| Aldagi BCI - 15 Years of Generating an Insurance Culture amongst Georgians |
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24/03/2009 14:13 (241 Day 20:11 minutes ago) | |||||
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The FINANCIAL -- In recent years the demand for insurance services in Georgia increased significantly. It took almost 15 years for Aldagi BCI, the first insurance company in the country, to persuade customers of the value of insurance. Nikoloz Gamkrelidze, General Director of Aldagi BCI, discusses the company’s long history that has been all about the fostering of an insurance culture among Georgians. Gamkrelidze declares that during the recession, the insurance business has been less affected than most.
Q. Your company was the first insurance company on the Georgian market which actually appeared during the country’s most difficult period of modern history in the 1990s. How difficult was it to attract and persuade customers of new insurance offers?
A. Aldagi BCI was made up of four companies: Aldagi, Salbi, BCI and Europace. Ensuring the industry’s development was especially hard in the 90s. From 2004 the industry started developing successfully in Georgia. At that time insurance market increased by 35-40%, in 2007, the growth reached 70%. In 2008 despite all local and worldwide economical problems Aldagi BCI still keeps its leadership on the Georgian market and we are focused on maintaining this position.
The rapid development of insurance sector was connected with the development of an insurance culture among Georgians. Another reason was the attraction of foreign investments. One more reason was the initiation of the Government which started supporting social insurance packages.
Q. How did you manage to gain customers’ trust and convince them that their small monthly insurance premium is a very necessary investment?
A. We gained popularity among our customers with the help of successfully served individuals. Our greatest advertisers are our customers. From others’ examples the majority of people became sure that they had made the right choice in becoming our customers.
Q. How did the Russian Georgian conflict and world economical crisis affect the insurance business in Georgia?
A. The war and global economical crisis has affected almost every business sector including insurance. Many foreign investments as a result have been postponed. For the first two months the demand on insurance was shortened. A high numbers of our clients had automatically been receiving different kinds of banking services. The banking sector has much encouraged demand for insurance. From our own point of view I would say that the recession has less harshly affected insurance businesses compared with other business sectors.
Since the August war demand for insurance packages shortened by 25-30%. In the first and second half of 2008 we had the best results, although we have not yet returned to the pre war situation. Currently customers’ interest in insurance has risen. Perhaps this interest isn’t as big as the same period of last year but I think that the current orders can be considered good results and a good indication for the future. In 2008 Aldagi BCI insured about 250,000 individuals.
Q. August’s events in Georgia and the world economical crisis made many companies change their strategies. What kind of changes have you made?
A. After the war a lot of companies started changing their strategies. We also had to shorten our expenses and reduced our staff especially those who were serving retail customers and were directly connected with banking products. Members of our workforce were placed in reserve employment. We changed our strategy and don’t plan to have as huge an increase of sales in retail products as last year. In 2009 we plan to more focus on corporate offers and social insurance projects initiated by the Georgian Government instead.
Q. Recently the Georgian Government actively started supporting social insurance packages. Aldagi BCI participated in this project in 2007 while in 2008 you refused it. Why did you reject taking part in this project last year?
A. Aldagi BCI suspended participation health insurance projects initiated by government as we were oriented on service quality improvement and new products development. We were always oriented on having a wide range of products. Currently the insurance portfolio of Aldagi BCI is widely diversified; we offer the insurance of property, health, transport, and health insurance under social projects.
Q. The Georgian Government made social insurance packages more flexible by offering cheap health insurance. What is the advantage of such projects?
A. The main advantage of developing social projects was the popularization of insurance services in regions. In Imereti only we insured about 60,000 clients. So I think that the project which will is launched recently will be successful. It will help to attract customers of the middle classes. The whole market share of Aldagi BCI in 2008 was 24% but this year we plan to increase our market share as we are participating in governmental projects as well.
Q. Aldagi BCI was one of the first companies that offered customers war risk insurance. Has demand for it started increasing since last August’s military conflict and what’s the situation at the moment, has the panic passed away?
A. Aldagi BCI was the initiator of starting insuring war risks which became very popular among our customers. A lot of large financial companies asked for these packages. We insured a lot of large companies. The price of war risk packages depends on the strategic importance of the object. Fortunately after August the demand for such packets has shortened as people started to switch to a more positive and optimistic way of thinking. There are many international organizations who are obligated to have war risk insurance and they were our clients even before August. In September and October people continued asking for war risk insuring packages but at the moment the situation has changed.
Q. In their interviews with The FINANCIAL a lot of experts have said that the crisis can be considered a good lesson and that each company has managed to gain something from it. What about your company, what did the force majeure situation teach you?
A. Crisis management sharply differs from everyday management. War can be presumed an extreme lesson which taught us how to act during a force majeure situation. The team spirit of our staff during the recession is worth mentioning as well. Actually the recession has proved that many companies have strong immunity against the effects of the crisis.
Q. Aldagi BCI is collaborating with such huge reinsure organizations as: Hannover Re, AIG , Munich Re , Swiss Re, SCOR, Allianz, Polish Re, ACE, Sava Re, , British Marine, Syndicates of Lloyd’s. Have the conditions of collaboration changed for 2009 and if so, what specifically was the cause?
A. Since August 2008 the risk zone of Georgia has sharply changed and accordingly our reinsure partner companies have changed their conditions. Another reason for renegotiating costs with our partners was caused by the world economical crisis which affected our partner international companies as well.
Q. How has the recession affected insurance companies on the world’s market?
A. The insurance market is a financial institute which is absolutely integrated with economics. Insurance companies have faced huge problems during the world economical crisis. The recession has affected even such a huge insurance company as American International Group (AIG). The company was almost bankrupted. But the U.S. Government left the door open to further aid and gave out 80 billion subsidies which helped AIG to survive. Most insurance companies have faced such problems because of their high responsibilities towards banks, which were hit first by the crisis. Fortunately the worst of the panic and problems of the insurance market have passed.
Q. Are you planning to overview the prices of your products for 2009?
A. Our prices with reinsure partners have changed and this will cause a change in our prices. Aldagi BCI has four clinics. The price growth on medicaments has influenced the costs of health insurance. In November, after the sharp change of the national currency towards USD, pharmaceutical companies have increased prices on medicals. These changes have increased our prime cost.
Q. Should new products be expected by your customers in 2009?
A. Aldagi BCI is often working on updating their offers for customers and we will soon inform citizens of these new products.
Written By Madona Gasanova
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