The FINANCIAL -- It is believed 2016 will be an extremely challenging year for the Georgian insurance market. Despite this however, insurance company IRAO (Vienna Insurance Group), plans to maintain its growth trend this year. Insurance products are still considered to be luxury goods in Georgia. In this regard, a transformation is needed in people’s minds for the proper perception of insurance as an item of necessity. By implementing CSR as part of its company’s tradition, the management of IRAO wants to make its social commitment focused on the most vulnerable part of society - children.
“In terms of developing the economy, maintaining year-to-year growth of the company is an extremely tough issue, but I strongly believe that when you have a clear vision and specific goals, you can achieve them. We think that 2016 will be extremely challenging for the whole insurance market taking into consideration currency depreciation processes, in our country, as well as in the whole region. Still, the average growth rate of IRAO during the last three years has been equal to 20% and we are very confident that we will properly manage to maintain this growth trend during the year 2016,” Vakhtang Dekanosidze, General Director of IRAO, told The FINANCIAL.
A few years ago the Management Board of IRAO made a decision to direct its CSR strategy towards the most vulnerable part of our society - children suffering from cancer. This concern became the main reason why IRAO started its relations with Monk Andrew’s Foundation, which is the only foundation in Georgia taking care of around 75 children from socially-unprotected families struggling with cancer.
“Last year, Vienna Insurance Group (VIG) paid particular attention to IRAO’s SAD project, and at the beginning of December 2015, representatives of VIG visited Monk Andrew’s Foundation in Georgia. We were soon after very excited to be acknowledged for our work. The IRAO SAD project, which was implemented in compliance with VIG CSR strategic directions, was recognized by the Special Jury as a 2nd prize winner of the Günter Geyer Award for Social Conscience, initiated by Wiener Städtische Versicherungsverein (the principal shareholder of VIG), annually provided for Group member companies for their social commitment,” said Dekanosidze.
Q. Leading companies are used to having an impact on the whole business environment. What are your most notable advantages and directions where others try to emulate you?
A. International Insurance Company IRAO, Vienna Insurance Group, has been operating on the local insurance market for around 12 years. During this time, the company has made a significant contribution to the development of the insurance industry and Georgian economy. Starting from its corporate history - IRAO occupies one of the leading positions among the top five companies, and offers its corporate and retail customers various types of qualified insurance products.
IRAO, as a member of Vienna Insurance Group (VIG), is constantly striving to transfer European business proceeding standards and culture to our country. Operationally, the strategic mechanisms of IRAO are strictly based on VIG standards and existing guidelines. It ensures we provide our customers with unconditional reliability. As for Vienna Insurance Group, it has been operating in Central and Eastern Europe (CEE) for more than 25 years and is one of the leading listed insurance groups in the region. According to preliminary results of 2015, it has generated more than EUR 9 billion in premiums, making it number 1 in its core markets last year again. VIG is presented in 25 countries of Central and Eastern Europe, with around 23,000 employees of 50 Group companies.
Q. The Georgian insurance market is still lagging behind the developed world. What are the main steps that need to be implemented in order to develop the sector further?
A. I fully agree with the statement that the Georgian insurance market is not yet matured. It has an asymmetric structure, in terms of how certain insurance lines are well developed in comparison to others. Besides, they differ from classic lines of insurance that exist on developed markets. In this regard, the Georgian insurance market strongly needs the implementation of compulsory types of insurance, such as motor third party liability, employer’s liability insurance, etc. Launching compulsory lines of insurance would become a trigger for formulating a symmetric and comprehensive market.
Q. Have you noticed any changes (such as cautiousness) in the attitudes of foreign partners towards Georgia, due to the existing economic instabilities in the region?
A. Currently, economic instability processes are spread beyond our region, still, we truly believe that our country has huge potential to maintain its path of development in various sectors; starting from banking, tourism and other service spheres.
The corporate history of the development of VIG, in terms of its expansion into the CEE region started 25 years ago, highlights its experience and confidence to operate and develop in countries with diverse economic conditions. A few years ago, our shareholder, Vienna Insurance Group, provided one of the largest contributions to the Georgian economy, with approximately GEL 50 million investments into the Hospital Rehabilitation Programme. As of now, 16 multi-profile hospitals are operating in various Georgian regions and are providing beneficiaries with qualitative medical service.
Q. Have insurance products transformed in people’s minds from luxury goods to items of necessity yet in Georgia?
A. By definition, insurance is a risk transferring mechanism that contains social benefit elements, protects the population from various unexpected financial risks, prevents them from becoming insolvent, and preserves the welfare of society. Nevertheless, insurance products are still considered luxury goods in Georgia. A mental transformation is needed for the proper perception of insurance as an item of necessity, which should be supported by the Government as well. As was mentioned above, launching compulsory types of insurance, for example, motor third party liability insurance - will protect our population from negative impacts, which often cause significant financial losses in the case of motor accidents, and will raise awareness of insurance as such.
Q. Could you please provide a brief description of the list of CSR projects implemented by IRAO Insurance Company?
A. Nowadays, in accordance with corporate social responsibility development, besides the Government, private companies have also started to think about the difficulties people are surrounded by in everyday life and ways to solve them. By implementing CSR as part of our company’s tradition, we want to make our social commitment related to our society. A few years ago our company’s Management Board made a decision to direct its CSR strategy to the most vulnerable part of our society - children struggling with cancer. Statistics show that over 200,000 children are revealed to have cancer worldwide each year. Therefore, 80% of those children live in low or middle income countries where survival rates can be as low as 5%, compared to 80% in high income countries, and proper medical treatment at an early stage is crucial for their improvement.
This concern became the main reason why IRAO started its relations with Monk Andrew’s Foundation, as this support and cooperation became in full compliance with the direction and priority that we have taken in this regard. Until now, the Foundation has been the only one of its kind in Georgia, which takes care of around 75 children from socially unprotected families suffering from cancer, and provides them and their families with all the necessary conditions that are crucial for their rehabilitation, besides medical treatments. Still, the Foundation has no organizational basis, it exists and operates, as far as providing any kind of support to such families, mainly based on the desire and freewill of its founders, volunteers and their supporters.
As well as monthly donations provided to Monk Andrew’s Foundation by IRAO, every year employees organize a Social Active Day project at the Foundation - initiated by our shareholder VIG, when around 20% of employees together with the company’s Management Board, visits and spends a day at the Foundation; organizes an entertainment event for the children; and delivers equipment necessary for their proper development and rehabilitation. But the most important and positive impact of this event is providing the children with an encouraging influence.
Q. For some, CSR is perceived as just another PR tool for big business, a drop in the ocean that does more good for that company’s brand than it does for others. Can you share with us your experience of why CSR is important for all businesses, regardless of their size, and what the main benefits are for the community?
A. IRAO’s inspiration, for transforming its social projects to the company’s constant CSR strategy, was the almost two centuries of experience and socially-oriented corporate culture of our shareholder - Vienna Insurance Group. Since the first predecessor of VIG was founded in Austria in 1824, awareness of responsibility, sustainability and value-oriented growth became main priorities for the Group. These priorities create a background for VIG social commitment, as a matter of tradition. Since then, the Group has been permanently launching and carrying out a number of social, volunteer and charity projects and activities in Austria, as well as on an international level.