Foto: Ales Rosa

XPRIMM: How would you characterize the CEE's insurance market evolution, as a whole, in 2013?
Benjamin JOSAR: The year 2013 has not been easy since the economic crisis has continued in both Slovenia and Croatia, while other countries in South-Eastern Europe experienced only weak economic growth. The insurance industry in this region faced many challenges, such as the economic downturn, unemployment, a decline in purchasing power, political instability in some areas, and as a result of all this, the demand for insurance products has declined. As far as 2014 is concerned, I expect the economic conditions in the region to remain challenging.

At the same time, I consider this part of Europe an opportunity for the development of the insurance industry, as well as the economy as a whole. In an unstable environment, the financial safety that is provided by insurance products is even more important. The Triglav Group, which is the leading insurance-financial group in Slovenia and one of the leading groups in South-East Europe, is presented in eight markets and seven countries the above mentioned region. In 2013 the TRIGLAV Group has continued to hold the leading position in Slovenia, Montenegro and Macedonia.

Last year we continued to use the strategy that is focused on the core business of the insurance industry, profitability and operational safety. In 2013 the Group as a whole achieved a favourable financial outcome, exceeded our plans and successfully maintained a high level of financial safety through the prudent management of business and financial risks. This was also confirmed by the A- rating with a stable medium-term outlook given by the Standard & Poor's and A. M. Best rating agencies.

XPRIMM: TRIGLAV has a strong presence in the region, being an important player in all the CEE markets from the Adriatic region. From this perspective, what are the most challenging aspects of doing business in the CEE markets?
B. J.: Each of the eight markets where we are present has its characteristics. The greatest challenges are market diversity, diverse consumer habits, different legislative and regulatory frameworks, and specific risks. We believe the legislative and regulatory frameworks in all the markets will gradually be harmonised with the European Union standards, which will facilitate the operating activities of all the participants that are active in more than one market. We have to be very responsive to the market situation and demand by using different sales measures as well as by launching new products and redesigning existing ones. The TRIGLAV Group continues its portfolio selection activities and focuses on building relationships with high-quality clients. We have noticed that an increasing number of insurances taken out within the region are from the core types of insurances classes, meaning the compulsory, accident and basic non-life insurances. Therefore we will gradually start to introduce the TRIGLAV complete bonus programme in the markets where we are present, which will enable policyholders to combine their insurances and thereby obtain certain discounts or other bonuses. Our goal is to offer policyholders the best possible insurance policy coverage, based on their needs.

XPRIMM: The CEE markets have been seen for many years as a growth reservoir for insurers is search of expanding their business, due to their double digit growth rates in term of GWP. However, from the profitability point of view, the CEE markets proved more challenging. How do you comment on the current situation from this point of view?
B. J.: The insurance markets of Skupina Triglav in the region are fairly underdeveloped. In the structure of the insurance premium in the region, motor third-party liability insurance is predominant. In general it is possible to say that the life insurance segment has greater potential in Slovenia in the medium-term, while a greater potential for non-life segments is visible in the Adriatic region. My belief is that the markets where the TRIGLAV Group is present are among the most promising in terms of the future development of the insurance premium. Because of the extreme growth potential, the profitability of these markets is more challenging since market participants expect substantial growth in the future and their business models have been adjusted to include these expectations.

XPRIMM: Which is your assessment with regard to the future development of the CEE markets, on short and middle term? What are TRIGLAV's development plans in the region? Would the Group be interested by further extend its activity out of the Adriatic region in CEE or even in the former Soviet countries?
B. J.: The TRIGLAV Group is planning further growth and development of the Group in the target markets in the South-East European region. By 2017 we plan to acquire at least a 10 percent market share of our target markets. In 2014 we will continue our activities to consolidate our position in the markets of the Adriatic region. We will consider the opportunities of individual insurance markets in the region and study the possibilities of organic growth, acquisitions and strengthening through the development of partnerships with relevant insurance companies, as well as complementary finance companies. In the region itself, we consider both the Croatian and Serbian insurance markets promising due to their size, as well as the growth potential of both countries. The TRIGLAV Group is already present in both markets and we intend to further strengthen our position.

XPRIMM: Would you say that the promising potential shown by these markets two decades ago proved real? How far/close are the CEE markets from fulfilling their potential from the insurance business perspective?
B. J.: The expectations two decades ago were set very high, in some cases too high, and individual countries within the region have justified these expectations to different degrees. Speaking from the business insurance industry point of view, these markets have not reached their potential by any means. The progress is clearly visible but there remains a lot of room for development. If we compare the insurance premium per inhabitant of the region, the highest one is in Slovenia with approximately 1000 Euro in 2012, while in Croatia it was around 270 Euro, and in other countries of the former Yugoslavia it ranged from 50 to 100 Euro. I gather there will be an increasing demand for existing products in these markets, as well as development and sales growth of new insurance products and an increasing interest in life insurances.

XPRIMM: What changes do you think would be the most important for the CEE markets in order to provide a better environment for the insurance business' growth and profitability?
B. J.: The fact is that the development of every insurance market is closely linked to the development of the economy as a whole. The gradual economic recovery in the region will promote growth in all business segments, including the insurance business. If one also includes the harmonisation of the legislative-regulatory framework with the European Union guidelines, then these markets will start to justify their potential rather quickly.