22 February 2023 —
XPRIMM: Tanja, while the Romanian insurance market is still an emerging one, one of its most important segments, the MTPL insurance line, is regularly in turmoil. What is your reading of the situation?

Tanja BLATNIK: After two years observing the industry, I feel Romania, despite undeniable progresses, still lacks a "culture of risk management". I am not taking about large companies as such or organizations. I am talking about people. Let' face it: there is a certain degree of fatalism! Nothing will happen to my car, nothing will happen to my house, nothing will happen to my health, or my holidays, or my income when I retire ... and so on. What we need to educate people on, is that the insurances, the concept of mutuality is at the very origin of social systems. Severe accidents that include hurting others, either things or people, happen without intentionality. This does not remove the responsibility of the individual. But because of insurances, because of our social protection system, one is not ruined financially, when the hurt person is asking for compensation. Insurance is there for HIM. In conclusion, we are a powerful "INSTRUMENT OF SOCIAL PROTECTION". Let me give you another example: last year healthcare insurances whose popularity in Romania is the lowest in Europe, grew by only 4%. We have a long way to go.

Of course, there is a cost for the protection we are providing, and we discuss it daily with regulators. Pricing has indeed increased, but we need to consider a few things.

First of all, average pricing in Romania is massively lower than anywhere else in Europe. There are plenty of independent data available and furthermore, in the last 18 months Euroins' MTPL rates were stable.

Secondly, several elements of our diverse cost structure might be either regulated or, equally acceptable, completely liberalized and thus increasing competition. In other words, as they say, you cannot "drink the bottle and have it full at the same time". We either liberalize the market and its cost structure or we regulate the market ... and its cost structure.

Lastly, but more importantly, segmentation. For example, in my little country of origin, Slovenia, we have 20 segments. We must differentiate pricing according to driving habits of these segments so that we reward good driving behaviour with lower prices.

You are also correct in the more specific point you make on MTPL: recurrent turmoil. I am not going into details but let's talk about impact on people! All of us in this business touch the lives of all Romanians.

Our Industry, together with Banking, are the major sources of financial stability. But we, as an industry, have a problem: people have a better perception of the risk of a banking crisis that an insurance crisis. They do not understand what can hit them in the same way they understand in the case of banks! They saw "bank runs" on TV, they saw films, they deal with their bank every day .... but they deal with us mainly when there is a bad incident!

This is why all stakeholders in the industry, no one excluded, must be guided by an unparalleled sense of responsibility. Exactly because our industry is less understood, our responsibility should be greater than ever.

XPRIMM: Risk management culture and responsibility are valid points, but there is also another element to discuss: what is the reading of foreign investors of these recurrent highly mediatized crises?

T.B.: I could answer in two words and move on: very negative. Nevertheless, let's reflect together a bit.

As you probably are aware of, I am a member of some foreign and local Associations, Chambers, Clubs etc. We all agree that in general Romania, with all its unresolved issues and contradictions is an attractive place to do business and, although some days I doubt this, I would say that, in general, I agree that it is a good place. I talk to colleagues in banking, healthcare, infrastructure, energy etc. They all have their funny stories, but they all appreciate Romania and Romanians in particular. They sort out their problems, explain to headquarters - difficult job sometimes -, and move on with their business and lives.

Having said that, every unexpected turmoil is a "Chinese drop" that hits investors' confidence!". Let me give just one example.

I did my homework, as I was not there at the time, but you remember for sure what happened a few years ago when rules on green energy subsidies changed overnight. Investors had "banked" their projects and suddenly, business plans did not add up anymore. The market stalled, most of investors except the very big ones left. Now they are coming back because some of the rules have been rebalanced and above all because the Green transition is a bigger opportunity than local uncertainties Yet, Romania wasted a few years of green transition. We could be in a better position now. People forget quickly, investors do not!

We need to avoid any sense of unpredictability. You know better than me that unpredictability is a dirty word in business! Unpredictability is pure blasphemy in the investors community!

Nevertheless, "against all odds", we at Euroins and myself personally remain reasonably optimist. We continue our dialogue with the regulators and any authority, although we defend our rights and those of our shareholders forcefully whenever needed.

This takes me back to the sense of responsibility of all actors that care for Romania, Romanians, including institutions and their vital role in society. We need to be responsible, and this of course applies also to media that should do their job "without gloves" but understanding complexities and ... above all with sense of responsibility.

XPRIMM: Tanja, your key points are clear and nobody can deny what you shared, but let me probe you there. Investors' confidence is important but also institutions confidence is important to meet the high goals you described. There is constant scrutiny of several Institutions on all of us. What is your reading? Don't they trust us?

T.B.: Let's reason together in systemic terms. There is no confidence without trust, there is no trust without transparency and there is no transparency without what I would call intellectually honest communication.

Our industry is highly technical and very complex. Technical complexities might generate different interpretations and assessments of the risk. Over and beyond numbers, you need honest, non-bureaucratic dialogue to assess the risk and protect people. Irrespective of market conditions, industry consolidations, companies restructuring or political seasons, our dialogue has to be transparent, continuous, and above all well intended. I might be overly optimistic, but I sense that some genuine dialogue might have started. We will see.