How do you assess the insurance sector?
Even though the sector caters to a small market in terms of population, it is highly competitive and evolving. A key factor to take into consideration is the number of competitors and a clear increase of international insurance players within the market. Competition has been beneficial for the market.
One of the most important evolutions within the sector is the changing consumer habits of the population. The region is maturing in terms of insurance policy purchases. Previously we could see most clients exclusively looking to meet their legal obligations. This has slowly changed as the population better understands the need of having insurance. We now see corporate and individuals purchasing policies for the financial security that insurance policies offer. This change will positively affect the sector’s evolution. The current average insurance agreements per capita is below two products per capita in the Baltic states, and we expect this will rise to four in the next three years.
What segment has grown the most?
Analyzing the numbers and growth percentages we clearly see health insurance has had the biggest growth in the Latvian market. The explanation is clear and simple. Personal and employee issues are hot topics amongst international companies and health insurance is one of the tools used to become more attractive for prospective employees. In addition, one of the biggest ministerial goals at the moment is improving the healthcare sector. Private insurance helps cover deficits in the current healthcare system. An estimated 75 million Euros come from Latvian Insurance companies every year, and it is one the most important financiers of the Latvian healthcare sector.
What steps is BTA taking to increase its competitiveness within the market?
BTA is a strong and well-known brand with an experienced local management team. The company is represented in all segments and has the widest sales network in the Baltic states. Starting in the 1990s BTA was clearly a local company represented in the Baltic states. The purchase by Vienna Insurance Group AG (VIG) has improved our competitiveness and is a big opportunity for us to grow. BTA is the first choice for the corporate segment in the Baltic States. We have all possible non-life insurance licenses, support corporate clients in all business lines and even cover areas international insurance companies cannot. Guarantee, financial risk or agricultural risk insurances are some of our many niche coverage areas.
We increasingly see American, British and other international companies opening offices in Latvia. They have clear corporate guidelines on what kind of insurance they can accept and being part of VIG allowed us to meet their strict requirements fully.
BTA has been innovating and has invested heavily in digitalization. It is clear that without digitalization projects a company cannot be competitive. Investments in technology have given great results. For example, average claim payment is within 24 hours. Policies can be purchased, and claims can be collected through the portal. Clients can be fully serviced by phone or through our portal within the Baltic states, and our service center can cater to all needs. In addition, the decision making process at international insurers within Latvia can take much longer than with BTA. This is one of our competitive advantages.
What is your forecast for BTA’s growth?
We increased business volume by 16% in 2016. In the first half of 2017, we are growing fast and seeing business volume growth of 30%. We see a lot of growth within the Estonian market. Within Lithuania, Gross Premium Income grew 35%. We are overall confident we will grow by 30% in 2017 and 2018. We are very optimistic about the results of the next three years.