Aviva seeks to ensure operational efficiency

Mihai Popescu, CEO of Aviva Asigurari de Viata, tells Business Review that the insurer is placing the focus on offering quality services, reorganization and efficiency in the wake of the crisis.

 Anda Sebesi

How would you describe the Romanian life insurance market in 2011?
Overall, it is in the process of developing. It posted a marginal increase of about 4 percent in the first half of the year, but this was not as high as we had hoped. We are slowly getting the life insurance market on the right track – sustained development. We are still far behind other countries and their citizens’ practices and habits.

What volume or value do you estimate for the life insurance market for 2011?
Life insurance has a 20.8 percent share of the total Romanian insurance market, while these percentages are significantly higher in our neighboring countries the Czech Republic (46 percent), Hungary (53.5 percent) and Poland (58 percent). These differences are also present at the level of the life insurance penetration ratio, calculated as the volume of gross written premiums against gross domestic product (GDP).
In addition, in Romania 0.3 percent of the monthly average gross salary is allocated to life insurance while in other countries in the region it is 2 percent. So, while the average Pole devotes up to EUR 17.2, the typical Romanian spends just EUR 1.5. At present, Romanian consumption is in the process of convergence regarding insurance, including life. And while the market share of life insurance in the entire insurance spectrum is small, including in comparison with our neighbors, we will help to reduce this gap in the years to come. In such conditions, we can expect an increase in the life insurance market.

How much has the current economic downturn affected the local life insurance market?
Consumers have had their trust in financial institutions dented to some extent. Nevertheless, life insurance is an instrument that is very carefully regulated under both local and international legislation. The money that customers give to their insurers is invested in the safest instruments that exist. However, I think that institutional trust will recover. There were crises also in the 80s and 90s. There are simply economic cycles that repeat one another. It is likely that the current difficulties will be greater than we have seen in the past ten years but this is not something new.

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What segment of the insurance market was the most dynamic last year?
There were no spectacular increases on any of the life insurance market segments, given that we’re speaking about a market that has posted only slight increases in the past twelve months. In those cases where the dynamic of the insurance class was higher, this was because of a favorable computation basis.

What are the main ways in which the current economic crisis has changed Romanian behavior regarding life insurance?
I think that the last two years of crisis had a huge effect on Romanians’ attitude towards saving, making them realize that nobody but them will assure financial protection for their family or a higher income when they retire. So I think that this period brought it home to Romanians that life insurance is necessary.

What importance do Romanians attach to financial planning?
Not as much as we would like or think necessary. Romanians are reluctant to take out life insurance in the still unstable current economic context. They prefer to allocate their funds to more demanding needs and put off buying life insurance. They are focused on the short term, which reduces their interest in investments in medium- and long-term financial instruments. They also don’t save money because they feel as if they don’t earn enough to do so. The level of financial education is still low but actually better than in recent years. Plus, the idea that “I don’t need life insurance because nothing bad will happen to me” is still deeply implanted in Romanians’ minds. This mentality is changing but the process moves with small steps and needs a very long period of time. We are hopeful that Romanians will become more responsible about their financial protection because they have started to be aware of the importance of acting themselves in order to safeguard their financial future.  

What insurance product has been the best seller for Aviva on the local market this year?
Complet, a long-term plan that provides a sum intended to offer financial protection for the family if the breadwinner dies prematurely. Our customers can choose additional options like covering unpredictable expenses in the event of an accident, invalidity or serious illness.

What is Aviva’s strategy for 2011?
This year Aviva has focused on operational efficiency and reorganization. Because we are going through another year of crisis we are concentrating on efficiency and ensuring that each Aviva customer has all the necessary information to know exactly what product he or she has bought and what to expect. It is more important for us to offer quality services to our customers and that’s why 2011 is a time of reorganization and major investments in the operational side.

anda.sebesi@business-review.ro

CV Mihai Popescu
May 2010 CEO of Aviva Asigurari de Viata
2008-2010 Chief marketing officer with AIG Life Romania
2003-2008 Manager, financial institutions & group management division at AIG Life Romania
2000-2003 Relationship manager at Citibank Romania
1997-2000 Brand manager at P&G Balkans
1995-1997 Off shore business integration project leader at P&G Balkans
1995 Graduates from the Bucharest Technical University with a MSc. degree in Engineering.