Last year in Poland Balcia Insurance signed premiums in the amount of 50m euro, which is about 70% of total amount of premiums signed by the company. In the upcoming years Balcia Insurance plans business growth of about 10% a year, this year – even faster. Speaking about competitive advantages of Balcia Insurance, Mr. Boss mentions ability to react to customers’ needs flexibly and quickly, as well as advantages in IT infrastructure and software.
Lauris Boss, Chairman of the Board, Balcia Insurance SE
Q: Last fall BTA Insurance Company changed its name to Balcia Insurance. How did you come to choosing such name and how is rebranding going?
A: We had to change the brand since one of the conditions that the buyer – Vienna Insurance Group (VIG) – had set for the sale of the majority of BTA Baltic Insurance Company shares was to sell business in Baltics together with the BTA brand.
There were several things we wanted to be put into our new brand. On the one hand, we wanted to keep the brand linked with Baltics, since its roots are in Baltic States. On the other hand, the new brand had to be linked not only to Baltic Region, but to Europe as well since the company operates in Europe.
Choosing Balcia as the new name for the company was determined by many factors, the most important of them being historical: it was found that the roots of word “Baltic” go back to the name of an island Balcia in Baltic Sea. This island was representing some sort of a gateway between Europe and Baltic Region and vice versa.
Graphic image is based on the symbol of the sun, which is well-recognised far beyond Latvia, virtually in any culture of the world. It also contains an element of Latvian traditional sign “Laima’s broom” (The symbol of luck, blessing, and happiness. A soul keeper. Sweeps away the undesirable – translator’s note). And its position in the graphic image of the brand stands for a modern communication principle in business, called “human to human”. The main value of our company is a human – employees, partners, clients. Behind every legal entity there is a human being. The little circle in the middle of the sign represents this human, to whom everything is directed and from whom everything starts. The colour of the graphic sign is orange, which is a colour of traditional Baltic symbol amber and the colour of rising sun.
We wanted the new brand to be simple and light. The condition was that Balcia’s logo had to be clearly different from BTA’s logo and it had to be changed in one year within completing the sale of Baltic business. The new brand was born in such a short time, because Balcia Insurance team has common point of view regarding the values and how we want to work, develop, form new relationships, and reach our goals – all of that is what describes our company and ourselves.
Q: Is the reorganisation process completed by now?
A: Yes, it is. The businesses are now split. The employees, the premises and the IT solutions necessary for running the two companies are now separated.
Q: How many employees did stay in Balcia Insurance?
A: In Latvian unit there are over 80 employees working. In Polish Branch there are 18 employees, yet the whole sales network, including the ones involved in claims handling, reaches 5000 people all over Poland. In France, Germany and the UK there are 26 people employed in total.
Q: What is the strategy of Balcia Insurance in these countries? In which country do you have the biggest business volume and what are your development plans?
A: Baltic Region still is and, I believe, always will be in our hearts, yet due to the transaction we will not work on this market for five years.
Over the last years our priority was development of business in Baltic States. In June 2016 we developed a strategy for further operation abroad. There were three primary markets defined: Poland, Germany and France; in other countries we are assessing business opportunities.
Speaking about development plans, it should be taken into account that upon entering any new market proper attention must be paid studying local mentality and business environment. It isn’t guaranteed that a product highly demanded and well-selling in one country will be as necessary and showing as good sales in another country. One should have deep understanding, what “works” in every country, what people seek, what draws their attention, since products with the same names may have different contents. Therefore we are using individual approach to building business in every country. Over the last several years we have been gathering and summarizing information, experience and insight of how to work in our target markets.
Q: Is Polish market the largest, according to the amount of signed premiums?
A: Yes, currently it is.
Q: What is the share of Poland in your business?
A: In 2016 the volume of signed premiums in Poland was about 50m EUR, in other countries in total it was over 20m EUR. So in Poland we sign about 70% of total volume of premiums.
Q: What products do you sell in Germany and France?
A: Balcia Insurance French Branch participates in state and municipality tenders for insuring property and motor fleet, as well as civil liability insurance. Last year we introduced a new product in France – wind farm guaranty insurance.
In Germany we are currently offering short-term MTPL insurance, while future plans include selling other insurance products as well – there are several products considered for this market.
Taking into account the populations and business activity of France and Germany there is a plenty of options.
Q: What is Balcia’s competitive advantage on foreign markets? Obviously, there is a bigger market, bigger demand, but they come along with bigger competition.
A: Well, there are several factors to mention. First of all, we are more flexible and fast in decision-making than big corporations, which results in faster prepared offers, complying with the needs of our clients. We have noticed that big companies are unable to react quickly and develop specific products, while our processes are set in a way that enables us to make qualitative decisions as fast as possible. This is our difference. Europe has interest in it as well and it wants the change, but the big insurance “wales” are too slow in introducing changes.
Second of all, since the 90s Baltic States have made huge steps in development of IT infrastructure and software, in availability of internet that greatly fosters both development and efficiency of a business. The solutions we have developed are one step ahead of the old Europe and that is what makes us so productive. We have such solutions that European market is just starting to consider. We are ahead of Europe in many different terms and that is our advantage.
Q: How is Balcia Insurance doing in the UK?
A: In the UK, we don’t sell insurance products. Our work in the UK started when we realised that our clients, who are travelling by cars, get into traffic accidents there. Each indemnity for traffic accident cost a lot of money. Having assessed options how to minimise the costs and achieve more effective results, we concluded that we can do the claims handling on our own. So we put up a team, which quickly arrives at the site of the accident and documents the event, thus avoiding those long legal procedures that only increase the costs. This is how we got so productive here.
We founded a branch in the UK since we needed a unit that would handle our own claims. Later on we realised that we can offer this service to other insurers as well. So now Balcia Insurance renders services to other insurance companies, too.
Initially in the UK we were focused on how to satisfy the interests of the customers involved in the accident. Research showed that people are losing a lot of money on every case and they don’t know what to do upon an accident, so we looked for the solutions to provide the best possible support.
We plan to keep our business in the UK regardless of the Brexit outcome. Current researches show that there are several options to keep working in the UK market even after the Brexit is over. We are determined to keep working in the UK as long as our customers need us there and as long as this work is effective for the company.
Q: In Spain and Italy Balcia Insurance is running in rather small volumes, doesn’t it?
A: We haven’t founded branches in Italy and Spain, but we are working there based on freedom of services principle. In these countries the very principles of operation and the approach to this field is different, so the assessment of risks and decision-making takes place in Latvia.
Q: What are Balcia’s financial objective for this year?
A: The ultimate objective of every business is to gain profit. Work of an insurance company is closely related to risks and risk assessment. If the risk occurs, we have got to cover it. Of course, we do a lot of analysis and calculations in order to be profitable, but besides this basic goal there is another important factor of our work – to help people, when something bad happens to them. Back in the days when the shareholders founded this company they stood for this is not just about profit, but about public benefit, about helping each other.
Occurring risks vary from year to year. We calculate the best and the worst options and take it into account in our estimates.
Our plan is to grow business volume every year. In 2017 we have a slightly bigger boost of business volume in mind, while later on in the following years the average growth of business is planned at 10%. This is a rather realistic goal. The population in Baltics is smaller, so the competition on the market is rather high, which makes it difficult to grow, while in big countries the very amount of population provides space for growth. Of course, we have to work on understanding the mentality of the people there, our company has to become recognizable, and we have to keep in mind that our competitors there are the big corporations. But we know what to do to reach our goals.
Q: What is the situation with the MTPL insurance abroad? Don’t they have the same problems as here in Latvia, where MTPL is a segment that works at loss for years?
A: In general the situation is similar, but within the company it is all about the segmentation. If a company accepts all clients, they have the situation that everyone else has. We have very good underwriters, who analyse customer segments. And in Poland, for example, it results in one of the best results: while some have negative portfolio, ours is positive. It can be achieved by leaving aside the desire to take all clients and focusing on the assessment. Balcia Insurance is seeking good balance between profit and loss rather than boosting the volumes.
Q: Balcia Insurance has retained 10% of BTA Baltic Insurance Company shares. What do you plan to do with them in forthcoming future?
A: The question about the remaining 10% is shareholders’ choice. There are certain confidential terms of the contract, which I cannot reveal. Any of the parties can initiate the transaction regarding these shares, yet then the parties would have to agree on all the conditions of it, including the price. If any of the parties expresses the will to buy or sell this part of shares, then we will work on it.
LETA (C) 19.01.2017