Irina MERZLIAKOVA, General Director, Belarusian Association of Insurers

10 June 2021 — Marina MAGNAVAL
Irina MERZLIAKOVA, General Director, Belarusian Association of Insurers

Insurance, as a financial instrument, has more closely came into daily life of Belarusians and has become a definite necessity. This is probably why, despite all the difficulties, our insureds were in no hurry to give up insurance. We consider electronic sales as one of the most significant triggers for market development in a pandemic.

XPRIMM: 2020 created many challenges to the insurance industry, demanded full commitment, and changed traditional relationships between market participants. How do you think the market reacted to this difficult situation? Have the challenges of 2020 reflected in premiums, profits, expenses, reserves and assets?

Irina MERZLIAKOVA: The "panic" scenario that was announced in early-mid 2020 clearly did not come true. We must admit that the market in general passed well though this year. Even though GWP decreased, a couple of business lines dropped to a minimum, but new prospects appeared, and the demand for health and life related insurance improved. Of course, what is very upsetting is the decline in business activity and inability to fully communicate.

Comparing the state statistical data and current information on the insurance market, it is possible to substantively identify the main drivers of development of various market segments. For example, if we are talking about motor insurance, which occupies 60-70% in the portfolio of leading companies, information about new car sales in Belarus is important: they decreased by 18.2%. The volume of deposits of individuals in the national currency decreased by 9.6%, and in foreign currency - by 22.4%. And as a general index of the economic environment, we see a decline in GDP of 0.9%.

It would be logical to expect a subsidence in the insurance market in similar proportions, but this did not happen. On the contrary, excluding exchange rate fluctuations, an overall growth was recorded at the level of 7.6%, and in the life insurance segment, a recovery was observed by 17.5% in national currency and by 0.9% in foreign currency. It should be noted that such a result is by no means typical for other financial markets. For example, the amount under the concluded lease agreements for the year fell by almost 20% in euros. Moreover, insurers made a profit of USD 65 million (vs USD 26.3 million in 2019). Insurance reserves amounted to USD 980.2 million (vs USD 879.6 million in 2019).

 

XPRIMM: Despite the crisis, which classes and insurance products showed the most significant growth and what factors contributed to this? Was there a noticeable change in the market portfolio compared to 2019?

I.M.: The greatest optimism is supported by the revival of life insurance - a growth of 25.3%. And there is an implicit trend, but with clear prospects, of increasing share of the segment from 8.8% in 2016 to 13.2% in 2020.

Such segments as insurance against illnesses and accidents, those traveling abroad, and Green Card saw negative dynamics. But at the same time, there was a noticeable increase in comprehensive property insurance, Motor Hull of legal entities.

On the paid claims side, their level was fixed at a non-alarming 53% mark, although, compared to 2019, their growth rate was several percentage points ahead of the GWP increase.

Voluntary insurance types kept their leading position in the market at the level of 62.3%. And if the "mandatory" portfolio traditionally consists by almost 90% of civil liability insurance of vehicle owners and insurance against accidents at work, the voluntary one has property and personal insurance prevailing. It is interesting how the personal insurance "pie" was divided between different products: 31.7% - life insurance, 18.6% - supplementary pensions, 34.9% - medical expenses.

There is high interest in the effectiveness of such a sales channel as the banking system, which, due to its high motivation and an extensive branch network, has clearly not exhausted its potential. In 2020, the top three bank insurance leaders remained unchanged. In general terms, the proportions in favor of life insurance, medical expenses, and other types of personal insurance, which, as you know, are often the "recommended option" in case of loan agreements, have also been preserved.

This year, for the first time, we compared the total number of concluded insurance contracts (9,335 thousand) and the number of policies sold online (about 100 thousand), which makes only 1%, but as we say, this is just the beginning.

The largest share of electronic contracts in the sales of an insurance company in the market was recorded at 22.7%. On average, on the market, this indicator rarely exceeds 1-2%, although more than a dozen companies offer their services in the virtual format. Mostly MTPL policies are still being purchased online (over 70% of e-contracts).

 

XPRIMM: Could you say that, in general, based on the 2020 market results, the year was not bad for the market? What object lessons would you highlight after 2020?

I.M.: The year was really good for the market. Insurance, as a financial instrument, has more closely came into daily life of Belarusians and has become a definite necessity. This is probably why, despite all the difficulties, our insureds were in no hurry to give up insurance, as, for example, as it used to be before, during crisis times. Due to the large demand for use of online technologies, insurance products should become simpler and more mobile, which insurers cannot always provide given specific legislation and strict regulation of financial transactions. But it is obvious that consumers now most of all value ​​their time and want to spend minimum filling out any questionnaires, applications and visiting offices. We consider electronic sales as one of the most significant triggers for market development in a pandemic. We are already talking about the reciprocal initiative of the policyholders. The COVID policy (the product has different names) together with remote sales, has shaped a new market reality. We can say for sure that today we are at the stage of active technological transformation and digitalization.

 

XPRIMM: This year, the Belarusian Association of Insurers is celebrating 20 years since its foundation - what significant achievements over the entire period of work would you note? What do you plan to develop / implement in the coming years?

I.M.: Today the Association unites 16 insurance organizations, including the Belarusian National Reinsurance Organization (Belarus Re), and 6 insurance brokers. If 15 years ago we were proud of the prevailing volume of GWP of our members on the market, today we are talking about 100% coverage of the industry, which confirms a high degree of trust in this institution in protecting rights and defending interests of insurers.

We managed to build constructive relationships with the regulator and its management structure. The Association has no lack of information or of the ability to send its opinion. It may not always be perceived, but we are listened to and heard, and this stands high.

Another important area of ​​activity is increasing financial literacy of the population on insurance protection, aimed at various social groups of citizens, considering their capabilities and needs in the financial sector, which is essential for qualitative transformation of the society. This includes all kinds of educational events and "thematic" weeks for various target groups, with the participation of leading employees of insurance organizations and government bodies; development of educational materials, production of special brochures and bulletins; development and implementation of advertising strategies and PR actions.

Since 2002, the Association has been the founder of the "Insurance in Belarus" magazine, which is extremely popular among insurance professionals in Belarus. Traditionally, we support talented students - the future potential of the insurance business in Belarus. One of the most interesting and popular educational events among students is "Shadowing Day". On this day, students are given a unique opportunity to "plunge" into the work environment of insurance companies, communicate with experienced employees, ask questions, and become active participants in the process.

It is people - professionals and enthusiasts in their field - who help us move the industry forward. Thanks to their support and initiative, the Belarusian Association of Insurers today is acting as a negotiating platform where the Belarusian insurance market participants can develop a common view of the future development direction. The members of the Association have built a common corporate foundation that gives insurance companies an opportunity to jointly generate ideas and implement innovative projects, bringing real benefits to all market participants.

On the eve of the anniversary, I sincerely wish the Belarusian Association of Insurers to further strengthen its position in the system of existing institutions both in the national market and in the international arena.

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