Immunity to the pandemic: results of the work of the insurance market in 2019

Insurance companies are forced to quickly adapt to the crisis and changes in the capabilities and demands of customers. Someone will see this as a chance, and someone will be forced to leave

The coronavirus pandemic has become a test for the Ukrainian insurance market. On the one hand, people have become more interested in personal insurance protection - health insurance policies, specialized insurance policies against COVID-19, life insurance. On the other hand, some corporate clients are suffering from quarantine and are cutting expenses. The crisis forces everyone to quickly react to changes, adapt to restrictions, change business models and plans for the current and future years.

Medical Insurance: криза як шанс

Спалах коронавірусу привернув увагу всього світу до питань охорони health. Не дивно, що зростає інтерес до полісів ДМС. На ринку почали з’являтися спеціалізовані програми, що покривають ризик COVID-19. “Світ та Україна вперше опинилися в стані загальнонаціонального карантину. Корпоративний та приватний сегменти по-різному відреагували на ситуацію. Різниця спостерігається й усередині кожного з них”, — зазначає Марина Зварич, керівник управління медичного insurance СК “INGO Ukraine”. За її словами, деякі підприємства, які раніше мали досвід по ДМС, але страхували лише окремі категорії своїх співробітників, під час пандемії розширили покриття на весь колектив. “Підприємства намагаються надати людям хоча б мінімальний пакет послуг, що дозволить отримувати якісну медичну допомогу в складній епідеміологічній ситуації”, — говорить пані Марина. Водночас зменшення ділової активності призвело до скорочення витрат цілими секторами економіки.

"If we talk about DMS, the current situation is twofold. On the one hand, we see increased demand from a large number of new clients. On the other hand, insurance payments under current insurance contracts are being suspended for those clients whose activities have been affected due to the introduction of quarantine. We will see how events develop further," explains Iryna Hevel, chairman of the board of SC "Alfa Insurance". Colleagues completely agree with her. "Companies whose business is suffering losses due to the forced interruption of work, in order to save the budget, reduced or did not extend their own insurance programs. Even some IT companies, which postponed the extension of their insurance contracts, have reduced funding," Ms. Zvarych notes.

Водночас страховики визнають, що у впровадженні продуктів від наслідків пандемії треба бути обережними. “Ми маємо програму insurance життя, яка передбачає виплату при діагнозі пневмонія, включно з випадком COVID-19. Деталі зможемо розповісти пізніше — зараз завершуємо розрахунки. Адже треба бути обережними — такий продукт потребує відповідального ставлення та не може бути сформований нашвидкуруч”, — зазначає Vyacheslav Havrylenko, Deputy Chairman of the Board of the ARX Insurance Company — General Director of the ARX Life Company. За прогнозами Андрія Артюхова, голови правління СК VUSO, покриття по коронавірусу або подібним ризикам рано чи пізно з’являться в будь-якій страховій компанії. “За рік ми це будемо спостерігати у пропозиціях майже всіх компаній. Природно, що в період пандемії складно створювати продукт, який покриває такі ризики. Але після закінчення пандемії він буде в усіх компаній”, — запевняє пан Артюхов.

Distance exam

Quarantine has caused changes not only in the field of health insurance. It affected the work of companies as a whole.

In general, experts agree that the current crisis has become an effective "accelerator" of digital transformation in the insurance industry. "The application of quarantine measures will move a significant part of our activity to online channels," says Ruslana Mikhnevich, financial director of NASK "Oranta". "The increase in sales through the online channel was expected. And now we record an increase in such sales almost twice." The work of insurers has become more remote - applications and documents for opening client cases are accepted online. Companies implement online customer identification procedures.

A year of training

The insurance market approached the current crisis better prepared than the crises of 2008-2009 or 2014-2015. In addition, 2019, although it was turbulent, turned out to be quite productive for the insurance industry. Insurers increased indicators in almost all major market segments.

In particular, the volume of gross insurance premiums increased last year by 7.4% to UAH 53 billion, and net premiums by 15% to UAH 39.6 billion. The volume of payments for insurance cases also increased. Gross payments for the past year increased by 11.5% to UAH 14.3 billion, and net payments increased by 12.9% to UAH 14 billion. We remind you that the indicators of net premiums and payments outline the result without taking into account reinsurance operations. At the same time, SCs were able to reduce such an indicator as the level of payouts — the ratio of payouts to collected premiums. If in 2018 the level of net payments was 36.1%, then in 2019 it was 35.5%.

The insurance market remains the second largest capitalization among non-banking financial markets. However, the amount of paid-up authorized capital at the end of the year amounted to UAH 11.1 billion, which is 12% less than in 2018.

Впродовж минулого року кількість зареєстрованих СК зменшилася на 48 фінустанов. На 31 грудня 2019 р. у країні було зареєстровано 233 СК, у тому числі 23 компанії зand insurance життя. Скорочення кількості учасників ринку відбувається з багатьох причин. Головною з них експерти вважають “спліт” — передачу повноважень регулятора страхового ринку від Нацкомфінпослуг до НБУ, що має статись цього літа. У цій ситуації власники компаній мають розуміти, що нагляд, вимоги до компаній та регуляторний тиск збільшуватимуться. До того ж донести свою позицію з багатьох питань буде набагато важче, адже НБУ переслідуватиме мету радше очищення ринку, ніж збереження кількості його учасників. Отже, позбутися непрофільного або непрацюючого активу для власників часом простіше, ніж намагатися втримати діючу ліцензію за будь-яку ціну. Головне те, що активними гравцями лишаються великі, достатньо капіталізовані СК, які мають довгострокові плани розвитку та присутності на вітчизняному ринку. Часто це СК з іноземним капіталом.

It must be admitted that for the market, reducing the number of SCs is not a critical factor, because there is a high concentration of business on it. According to the National Financial Service Commission, the Top-3 SCs account for 13.9% of collected insurance premiums, the Top-20 — 60%, and the Top-50 — 88.6%. This directly indicates that more than a hundred SCs, although they are registered market participants, do not actually carry out activities. Many of them were once created as companies for sale or to use an insurance license to organize financial flows. And until the big players leave the market, it can be assumed that everything is more or less okay.

Hold the drive

It is pleasing that SCs have maintained growth rates in almost all segments of the insurance market, namely:

• net medical insurance premiums increased by 31% and exceeded UAH 4.26 billion, and medical expenses insurance premiums increased by 53.4% ​​to UAH 1.969 billion;
• net premiums for insurance against fire risks and risks of natural phenomena increased by 13.5% to UAH 2.2 billion;
• life insurance premiums — by 18.4%, up to UAH 4.6 billion;
• in auto insurance, which includes CASCO, OSCPV and "Green Card", payments increased by 17.8% to UAH 13.8 billion;
• property insurance premiums increased by 9.2% to UAH 3.5 billion.

Road safety

За договорами insurance автомобільного КАСКО минулого року клієнти сплатили страховикам близько 8 млрд грн. Найпомітнішими гравцями на цьому ринку лишаються такі компанії, як ARX (колишня “AXA Insurance”), “Arsenal Insurance”, “УНІКА”, об’єднані “УСГ” та “Глобус” та “INGO Ukraine”. Як бачимо, більшість компаній у Топ-5 є страховиками з іноземним капіталом. ARX після виходу з українського ринку французької групи AXA увійшла до міжнародної канадської страхової групи Fairfax Financial Holdings. “УНІКА” представляє австрійську групу UNIQA, а “УСГ&Глобус” підконтрольна австрійській Vienna Insurance Group. Проте якщо подивитись на Топ-10 ринку КАСКО, то можна помітити, що підконтрольні українським акціонерам СК не відстають. Наприклад, у другій п’ятірці йдуть СК “Universal”, СГ “ТАС”, VUSO, “Express Insurance”, що є компаніями з українським капіталом.

The CASCO market leaves quite a wide field for competition. The fact is that, according to experts, no more than 20% of car owners currently have a CASCO policy. It is usually issued when buying a car on credit or if it is an expensive car. Sometimes novice drivers take out such a policy in the first year of driving - due to lack of experience and fear of damaging the car. So, as we can see, insurers have room to grow. However, not everything is so simple. The problem is that Ukraine has an aging fleet. For the most part, car owners use cars that are approximately 10 years old or older. It is unprofitable to insure such cars neither for insurance companies nor for car owners. The situation could be changed by the active development of car lending, but it is not yet there.

Besides, this service is not cheap. That is why companies are forced to pay attention to the quality of services and the speed of settlement of insurance cases. Additional options are not superfluous, such as providing assistance to the insured driver in various road situations — from fuel delivery or calling a tow truck to legal advice and prompt departure of a company representative to the scene of an accident.

Market participants predict a rapid transition of the motor insurance segment to online, which is facilitated by forced isolation. "We are observing a steady increase in online sales of OSCVP and voluntary "autocivilka". Until the beginning of 2020, about 50% of our "autocivilka" contracts were electronic, - says Vyacheslav Gavrylenko. - We set ourselves an ambitious goal - to bring this figure to 90% by the end of 2020. But in recent weeks, the demand for online OSCVP policies has increased many times. We will reach the planned figure much earlier." In his opinion, the market as a whole expects a noticeable increase in online sales and the transition to the electronic policy model in almost all types of insurance.

Car Insurance лишається так званим “локомотивом” страхового ринку. Саме на КАСКО, ОСЦВП та “Зелену карту” припадає 34,9% загальних страхових зборів. Втім, час покаже, чи буде так і надалі. Адже нині ринок нових та вживаних авто завмер через обмеження. І через це можна очікувати падіння, як мінімум, показників ринку КАСКО. А от сфера ДСМ, навпаки, переживає підйом і має шанс вийти на перші позиції.

Vyacheslav Havrylenko,
Deputy Chairman of the Board of the ARX Insurance Company — General Director of the ARX Life Company

— Undoubtedly, the volumes of planned sales will decrease in all SCs, so the issue of adjusting plans will be acute. This can be either a slight adjustment of 5-10% compared to last year, or a rather sharp drop of up to 50%.

We made three scenarios: from optimistic to pessimistic. All three involve deviations from planned sales plans. In the case of an optimistic scenario, we and perhaps the entire market will reach last year's figures with a sales increase of 5%; the average scenario predicts a drop of up to 15%; pessimistic — a drop of 30% or more compared to last year's figures. But we are optimistic.

Iryna Hevel,
chairman of the board of SC "Alfa Strahuvaniya"

— Clients with DMS will want new coverage extensions and new services. We are ready for it. We are already offering our clients the services of full-fledged online consultations with doctors, which we have launched together with partner pharmacies. We also offered an insurance program for individuals and legal entities in case of illness with the COVID-19 coronavirus. The current crisis will force insurers to diversify their portfolio, because it is necessary to adapt to new realities, repurpose salespeople, and rebuild work with partners and clients. And to continue the digitization of all business processes of the company, because the ability to work in a virtual environment with remote service channels is now difficult to overestimate.

Pavlo Tsaruk,
Chairman of the Board of SG "TAS"

— This year, we were all waiting for the arrival of the NBU, which was supposed to bring order to the market of insurance services, so that only reliable and solvent insurers remained on it. But it seems that the long-awaited cleaning will happen much faster - precisely thanks to the quarantine. And it is explained very simply: during the quarantine, turnover in all businesses falls, sales decrease, and insurance companies are no exception. At the same time, the number of insurance cases remains plus or minus the same as before, and you have to pay for them. Companies that were undercapitalized and actually lived on payments will have serious problems, because they do not have the money to cover losses and fulfill their obligations under insurance contracts. Thus, the crisis will help clear the market.

In general, by and large, we expect that after the quarantine, the insurance market, at least, should recover within one to two months. This can be prevented either by a serious jump in the dollar exchange rate, or by significant problems with the population's income. If there are no significant "distortions", we see no reason not to fulfill the tasks we have set ourselves for 2020.

Andriy Artyukhov,
Chairman of the Board of the SC VUSO

— Of course, during the quarantine period, the number of people buying policies online has increased significantly. We saw a 56% increase in online sales in the first two weeks of March, and an 80% increase in the first two weeks of April compared to the same periods in 2019. I think that this trend will continue after the end of the quarantine. Quarantine for online sales served as the strongest catalyst. Stronger than contextual advertising, SEO optimization, etc. The situation itself has created opportunities for the expansion of online shopping.

Ruslana Mikhnevich,
financial director of NASK "Oranta"

— Since the first days of the quarantine, we have increased the number of contact center lines to four, so that clients have the opportunity to receive the necessary advice or assistance remotely. During 2019, we have already changed most of the processes directly in the contact center itself, so now 93% of calls are processed within 10 seconds. We solve 80% of issues at the first contact. Due to the pandemic, the company partially changed its business processes. Back in 2018, "Oranta" launched an updated website that allows you to get the desired policy within 5-10 minutes, and last year an application for the network appeared, with the help of which the agent can sell policies online. And all this now came in handy.

YURI HUSIEV, MAY 14, 2020