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Positive Signals on a difficult market

What does it take to set up an insurance company in Romania during a recession? Leslie Breer, president of the management board of Signal Iduna Asigurari de Viata, tells The Diplomat-Bucharest the company’s milestones, its results so far and where it will go from here. By Dana Verdes

September 2011 - From the Print Edition

German insurance company Signal Iduna came to Romania several years ago just before the crisis struck. “We began to go operational at the end of 2008, not exactly the best time. We were taken completely by surprise, just like everybody else, by the recession. We didn’t put full forces behind this opening, but immediately we backtracked into some investments that we had to do then, like setting up the sales forces in a larger way,” Leslie Breer, president of the management board of Signal Iduna Asigurari de Viata, tells The Diplomat-Bucharest of the beginning of the company’s operations on the local market.

First obstacles

“2009 was horrible for everybody. For us, it wasn’t that horrible, because we didn’t have much of a portfolio, but the business was quite slow and we said, ‘Let’s restart everything in 2010’,” says Breer.
Besides the slow start due to the effects of the worldwide crisis on Central and Eastern European states, the company had to deal with problems in establishing its operations in Romania.
“It took longer than we expected to set up the company and we don’t really know why. We had the capital money in very early for the start-up in February 2008 and money is usually the most important thing they look at. I would say that it was probably just a thorough check as Signal Iduna is not very well-known internationally, so it took time,” reflects Breer.

Investment commitment

His 20 years of experience in the insurance sector brings the necessary know-how to continue the local investment. “We have just finished the greenfield phase and we are now going through a regular administration period for the company. Currently half of our premiums are for health insurance. We did what we do best, meaning build up a very good health insurance company, as it is our major focus. We see Romania as a medium- to long-term market,” said Breer.
And the investment plans confirm the company’s long-term strategy. “We have a capital inflow of EUR 12 million which we have boosted in the meantime with an additional EUR 3 million, and we are planning our next capital inflow for the end of this year, of another EUR 3 million,” he added. In predicting the investment return, Breer is realistic. “In a few years, the investment will show. Insurance companies take a longer time to break-even but then again we are in the long-term business.”
According to him, the mother company had money to invest thanks to its prudence. “When everybody was investing in risky stocks, we played it safe. We do not experiment with people’s money.”
However, the first results did not take long to appear. “This year we managed to ink the largest health insurance contract with automotive supplier Takata Petri, a company with headquarters in Arad,” said Breer, adding that the insurer is currently negotiating another regular contract worth over EUR 1 million.

State’s contribution

Breer has found that since he arrived in Romania in 2007, nothing fundamental has happened in the health insurance sector. “You get at least 10 different opinions on different issues, as there is not a structured strategy in the health field,” says Breer.
He believes that the government’s timid measures are not enough to boost this sector. “The state has indeed given some incentives to take out private health insurance. One first good step was that companies would insure their employers for a sum from which EUR 250 per employee per year could be deducted. Another step was that, from this year, employer insurer didn’t have to go to the Health Insurance House (CAS). The deductibility of costs and other measures could be reflected in the medical services,” he added.
Another issue the Romanian authorities have to resolve – in his opinion – is the lack of specialist managers. “There are no medical economists with technical economic knowledge to understand what profit is about. It is very important to have medical people with an economic understanding to manage the hospitals. Also, there is a need to cut down the administration as it is much too bureaucratic,” he stressed.

The cost of health

The Signal Iduna official said that insurance costs are still low in Romania, compared to other European countries. “You can pay between EUR 35 and EUR 45 per month for a full insurance package in Romania, compared with the price of an equivalent package in Germany which starts at EUR 300 per month. The costs could go lower if there were a unique pricing catalogue for insured services. This doesn’t mean that it cannot be operated on the free market. The existence of such a catalogue could result in transparent costs in the relationship of the customer with his or her insurance company and the medical services provider, to better observe the costs of those services and act in the customer’s best interest,” says Breer.

Future plans

This year, the company targets subscribed premiums of EUR 11 million, five times more than last year’s results, as he considers the need for good medical services universal.
“We do not play all our cards on the agent network as in addition we have contracts with brokers and banks to sell our products. Our focus is to customize products and solutions according to individual consumers,” says Breer.
“For this year, we are also aiming to come up with lower priced products for a segment that has not been approached so far, low income consumers.”
Despite the rough start, the company has the chance to up its speed on a healthcare market growing at over 30 percent and above.

Who is Leslie Breer?

2010 – present
President of the management board of Signal Iduna Asigurari de Viata
2008 – 2010
Vice-president of the management board of Signal Iduna Asigurari de Viata
2007 – 2008
Leader of the set-up project of Signal Iduna in Romania
2001 – 2007
Member of the management board of Signal Iduna Polska Towarzystwo Ubezpieczen, Warsaw, Poland
Administrator of Signal Iduna Insurance Services Poland, Warsaw, Poland
1989 – 1999
Coordinator of the following projects: set-up project for SIGNAL Hungary, M&A project, SIGNAL Universal Life, Dortmund Reinsurance Ireland, Dublin set-up project

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