid-sized companies is much lower than in Czech Republic or Austria compared to GDP. Therefore, the non-life GWP (Gross Written Premium) is 3 times lower than in Czech Republic (even though GDP is 106 million EUR compared to 245 million EUR).

Another effect for this industry structure is the large market share of agents active in retail and SME business. There are only a few local brokers that focus on pure corporate business.

What specifics differ from those in other countries?

BOROT: The biggest difference from the Western European insurance market is the strong position of the agencies. This also effects insurance legislation. Insurance legislation does not know the word “Broker” – only agent or consultant. This manifests the strong position of individual agents. Only couple of intermediaries are employees in larger firms. Additionally, there are certain tax issues and other special requirements for brokers, such as required processes for certain lines.

The insurance tax of 8% applies for on all non-life lines except MTPL and there are insurance pools for energy and nuclear risk. The mandatory lines are MTLP, Professional Indemnity (e.g. medical, auditor, architects) and via social security: employers liability and workers compensation on state basis Regulatory challenges are Solvency II. This effects our clients in many ways, for example, high claims ratios in MTPL/Casco can no longer be compensated by other lines of business. Therefore this forced the insurers to increase the premiums

Brokers account for about 80% of all corporate insurance sales. Is the share the same in life business? How does your approach differ when it comes to Employee Benefits?

BOROT: The social security coverage in Slovakia is rather strong and toughly regulated. Nevertheless, the insurers have discovered this as an area of strong potential due to the labor shortage in Slovakia. Companies use EB to attract new employees. Agencies and brokers are in a consultancy role when setting up these programs. The share is similar or even higher when considering Employee Benefits.

Can international insurance programs be implemented?

GAŠPAR: There are no problems in implementing international programs – insurance regulation is based on the EU regulation. The main lines are Property & Business Interruption – sometimes also via Freedom of Services. In this case we also service the client and provide assistance in case of a claim. In liability we always recommend a local cover to include local regulation and also to have a Slovak court to decide in case of a claim.

How is this done at GrECo Slovakia? How do you coordinate with the controlling broker?

GAŠPAR: We provide reports and policy summaries to the controlling broker on regular basis. Additionally, we are always available via phone or mail. In-person meetings with our partners are also conducted on a regular basis.

We regularly meet the referred clients and treat them as we would with our local clients. Proper servicing is our first goal. Our risk-based approach encompasses an analysis of the clients risk. Based on this, we not only handle the international lines, but also, with the controlling brokers permission, include local lines.

Please describe your incoming business servicing capabilities?

GAŠPAR: We have a strong team designated to service international clients. The six colleagues speak German, English, Czech and Slovak fluently. Both Account Managers have more than 20 years of experience in servicing international clients, both on the insurer and broker side. In all this time they have been in daily contact with our international partners.

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

GAŠPAR: In 2010 one of our client had a major flood incident. This flood caused one of the biggest damages in the history of insurance in SK. The coverage for our clients was structured via an international program. Our team had do handle two claims of more than 1 million EUR each and coordinate between the different parties. In the end the claims were paid by the foreign insurance firm.

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

FUĆAK: The GDP has been growing between 2-2.5 % per year over the last 5 years. Until now a GDP growth of 3% for 2020 was forecasted but after the COVID-19 crisis and the effects of the recent earthquakes a decrease is expected. Tourism has always been a large driver of growth for Croatia and it is one of the largest areas of business in Croatia. The 2nd most important sector is construction.

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

FUĆAK: Construction, tourism, marine – those areas will highly grow in 2021 after a slowdown in 2020 due to COVID-19. Despite all enterprises have been shut down in 2020 due to COVID-19 we expect no long-lasting effects in the tourism area. Nevertheless, the crisis will led to a consolidation of the industry. The larger firms have saved the profits from the last booming years and will now take the shares of those businesses that are struggling. The basic, underlying growth will continue.

In Construction all development projects that have already been planned in 2020 and now are stalled due to COVID-19 will be executed in 2021. Also the earthquake will have a strongly positive affect on the construction industry. In the area of Marine (Ports, Shipyards etc.) the situation is variable, but there should also be a strong growth in 2021, due to the dependence of Croatia on the sea.

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

FUĆAK: Demanding administration. As a foreign firm you will run into problems when not having a local person handling your investments (“Corruption”). Therefore a local advisor is important and can strongly support with the administrative tasks.

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

FUĆAK: The total premium is: 1.5 billion EUR. Out of this, the corporate sector makes up 35% and the life share, counting both corporate and private retail, is 30%. The shares of premium handled by broker companies is 15% manly in PDBI, liability and motor.

We can observe the following trends in Croatia: an overall market growth of 3.5 % and a growing markets share of broker business.

The reasons are:
– State companies use brokers (but also money laundering/corruption)
– The Private sector considers a broker more and more as a solution provider, also in other areas than Motor. This is also supported by the growing understanding of insurance by the clients. The maturity of the market is increasing.

What specifics differ from those in other countries?

FUĆAK: Everything is in line with the EU regulations, IDD & GDPR are implemented. Obligatory lines are MTPL, marine & aircraft liability and public transportation passenger liability. Insurance companies doing business in Croatia need to be registered in Croatia.

Brokers account for about 15% of all corporate insurance sales in Croatia. Is the share the same in life business?

FUCAK: No life insurance is not targeted by broker companies. This is mainly done by banks (as part of a loan). For other employee benefits, like additional health insurance, there is a limited demand. Some employers offer this to their employees to attract them or keep workers council in check.

Can international insurance programs be implemented? Which special features have to be considered? How is this done at GrECo HR?

FUĆAK: We still use a local carrier for fronting – clients usually prefer to have a domestic policy even though Freedom of services (FOS) is possible in most areas. This is mainly due to the fact of claims handling issues (esp. in PDBI and General Liability).

We can observe a trend towards FOS placements – particularly in specialty lines like Cyber or complex financial lines (also due to limited capacity on the local markets).

Please describe GrECo HR´s incoming business servicing capabilities?

FUĆAK: We have a team of three employees, all fluent in English, all designated to servicing international clients. On average the team has five years of experience with international insurance & client servicing.

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

FUĆAK: As part of our Specialty strategy we have also analyzed the Croatian industry to find areas where we can add extraordinary value to our clients. This resulted in us investing to build up capabilities and teams focusing on the tourism sector as well as financial institutions. Moreover, we specialize in the marine industry.