Triglav Group sees steady rise in premium share on SEE markets outside Slovenia, adopts omni-channel sales approach

Uroš Ivanc, Member of the Management Board of Zavarovalnica Triglav

Triglav Group posted consolidated pre-tax profit of 84.4 million euro in 2017. The Group employs over 5,100 people in six countries.

Triglav Group continues to maintain high capital adequacy in line with its strategy for responsible long-term development. How far has the group come in fulfilling the other goals outlined in its 2017-2020 strategy?

The Triglav Group is developing into a modern, innovative and dynamic insurance/financial group, which will firmly remain the leader both in Slovenia and the wider region while maintaining profitable and safe operations and financial stability, as also confirmed by the high “A” credit ratings assigned by the credit rating agencies S&P Global Ratings and A.M.Best.

Strategic activities aimed at achieving growth and development are going well. At the group level, the premium share on the markets outside of Slovenia has been steadily increasing, in addition to strengthening our market share in the region. The volume of business has increased in all segments, with greater emphasis placed on investments in life, pension and health insurance, where the highest growth levels are expected. Last year, the Triglav Group entered the Macedonian life insurance market, while in Bosnia and Herzegovina it was the first to offer voluntary pension insurance. With the aim of increasing the visibility of the Group as the leading asset manager on the markets in the region, last year together with a part-ner we established a regional platform for alternative investments (Trigal) and this year we have entered the pension insurance market in Croatia by acquiring the majority stake in a Croatian pension insurance company. Apart from that, we are developing new ways of doing business and new business models and partnerships, which allow us to enter the markets where the Group is not present with traditional business models.

The Triglav Group has adopted an omnichannel sales approach; in addition to our well-branched sales network, we are strengthening alternative sales channels such as banks, leasing companies and travel agencies, online and mobile sales. We aim to provide comprehensive solutions for our clients, therefore our insurance services are upgraded with assistance services. The group already provides roadside assistance on all of its markets, the focus now is on offering other services, and we are particularly active in the health insurance segment.

One of our strategic guidelines is the digital transformation of the Triglav Group. We carry out a wide range of activities, some of which are visible to our clients and business partners, while others concern our internal processes as support for insurance underwriting and processing, claim settlement, information security, etc.

What are the key factors likely to influence your operations by 2020 on the Slovenian and the other markets in South-east Europe (SEE) where you operate?

Both our activities, insurance and asset management, are directly linked to the macroeconomic situation in the countries where the group operates and the situation on the global financial markets. We are pleased that the economic situation in the region is improving, which is reflected in the growth of our insurance markets. In the health, pension and life insurance segments, structural changes and reforms in individual countries of the region are expected to have an additional impact. We see a number of opportunities. Our business is exposed to fierce competition, which is, in general, beneficial for our clients and for the further development of our activities. We estimate that this will continue in the future. We expect that the level of risk-free interest rates will begin to slowly rise, which will have a positive impact on interest income from the group’s financial investments. However, we do not expect that interest rates will reach the levels from ten years ago in the medium term.

The consolidated net profit of Zavarovalnica Triglav declined in 2017, despite a rise in gross written premiums. What were the main reasons for the drop and what actions has the company taken to increase its profitability?

We are satisfied with the performance and the results in 2017, which even surpassed the planned level. Consolidated profit before tax of the Group in 2017 was 84.4 million euro, which was planned at 70–80 million euro. Our performance was affected by unfavourable claims experience (claims from major CAT events were 22% above the 10-year average), which was effectively compensated with high premium growth and good cost control. Returns on investment further fell in 2017, but less than expected; however, they were positively affected particularly by specific one-off events. Although the claims ratio increased, the combined ratio of the group remained strong at 93.9%. We believe that we set good strategic guidelines, which are being successfully realised.

Triglav Group recently entered Croatia’s pension insurance market. Is the company actively pursuing expansion of its operations on this or other segments in SEE markets?

Yes, we are strategically expanding our operations on the existing markets through organic growth, however, we do not rule out takeovers should an appropriate opportunity present itself.

Is climate change affecting your business?

The impact of climate change will very likely be seen in the long term as higher expenses for reinsurance cover, or even a narrower range of insurance products for certain types of risks as the most extreme consequence. Climate change would mostly result in more frequent major CAT events, which are in our markets mainly the consequence of hail-storms with strong winds, floods and frost. This risk is managed by ensuring adequate reinsurance protection, appropriate insurance technical provisions and high capital adequacy. However, the claim frequency has to be observed through a longer period of time and not merely on the basis of last few years in accordance with the professional insurance stand-ards. Although most people believe that the frequency of major CAT events in the environment has been increasing in recent years, our data on claims paid for the last ten years do not support this. The higher claim frequency could only be observed on the basis of long-term data. Such a long-term trend would most likely mean more expensive insurance for our clients because the higher the claim frequency, the higher the reinsurance cover expenses for insurers.

In an interview for last year’s edition of SEE TOP 100 you said you expect that digitisation will be one of the most important future elements of operational efficiency. In what areas is Triglav Group employing advanced technologies?

We are employing advanced technologies in managing relationships with our clients and business partners as well as in our internal processes, with the aim of implementing paperless, mobile and simplified operations. This year the i.triglav web office is being upgraded for our clients in the Slovenian market. We are expanding the range of claims settled exclusively electronically; furthermore, our mobile applications enable the clients to report a claim and request assistance services. Our processes are being automated and optimised, a fully electronic loss file and the possibility of cloud-based digital signatures were implemented in some insurance segments, the electronic document archiving system was upgraded, etc. With the launch of mobile platforms, we aim to increase the effectiveness of cooperation with our business partners, assistance service providers and outsourcers for making repairs. Apart from that, we developed a mass claims monitoring solution and adjusted our organisation of work to the settlement of mass claims. In short, Triglav systematically carries out a number of activities and projects with the goal of increasing the level of digitisation and following the trends in this area.