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.  

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Jonathan Höh

Group Sales & Market Coordination

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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.

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Jonathan Höh

Group Sales & Market Coordination

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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.

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Jonathan Höh

Group Sales & Market Coordination

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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!

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Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396

Best of insurance in Ukraine

Alexander Laukart, General Manager of GrECo Ukraine, about Ukraine´s “tradition” of instability, regulatory changes and how international insurance programmes are implemented.

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

LAUKART: I may say that it’s our local Ukrainian “tradition” to be in the permanent state of political instability and regular economic crisis. All this also deeply impacts our economy including insurance industry. Due to all these reasons the insurance industry is quite small for the biggest country that lies completely on the European continent. The insurance penetration rate in Ukraine is possibly the lowest in Europe. The local insurance market has been actively developing during the last years but is not yet “mature” enough to develop and implement a number of insurance lines and products and thus limiting the proposition and client’s potential needs. The financial capacity and resources of the local insurance market are quite limited and a big share of the risks is still going to international reinsurance market.

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

LAUKART: Although the overall situation in Ukraine’s economy is not good, some industries are quite attractive and may provide good return to the potential investors. Ukraine is quickly regaining its position of being a Europe’s “grain basket” and agriculture is definitely a very attractive industry for investing. I am also pleased to admit that Ukraine is becoming one of the leading world IT/FinTech outsourcing services hub and this sector will be an active investment recipient for the coming years.

Being located on a crossroad within Europe with big transit potential, Ukraine may also anticipate big investments into its infrastructure i.e. railway network, road system, sea ports etc.

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

LAUKART: There are a number of factors that may prevent the foreign companies from launching their operations in Ukraine or that make their existing business operations in Ukraine not easy and risky. I mean political instability, changing legislation including taxation system, high level of corruption and very bad judicial practice.

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

LAUKART: The Ukrainian insurance market achieved the following results in 2019:The Gross Written Premium (GWP) is EUR 2 billion, that indicated a 7.4% growth including the life insurance share of 175 million EUR (18.4% ,growth). The losses paid of 542,7 million EUR including life insurance share 21,8 million EUR are rather low compared to the GWP. The dominant lines are Motor Insurance, P/C, Health and Life Insurance.

Due to the absence of the official information, it’s hard to say what share of the insurance market result is represented by intermediaries but I can estimate that in MTPL and life insurance agents/MLM sales share may reach 60%. In corporate insurance i.e. Health Insurance, Energy/Power, Aerospace, Financial Institutions the share of intermediaries sales may reach 50%. And, of course, multinational corporations that operate in Ukraine are mainly served by international brokers by their local representative offices and agencies.

Although the current local legislation that regulates insurance broking business is not good we can see many world leading brokers having their agencies and representative. offices here. We expect that our Parliament will soon accept a new insurance law and will introduce new legislation regarding insurance broking business regulation. This will lead to an intensive growth of the insurance and intermediary business in particular.

What specifics differ from those in other countries?

LAUKART: We’ve got some local specifics which are not helping the insurance industry to develop and grow quicker. The insurers are paying 3% insurance tax which applies to the insurance premium received. But at the same time the insurance companies are paying standard corporate profit tax, so in this case we may say that local insurers are double-taxed.

The current insurance broking regulation is not allowing brokers to develop their business in Ukraine. The number of broking operations in Ukraine is very small and international insurance brokers do not register broking companies but open agencies and representative offices.

Can international insurance programs be implemented? Which special features have to be considered?

LAUKART: One of our core business in GrECo Ukraine is the provision of our services to international companies operating in Ukraine. As we are not a part of Freedom of Services market and non-admitted insurance is prohibited in Ukraine the implementation of global insurance programmes as well as the issuance of the local insurance policies in full compliance with master policy terms & conditions and local legislation requirements is very important. We have a dedicated team of specialists who are in close contact with controlling brokers to provide excellent service in accordance with the agreed procedures and service guidelines. The average experience of our specialists in international client servicing and consulting is 10+ years. The main business language in the company is English.

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

LAUKART: We’ve just currently had a change of the insurance regulator when the regulation authority was passed from the National Regulating Commission to the National Bank Of Ukraine and as a result a mega-regulator was created. We witnessed the process when NBU cleaned the banking sector and double reduced the number of commercial banks in Ukraine. The market anticipates that same cleaning process will be done with insurance industry and the number of insurers will be drastically reduced.

Currently we have 37 types of compulsory insurance, as stipulated in Insurance Law. But not all of them are implemented and the main of them are: Compulsory Liability of Car Owners (MTPL), Civil Liability of Nuclear Reactor Operator, Civil Aviation Insurance, Space Insurance, Hazardous Cargo Transportation etc.

The level of tax load – how seriously the tax burden affects the brokers’ activities?

LAUKART: The insurance broking business in Ukraine has the same standard taxation as any other corporate entity in Ukraine. The current corporate tax rate is 18% and insurance companies and intermediaries are not paying VAT. This taxation system is quite acceptable and does not prevent us from business development.

When was the last bankruptcy of an insurance company in Ukraine? How do you made preparations to minimize the effects on your clients?

LAUKART: The bankruptcy of an insurance company in Ukraine is not a rare and unique case. We used to have nearly 500 insurers and now as of end of 2019 we had 233 insurance companies including 23 life insurers. Some insurers have gone bankrupt and the rest had their license being revoked and cancelled. In the past we had the cases when big insurers went bankrupt and this had a tremendous negative financial effect on the clients and the insurance market. But currently we see a process of market cleaning.
This is one reason why we take market security very serious. Locally we are monitoring the local insurance companies. Our carrier risks are also monitored on a group level and we will not work with those companies who are not fulfilling certain predefined parameters. If the client wants to partner with such a company we strongly advise him about all possible negative implications this may bring.

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

LAUKART: In Ukraine we have a dynamic team using their expert knowledge to advise international clients but also those of the local energy sector. Additionally, we arrange fronting solutions for large multinational firms with operations in Ukraine. We strongly cooperate with our colleagues in Vienna to advise our clients based on their risks and prepare insurance solutions using international markets.

Alexander Laukart

Alexander Laukart

General Manager
GrECo Ukraine

Alexander studied at the Kiev Institute of Foreign Languages and has exceptional English skills. His insurance carrier started 1994 and includes experiences in management positions at multinational insurance brokers, insurance departments of leading Ukrainian firms as well as the local subsidiaries of international insurers. He obtained exemplary knowledge of the insurance market, especially the placement of larger risks and international cooperation with brokers and insurers. In 2010 he joined GrECo Ukraine as the General Manager.

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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

CEO
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.

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A comprehensive guide to insurance in Poland

Paweł Paluszyński, General Manager of GrECo Polska talks about the Poland as a coal country, the large number of mandatory insurance and the focus on specialty insurance.

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.

Paweł Paluszyński

Paweł Paluszyński

General Manager
GrECo Polska

Paweł graduated from the Faculty of Law and Administration of Szczecin University, however, he decided to pursue his professional career in the insurance market. He started his professional career in Gerling in 1996. For 25 years he gained experience in insurance companies and brokerage companies, including April Polska, Concordia Polska, AIG. In the years 2005 – 2014 he was CEO of April Polska and Regional Manager of April Group, responsible for Poland, UK, Lithuania and Belgium, dealing with insurance brokerage, claims management and assistance service. For the GrECo Group he has been working since October 2014, and in 2015 he became General Manager of GrECo Polska. He is an insurance and reinsurance broker.

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The essentials of insurance in Slovakia

Andrej Borot, General Manager and Pavol Gašpar, Account Manager for international clients at GrECo Slovakia talk about the development of Slovakia into an industrialised country, the strong social security system and the biggest claim in the history of insurance in Slovakia.

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.

Andrej Borot

Andrej Borot

General Manager
GrECo Slovakia GmbH

Andrej joined GrECo in 2003. He started in the Finance and Administration Department and was responsible for Financial Accounting, Reporting, implementation of IT Systems, Business Processes, Compliance – IDD, GDPR, AML and Human Resources as well as Procurement. At GrECo he managed two acquisitions of Univerzalna maklerska spolocnost (UMS) and small broker called MSA. He is highly experienced in post-merger integrations.

Since 2019 responsible for development of UMS as well as Risk- & Insurance Technique and Finance & Administration in GrECo Slovakia.

Pavol Gašpar

Pavol Gašpar

Account Manager for international clients
GrECo Slovakia GmbH

With his background as a director for educational programs and international relations in the education sector Pavol joined the insurance industry in as an insurance training coordinator for a large multinational insurer. In 2001 he became Account Manager for international clients at GrECo Slovakia. In his daily work he focuses on international and local policy administration, reporting, FOS claims handling and cross selling activities.
Pavol is fluent in English, German and Slovak.

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Insurance in Croatia in a nutshell

Robert Fućak, General Manager of GrECo Croatia talks about the growth driver tourism, the importance of local service and the growing broker business.

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.

Robert Fućak

Robert Fućak

General Manager
GrECo Croatia d.o.o.

Robert joined the insurance industry in 2001 as a property underwrite with a multinational insurance firm. After multiple roles at local and international insurers he joined GrECo in 2011 as a General Manager. Since then he is developing the presence of GrECo in the Croatian insurance market. Robert speaks Croatian, English and Italian.

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A crash cours on insurance in Romania

Eduard Simionescu, General Manager of GrECo Romania talks about corruption and other obstacles, the domination of motor insurance and the necessity of IT solutions in insurance.

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

SIMIONESCU: Romania had enjoyed robust growth after joining the EU in 2007. The predictibility of the political decision-making remains the main challenge after the country had four different prime ministers during 2017 and 2019.

At the beginning of this year 2020, the economy was expected to expand by 2,21% in 2020 and the inflation was anticipated to fluctuate between 3,86% and 3,0%. However, the disruption caused by the COVID-19 pandemic is already visibile and its full effects are yet to be calculated. Almost one in five companies in Romania was forced to either reduce or stop their activity in the last months.

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

SIMIONESCU: Considering the fact that Romania’s key industries are construction, manufacturing, agriculture, oil and gas, textiles and tourism, we expect that they will continue to account for the majority of next years investments and also to consolidate their share to the country’s GDPR and employment.
Car manufacturing, offshore exploration in the Black Sea and tourism events such as medieval castles fair, concerts and film production could be the choice of more and more investors.

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

SIMIONESCU: Little progress in improving the predictability of the state decisions impacting the companies and employees and in the fight against corruption can be assessed as the major exposures while making deals in Romania. Poor quality of infrastructure (motorways, railways) and the outward migration of skilled labour are also disquieting factors for the companies.

As per the World Bank’s “Doing Business 2020” ranking, evaluating the ease of doing business in various 190 countries around the globe, Romania ranks 55th, with the lowest scores for getting electricity and construction permits as the biggest problems, followed by the insolvency resolution and minor investor protection.

How do Romania’s risks differ from those in other countries?

SIMIONESCU: As an ex- communist country, Romania is still facing some historical impediments such as:

– Industrial assets were not insured under communism. Even today, state-owned enterprise managers may buy insurance only to the extent that it is required for a bank loan.
– Insurance awareness among the general population has been low and is still developing. Most individuals’ experience of insurance is limited to the compulsory classes and they still see insurance as a form of taxation rather than a service. Even the mandatory household insurance only has an actual penetration rate of 20%. Voluntary insurance is further discouraged by low income levels.
– A further legacy of communism is a lack of awareness of individuals’ legal rights. This results in little third party liability insurance being written apart from the compulsory classes.

Despite these holding back factors, the yearly insurance spending per inhabitans increased year by year to reach EUR 109 in 2018. It is still below the average of the EU, EUR 2,170 per person, or two-three times lower than that of Hungary or Poland but the perspectives are promising after the campaigns to raise awareness of the benefits of insurance developed by the insurance industry.

In case of companies, it was observed that they buy only particular categories of insurance (such as leased plant and car insurance and employee benefits) rather than comprehensive insurance programmes.

From a natural perspective, Romania is exposed to earthquake and floods that lead to particular higher conditions for the (re)insurance contracts compared to its neighbouring countries or to Western Europe countries.

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

SIMIONESCU: In 2018 total gross written premiums (life and non-life) were RON 10.14bn (USD 2.57bn). Non-life (excluding personal accident and healthcare) accounted for RON 7.64bn (USD 1.94bn). Motor is the largest class, accounting for 72.3% of the non-life market.

At the end of June 2019 there were 28 insurance companies authorised to operate in the Romanian market. Major insurers are City Insurance, Allianz-Tiriac, Euroins Romania, Vienna Insurance Group companies (ASIROM and Omniasig) and Groupama. There were also 11 branches authorised in other EU member states conducting their activity (non-life and life) in Romania under freedom of establishment as at 30 June 2019.

There is a high level of market concentration in the top five non-life insurers in Romania (they accounted for 72,22% aggregate market share in 2018) exaggerated by local companies having very high market share of MTPL, by far the biggest line in Romania. There are no longer any MTPL tariff classes. Although a six-month cap was placed on MTPL premiums commencing 18 November 2016, with effect from 18 May 2017 the premium cap ceased to apply and the ASF now publishes reference fees in order to provide a benchmark for consumers to compare their MTPL quotes from insurers. The main distribution channels used to be direct sales forces and agents but brokers have become the dominant force. Most commercial/industrial business is broker-controlled.

What specifics differ from those in other countries?

SIMIONESCU: The large share of the MTPL in the overall insurance portfolio is, for sure, very particular for Romania. In respect of the regulatory frame, the EU directives and regulations to be implemented in the member states should result in a similar working environment for the brokers and insurers and similar care taken of the customers’ demands and needs

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

SIMIONESCU: Employee Benefits have proved to be an attractive motivation and retention tool and thus we have seen increases in this line of business for the last 4-5 years. Our specialised Health & Benefits team and particular attention is further allocated within our company to the EB business line as more and more clients value this product and invest in sophisticated insurance plans.

Can international insurance programs be implemented?

SIMIONESCU: EU insurers can do business with Romanian clients as per the FoS, Freedom of Service principle. Non- EU insurers are not allowed to conduct insurance business in Romania without authorisation.

There are many international programmes for the Romanian subsidiaries of international companies that we service, either by managing the locally issued fronting policy or by providing certain agreed services for the FoS programmes. The major requirements for our activity are discussed and agreed in advance of the service provision so that we ensure the highest degree of compliance. Furthermore, periodical, at least annual, stewardship reports are issued to the use of the controlling broker and customer.

Please describe GrECo Romania’s incoming business servicing capabilities. Can you tell us about your most complicated case when dealing with international clients?

SIMIONESCU: Critical requirements for our colleagues who deal with the international clients are the previous experience in dealing with complex accounts and English proficiency. Apart from English, we are glad to have colleagues in our team who can speak French, German and Italian.

For sure, the most sophisticated cases are those to comprise more parties than just our clients and we face the challenge to accommodate interests that may diverge to some extent from those of our clients. For example, when working on recent construction project, we managed to solve the queries of our client the contractor, of its financing bank, of the state construction authority (the principal) and of the construction professionals employed by the principal in a satisfactory manner.

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

SIMIONESCU: The compulsory classes include motor third party liability and professional indemnity for an increasing number of professions (construction professionals, lawyers and notaries, medical profession etc).
A form of directors’ and officers’ liability insurance is compulsory for the managers of joint stock companies. The Law on Compulsory Home Insurance requires every householder to buy first-loss insurance against the perils of earthquake, landslide and flood.

The compliance with Solvency II supervisory system, GDPR and IDD and AML/CFT is of continuous concern for all the insurance market players preoccupied to deliver high standard services to the customers while observing the current legal framework.

How do you cope with these regulatory issues?

SIMIONESCU: Our specialists within the central office in Austria and within the local team collaborate and exchange information so that the policies and procedures that we implement locally are compliant with the national requirements and also, if case, with our group requirements. In addition, helpful data and guidelines are provided by the local association of brokers, whose leverage in the market has continuously increased to the benefit of its members.

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

SIMIONESCU: After the period 2015-2016 when two local insurers, mainly focussed on MTPL insurance, went bankrupt, we witnessed the withdrawal of the insurance licence and start of bankruptcy procedure of the company Certasig in February 2020. It appears that Certasig, that was not issuing any motor insurance, got into difficulties after some large marine losses in the region and after failling to review its capital reserves.

Our team in charge of markets security is constantly analysing the public information about the insurance companies in respect of their financial standing and compulsory indicators, claims behaviour, etc in order to those placements with potential high risk. Co-insurance arrangements and/ or re-marketing of a closed deal are also options we consider in case of potential large exposures.

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

SIMIONESCU: We value the permanent dialogue with our clients so that we correctly understand the particularities of their business and so that we are able to indicate what insurance solutions suit them best.

Apart from our team for international clients, there are experienced colleagues specialised either by insurance line or by industry so that we can liaise with a wide range of clients for various needs. They are supported by pur Headquartes in Vienna not only in respect of knowledge exchange but also if complex cross border placements. It is worth to mentioned that we have developed an unique IT in-house (we have our IT Development team based in the Belgrade office) solution which allows us the immediately distribute insurance offers or policies to the bank and leasing customers. We are proud to say that probably this technology is the best in our country and we are constantly upgrading it and adding new features.

Eduard Simionescu

Eduard Simionescu

General Manager
GrECo Romania GmbH – Sucursala Bucureşti

Eduard studied law at the University of Bucharest and the Romanian American University and graduated with a master degree in 2002. Already during this time he worked for a multinational insurance broker as an Account Executive. Later he was promoted to department manager for financial lines. In 2010 he joined GrECo Romania as a General Manger. Since then he and his team have demonstrated strong growth and excellent client service.

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