Having made its entrance on the local market last year, CIG Romania has big plans in Romania for the years to come. As Zefir Castris, general manager of CIG Romania, told Business Review, the company intends to double its number of agencies in about three to five years and to become profitable in the next five to seven.
How do you characterize the Romanian life insurance market?
It is far from being saturated. We have many reasons to believe in its future growth, especially the life insurance segment. All Romanians are becoming more and more aware of the need to have a life insurance. But it is obvious that it is our duty, as insurers, to educate and emphasize the tangible benefits of such a product, in our case of an investment. Besides, the local insurance market is well regulated, with the support of the Insurance Supervisory Commission (CSA). I believe that, slowly, life insurance will become more and more desirable both to individuals and companies, aside from the bancassurance format. Life insurance offers both medium- and long-term protection and enables to professionally calculate the exposure to a higher risk of your financial investment. We expect an increase both in value and volume of the local insurance market this year.
To what extent has the current financial turmoil affected local life insurance? Can you estimate how much it decreased last year on 2008?
The market has been affected by customers’ lack of trust in the investments made by insurers. It was also influenced by the competition between different suppliers for the available financial resources of each Romanian – the daily basket and current financial engagements.
What is CIG’s strategy for Romania? To what extent was it influenced by the current economic context?
From the beginning we intended to offer high quality consultancy services to our customers through all that we do. We want to orient them towards a totally customized product that meets their needs and the degree of risk to which they want to be exposed. In addition to specialized consultancy services we also offer constant financial planning advice. This is the only way we can avoid wrong initiatives that, in the context of a still unstable market at international level, could affect our operations in Romania. The mother company from Hungary posted good results last year, as a result of our very high quality standards. As for CIG Romania, we haven’t been much affected by the current turmoil because 2009 was our first operational year on the local market. But things evolved with more difficulty, for sure.
What were the main insurance products that did the best for CIG Romania during 2009?
CIG Romania sells only unit-linked insurances. But we intend to extend our customer target from individuals to medium and large companies in the months to come, as soon as the discussions with partner investment funds are completed.
What can you say about the financial results the company posted last year?
Our operations in Romania are at the beginning and the results of our current actions will be seen in the next few years. The investments made by the mother company thus far in Romania have reached EUR 2 million and in order to complete our current strategy we will invest another EUR 3 million. As for CIG Pannonia, in 2009, it became market leader on the unit-linked segment (life insurance with the investment part linked by investment funds) with installment insurance premium payments, both for the annualized gross premium (PBA) and average written one. The total PBA of those 9,000 written unit-linked insurance policies is about EUR 17.77 million, or over 16 percent of the whole 2009 Hungarian unit-linked with installment payments insurance market. As for the average annual premium of written policies for 2009, it was about EUR 945.
What are the company’s plans for the Romanian market in 2010?
We have many plans which we hope will come to fruition as soon as possible. What we can say for sure is that we intend to launch a RON unit-linked product and one addressed to children by the end of 2010. As specific targets, we intend to sell over 5,000 life insurance policies. It is a very ambitious plan for our Romanian branch, but the current conditions are helping us to achieve our goals. I am sure that along with our partners, Concorde Ltd, Aberdeen and Pioneer Fund Management, we will post positive results at the end of 2010.
How large is your presence on the local market and what do you intend to do in the years to come?
CIG Romania will become profitable in the next five to seven years. We are at the beginning of our operations in Romania and we are in discussions with some important players on the brokerage market at the moment. For now, CIG Romania is selling unit-linked insurance only to individuals, but as I said we will target medium and large companies in the future. Our position in the top ten life unit-linked insurers on the local market is an achievable one. We have more than 325 employees (25 who work in the headquarters and over 300 nationwide in sales). At present, we are operating throughout 14 agencies nationwide but we intend to double the number in about three to five years.