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There are small prerequisites for stabilizing the economy and gradually exiting the recession, this will allow all Ukrainian markets to recover, including the insurance market, which is on the verge of major changes.
About what changes 2017 will bring to the life insurance market, as well as about GRAWE's further plans in Ukraine, she told Natalia Bazylevsky, Chairman of the Board «GRAWE UKRAINE Life Insurance».
- In 2016, the Ukrainian economy finally demonstrated growth. And there is every reason to believe that in 2017 the positive dynamics of Ukrainian GDP will continue. How will the insurance market react to this? Will it receive the long-awaited boost for growth?
I really look at the current situation with great optimism, as I would like to believe that the next 2 years will be a turning point for the entire financial market as a whole, and for the insurance industry in particular. On the one hand, the rehabilitation of the banking sector, which has become a painful but necessary step, has actually been completed. On the other hand, Ukraine continues to approach the European Union within the framework of the Association Agreement and cooperation with the IMF has been resumed. All these signals form a kind of foundation for the recovery of the insurance market. Plus, we expect a change in regulatory conditions for insurance companies, which is in particular associated with more stringent control over insurance companies with the planned transfer of powers of the National Commission for Regulation of Financial Services Markets to the National Bank of Ukraine. We expect changes in the next 2 years that bring Ukrainian legislation closer to European legislation. Of course, the exit of companies such as Aegon Life from Ukraine cannot be happy and this is a summary of the fact that the market is far from being interesting for fresh foreign investors. I would like to see legislation in this market that would be able to attract and interest classic companies for a clear vision and stable development.
- But don't you think that if there has been no revolution in the life insurance market for more than 10 years, then it is not worth expecting it in the coming years?
Considering that revolutionary processes have not been implemented in any of the spheres of the Ukrainian economy, the economic situation in our country is the one that we all observe. At the same time, I cannot say that we expect or expected any revolutionary changes. For the development of life insurance, it is necessary that all economic and financial spheres of the economy work synchronously. Insurance is an important link in any world economy. After all, life carries not only a financial function. Accumulation products often contain options related to both medical and pension provision. In other words, insurance companies, in fact, take on the protection of the population, thus reducing the pressure on the state budget due to the reduction of social security costs. Moreover, if we analyze the state of the Ukrainian financial market since 2008, a clear trend is noticeable. While the banking sector has experienced ups and downs, mass bankruptcies, the life insurance segment has been experiencing stable growth. And this only confirms the thesis that the life insurance market is the least susceptible to crisis and other negative phenomena, which makes it almost the only option for accumulating and protecting savings in the current conditions. We also have high hopes for Ukraine's rapprochement with the European Union within the framework of the Association Agreement. Be that as it may, these agreements will provoke an inflow of capital, an increase in the solvency of business and the population, which sooner or later will be converted into investment and savings instruments. And insurance, of course, will receive an incentive for development in connection with these processes.
- That is, if we summarize it in some way, there is market growth. But is life insurance in Ukraine still not up to the pace and scale of Western Europe?
It is not entirely correct to say that the Ukrainian market is somewhere "at the bottom" and everything is bad. Yes, we are still far from the scale that life insurance has reached in Germany or Austria. But even in the current realities, it justifies itself and fulfills the tasks assigned to it. Moreover, we see a trend that people, having withdrawn money from other assets, are increasingly thinking about how to protect them from inflation and devaluation, make them work and bring profit. Moreover, if in 2014-2015 there were relatively few clients who chose accumulative insurance as an alternative to the usual methods of investment and savings, today more and more people are considering this option for themselves and are aware of it.
- By the way, if you have already touched on the issue of sales. Were there any changes in this direction in 2016 or not?
GRAWE in Ukraine has been adhering to a model for many years in which life insurance sales are carried out through our strategic partner - the company – «EUROLIFE Ukraine». Yes, this approach differs from European practice, where insurers very often use alternative channels. For example, they organize the distribution of policies through banks. But we should not forget the specifics of the market in Ukraine, which is developing in conditions of high demand for insurance. That is why the multi-level distribution model chosen by «GRAVE UKRAINE Life Insurance» is more economically feasible at the initial stages of economic development and does not increase the cost of the product for the client.
- In other words, can we say that the sales strategy you have chosen is one of the optimal ones, based on the realities of the Ukrainian market?
The optimal strategy is one that does not increase the cost of the product for the client. There are various cooperations in Ukraine, some work through banks, some work through other channels. Bank sales, for example, are more suitable for selling short-term products. Banks are effective provided that one meeting results in the sale of a policy. This approach works, for example, in borrower insurance. But it is completely unsuitable when it is necessary to provide information to the client about the terms of long-term insurance. The manager needs a sufficient amount of time to understand the client's needs and offer the product that may be interesting, and this takes a lot of time. Therefore, all the years that we have been working with «EUROLIFE Ukraine» - and this is already 17 years - we are convinced that our choice was the right one.
- What are the features of the work of sellers during a crisis period? After all, it is obvious that in the current situation, clients are more prone to terminating contracts and are easily panicked. Exchange rate instability, bank bankruptcy, etc.
Indeed, the so-called negative information background, which is a consequence of unfavorable external factors (devaluation, inflation, falling incomes of the population), has a very strong impact on the client's mood, makes him nervous. And in order to talk to him about investing money in investment programs, it is necessary to have an objective economic situation in the country, so that he could qualitatively explain and tell the client the difference in the systems of operation of various economic institutions: banks and other financial institutions work on currency markets. In Ukraine, at the moment, there are very few real working investment assets that can guarantee stable profitability and return on investment, so the presence in companies of: shareholders with more than 200 years of experience in insurance, financial stability and solvency are extremely strong arguments. An equally important point is constant two-way communication between consultants and clients.
- What are your plans for the coming years? Will the company's strategy change?
The local insurance market, as we mentioned earlier, is far from the European level of development and is aimed only at a long-term presence. In addition, let me remind you that GRAWE is represented by two companies on the Ukrainian market, which will allow us to seriously strengthen our presence in the coming years by developing cross-selling. So we have no reason to change our strategy. As before, we intend to adhere to a policy of balanced growth and strengthening market positions. At the same time, in Ukraine, there is a certain redistribution of the market, and GRAWE is looking for opportunities for expansion. In Austria, for example, the concern has long been represented in all areas of insurance. In other countries, we are developing according to a similar scheme, and Ukraine will be no exception. It is for this purpose that a risk company was acquired several years ago, and in 2015-2016 a rebranding was carried out so that our clients had a clear understanding: both «GRAWE UKRAINE Life Insurance» and «IC «GRAWE UKRAINE» are actually one company, where the insured can receive a full range of insurance services. At the same time, we strive to become better and closer to the client. Thus, in 2016, a new office space was purchased on Velyka Vasylkivska Street with an area of 750 sq. m. - the head offices of both companies will move there in the near future. The presence of the illiquid division of "Grave UKRAINE Insurance Company" in cities such as Zaporizhia and Khmelnytskyi was also reviewed.
- Are changes planned in the company's product line?
We do not see any significant prerequisites for seriously reviewing our product line. For changes in insurance programs, firstly, the adoption of a new law "On Insurance" is necessary to introduce European insurance standards in Ukraine. Secondly, full-fledged medical and pension reforms are needed, which will allow insurance companies to more deeply integrate into the social security system of citizens. At the same time, let me remind you that three years ago we launched a line of programs with a medical component "Grave Gold", "Grave Medic" and "Grave Support", which are in great demand. I think this is due to the fact that "GRAVE UKRAINE Life Insurance" has, in fact, offered the market a unique product that combines accumulation options and coverage of the risks of critical illnesses or hospitalization. In addition, for several years now we have had the "Pension Option" program, which, in addition to increasing savings in the long term, provides capital protection and gives the client the right to choose a payment in the form of an annuity instead of a lump-sum insurance payment. Taking into account the fact that social standards for pensioners in Ukraine remain low, the Pension Option will be an extremely popular option.
Source: NV Business
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