Interview with Mariana Diaconescu, ASIROM Vienna Insurance Group President and CEO.
ASIROM has always been a reference point for the local insurance market’s trends. How would you characterize the company’s activity at the moment? What would you say are ASIROM VIG’s strong points?
In order to describe our activity and our progress in 2011, we should mention a few things about the company’s history. ASIROM is the company which inherited the only insurance “entity” in pre-1989 Romania. Nowadays, it means, first and foremost, a very wide network, made up of over 180 territorial offices, over 7,000 insurance intermediaries and collaborations with more than 350 brokers on the local market. In 2011, we continued subscribing both general and life insurance policies and what made us stand out in 2011 was the fact we were one of the few insurance companies in Romania to report rising figures on the general insurance segment against a fairly sharp slump across the insurance market.
Certainly, we would like to believe that the growth we reported in 2011 is due to ASIROM’s major makeover process, as a result of its joining the Vienna Insurance Group (VIG) in 2008. I think that the main thing that defines us at the moment is the fact that all the business processes in ASIROM are centralised. We’ve managed to centralise all the bank office processes, I’m referring to the management of insurance policy processing, to the company’s entire accounting process and also to the management of damages. I should add that, since mid-2010, all our territorial offices have been allotted exclusively to sales. As regards the other services, we cater them at the central office in Bucharest, which allows us to enhance cost-effectiveness.
What brought about this “affiliation”? What were the changes?
ASIROM’s joining the VIG group was a great step forward, which resulted in changing our entire business philosophy. We are now a modern company, both in terms of products and in terms of the services we offer our clients.
What was the company’s progress in 2011, on segments?
Life insurance policies claim a steady share of the ASIROM portfolio, of approx. 17-18 pc. At the end of October, we saw a slight reduction which I hope was made up for in November and December.As regards general insurance, naturally, we are no exception, car insurances account for the largest share. Thus, car insurance policies claim 55 pc of the ASIROM portfolio and compulsory liability insurance policies claim an even larger share. Of course, as far as we are concerned, we are the Romanian people’s traditional insurer and, for this reason, RCA accounts for a large share of our portfolio, but in the past years, above all in 2011, we’ve seen a rise on other segments, especially that of optional goods and home insurance policies. We are not among the insurers which offer compulsory home insurance policies but, as you well know, the legislation allows the optional insurance policy to cover the three major disaster risks: earthquake, floods and landslides, thus standing in for the compulsory home insurance policy. Therefore, since mid-2011, ASIROM has reported very good figures on the optional insurance policies segment.
Do customers come out of their own will to buy insurances?
We have traditional customers. We have a stable portfolio of customers we have been keeping for years, whom we reward one way or another, given their loyalty towards our company, so they also benefit from many incentives we extend to them. We also have incentives for all the customers that did not claim damages through the years. Obviously, damages can also appear because of risks or fortuitous events, and there is nothing we can do, but we reward faithful customers and, on the other hand, we also reward the low claim rate of a customer.
How did the insurance market look in Romania, in its early years?
We do not believe that insurances had a shy start. As far as we are concerned, we were selling life insurances, goods insurances, agricultural and auto insurances, CASCO, RCA even in 1990. Naturally, there is nothing new in the Romanian market for ASIROM. What we added in time are civil liability policies, all kind of management liability insurances for professions that developed very much these years: the management liability insurance or the civil liability insurance of doctors, lawyers, notaries, managers. These are insurances that were not being used in the past, in Romania, which we added to our product portfolio.
How do you see the development of the whole insurance market in 2012? What trends do you see as being present here?
Speaking about 2011, the market kept this trend, this decline it experienced last year in terms of general insurances, of approximately 10 pc, and a slight growth of the life insurances sector, of 4-5 pc. So there was no dramatic change in the last month of the year. Of course, sales are traditionally much higher in December, due to the compulsory civil auto liability insurance (RCA).
For 2012, things are rather hard to predict. As you know well, the insurance industry always follows the trend of the whole national economy. It cannot do otherwise, because it is a service provider industry, after all, and both population and companies usually cover their basic needs, in the first place, and only then start spending on other types of services.
This is why insurances are often left slightly behind. When we experience times of crisis, there is probably a tendency to hope that we’ll be lucky, perhaps, and there will be no event that will cause damage. If we estimated that the national economy keeps stagnating, we would probably see the same level of sales in 2012 as well. If recession will come, then we will certainly experience a decline of the local insurance market, but not in the first months of the year, and only starting with the second half of 2012.
Concerning the RCA, there are not many influences upon the car insurance sector, only the fees. But the fees are so low in this market, that it is almost impossible for the decline to come from lowering the fees, so here we will probably have stagnation. When it comes to CASCO insurances, we already have a problem, because CASCO insurances are linked to the leasing industry. And as long as the economy stagnates or goes into recession, leasing stagnates or goes into recession too, and the CASCO will follow the same trend.
We reformulated the product and are selling a new product since November. We have already noticed, 2 or 3 weeks after the launch, a certain reinvigoration of this product. I want to hope that, this year too, we will sell it well enough. It is not necessarily the leasing; we reformulated it of such a manner that it is not linked to the leasing market.
How do you regard the private pension segment?
There are two totally different markets. During the past couple of years, a great deal of effort has been put into developing all the types of private pensions possible for various generations of customers. Nonetheless, we have life insurance products very much resembling the pension products. And these products sell very well. People are farsighted and try to make sure they will have a comfortable life after their active period. We have very many customers requesting such products which we offer as life annuities. With respect to business turnover, we closed the year with over RON 600 M of gross underwritten policies.
ASIROM’s plans for 2012?
We already drafted the strategies, we try to achieve a growth of the gross premiums subscribed in 2012 as well, and our wish is to raise them by more than 10 pc. I want to hope that we will succeed. In the market segment we want to penetrate, which will mark the whole year 2012 in Romania – the health insurances sector – a new legislation is being drafted as we speak. We are waiting for the legislation, to see to what extent we can offer our customers flexible health products that will support them in covering all their needs in this field. As far as we are concerned, the strategies devised by VIG are very ambitious and quality is the keyword for 2012 – the quality of the services we provide to customers, from the structure of products, the flexibility of the offer we make our customers, to providing them with services of the highest quality, in terms of covering damages and claims. So, on one hand, there is the payment of claims, and on the other the payment of claims within the shortest time possible, this is our target for 2012.
As for us, we have an extremely high number of intermediaries, approximately 1,000 sales employees, and we do not have a preference regarding their age. We systematically train them, with courses that are a must, because the structure of products changes frequently enough. We try to keep the pace with both the market, and the demands of the group. Coming to the products, those that sell these products of ours certainly must know them and answer all the questions a customer of years 2011-2012 might ask.