homepage_name! > Editions > Number 039 > Interview - Miodrag Kvrgic


Miodrag Kvrgic, Director of Merkur Insurance, Serbia

Merkur Insurance is the oldest insurance company in Austria, independent and with head office in Graz.
It all began more than 200 years ago, on June 17, 1798, initiated by four merchants from Graz, Austria. More than a half of merchants from this town gathered at, at that time very well known and well-visited inn “Grafi”. Cause for gathering was establishing “Institute for supporting sick, poor, unemployed merchants of the town of Graz unable to work due to an old age”. This Institute was forerunner of present Merkur Insurance.
For more than two centuries, Merkur Insurance has been insuring people and offering protection of belongings of highest value for an individual. They have been determined to protect life and health, and their definition of healthy life is overall physical, mental and social welfare.
Today, besides Austria, countries of SE Europe represent extremely important market, where they are active through their subsidiaries.

We had a great pleasure to talk to Mr. Miodrag Kvrgic, Director of Merkur Insurance.

Mr. Kvrgic, please tell us something about yourself: where were you born, where did you grow up, go to school?

I was born in Ravno Selo, in a beautiful and colorful place in Vojvodina, where I completed elementary school. I finished Secondary school of Economics and graduated from Faculty of Economics in Novi Sad. At my final year, I was awarded a scholarship, and I started to work immediately after graduation. The decision to start working at Fadip and to move to Becej with my family appeared to be cat’s whiskers, both professionally and privately.

When and how did you become Director of Merkur Insurance?

I have been in Merkur Insurance from the very beginning, since half of the year 2007. I made contacts with Mr. Shaubert and Mr. Taylor, who were in charge of establishing insurance company in Serbia, in the second half of 2006. We spoke several times, Merkur representative wanted to be sure I would be able to represent and run appropriately Merkur Insurance in Serbia, and I wanted to be sure that the way the things would be done in Merkur as well as corporate culture would enable realization of my business ideas.

Two moments influenced decisively my interest in becoming director of Merkur Insurance. The first was that I got opportunity to lead one insurance company from its incorporation and to influence crucial its profiling both towards partners and government institutions, as well as in creation of internal corporate culture. Such opportunities are very rare in lifetime. The second moment was completely different business concept compared to many other international companies and different approach to employees. Such business philosophy could be defined briefly as: selecting a team of educated, perspective and young people with strong sense of teamwork, providing conditions and creating inspiring and positive work environment. Business success of a company is a result of such approach, not primary goal.

What did your career ladder look like before current position?

From the first day of my business career, I have been dealing with finances. For many years I was Director of Finances in economy, and such experience was precious. Solving particular problems such as maintaining liquidity and solvency of the company, financing export and import, negotiations with commercial banks were inspiring and challenging situations for a young man who is in the beginning of career path. I was a part of a very successful dynamic management, with intensive international business communications and impressive results achieved considering the situation.

It was a period when our country experience one of the highest hyperinflations in the history of entire world. To be in charge of finances in such period, in any legal entity, was not an easy job. After that, I moved to Novosadska Bank. It was a new challenge, requiring a lot of learning, work and patience. I have gone from Branch Director to Deputy General Director and member of Executive Board. Banking is a very much arranged system, but the system which provided me with enough space to express personal initiative and contribute achievement of good results. During that period I was also a leader of Novosadska Bank privatization team. It was another valuable experience in the career of any financier. After that, I went to NLB Bank, to the position of General Manager, and then to Merkur Insurance.

I have been lucky in my career to be in such circumstances opening for me opportunities to do more and more responsible and complicated duties and to adopt new knowledge.

Merkur Insurance is a company with tradition. Please tell us something about the beginnings of Merkur in general and in our market.

Merkur Insurance is the oldest insurance company in Austria, established in Graz in 1798. Merkur Insurance has been recognized in Austria firstly as one of the largest insurance companies in the field of health insurance. Merkur Insurance focuses on a person, and foundation is a principle that nothing can be more important than an individual and his needs. The approach of Merkur Insurance means providing general welfare of insured. Everybody experiences physical, mental and social welfare differently. Due to such reason, Merkur provides clients with option to choose suitable package which will satisfy their individual needs. Aiming at conducting their mission, Merkur is a co-owner of several hospitals providing health care at the highest level possible, starting from provided quality services and accommodation to possibility for patient or insured of Merkur to select exact doctor to treat him/her as well as to chose certain person among medical technicians to take care of his/her care and treatment.

What does the offer of Merkur Insurance differ from offers of competition in Serbian market?

We try to observe the needs of our prosperous insured and then to offer them insurance coverage, based on needs observed, and not to offer them products defined previously, and that makes the offer of Merkur Insurance different from the other insurance companies’.

We have understood that decision whether to conclude life insurance contract with one or another insurance company depends primarily on the quality and innovativeness of product but also on the quality of service provided to the client. Of course, categories like amount of capital, balance sheet sum and similar financial categories are very important for making decision on entering into contract, but they are not crucial. Ability of insurance companies to provide clients with timely and complete information, to pay clients respect at any time and to completely and promptly settle their obligations is an approach which can improve position of insurance company in the market.

Starting from such approach, out team of experts has offered, as the first one in Serbian market, in cooperation with colleagues from Merkur Concern but also thanks to cooperation with one of the biggest reinsurance companies in the world, Gen-Rei, combined life insurance with coverage for occurrence of one of severe illnesses – ten plus (“deset plus”). It is combined life insurance, where sum insured, except in case of endowment or death, shall be also paid out if any of nine sever illnesses have occurred. The tenth benefit for our insured, after which the product got its name, is free coverage for children of our insured pursuant the same types of risks. We are proud of the fact that almost all insurance companies, after they have observed the attractiveness and quality of our new product, included the same or similar product in their offer.

Could you tell us more about new life insurance products from Merkur offer? What are the benefits for prosperous and existing clients?

Aiming at increasing quality of protection for the insured and in order to create competitive advantage compared to other insurance companies, we have improved our program of combined life insurance with coverage for occurrence of severe illnesses into fifteen plus program.

We have increase from nine to fourteen the number of severe illnesses in case of occurrence of which we will pay out sum insured, illnesses included are occurrence of Alzheimer disease, benign brain tumor, aorta surgery, heart valve surgery and HIV occurrence, and fifteenth benefit for our insured is the same as under the previous program, coverage in case of occurrence of any of those illnesses for children.

In addition to the above, additional insurance with life insurance in case of urgent surgeries resulting from accident and surgery have been recently included in our offer. Sum insured, depends on the type and severity of surgery, and amounts from EUR 500 to 5000. Attractiveness of our offer has been increased by mentioned product and our insured have been provided with additional form of financial protection in case of need for surgery.

What were the business results of Merkur Insurance in previous and this year, considering difficulties Serbian economy has been suffering?

Merkur Insurance has continued growth and increase of market share which amounted to 4.2% at the end of 2010. Besides this mentioned, growth of total premium by 53.7% has been recorded, from RSD 255.1 mil in 2009 to RSD 392.2 mil in 2010. Balance sheet assets increased by 52.5%, from RSD 486.0 in 2009 to RSD 741.4 mil in 2010 and what is very important for our insured is the increase in technical reserves by 112.6%, from RSD 170.4 mil in 2009 to RSD 362.3 mil in 2010. Solvency of the company is also at high level and amount of capital exceeds by 40.45% the minimum level provided for under the Insurance Act.
How does Merkur educate population regarding the importance of life insurance?

With average premium per citizen amounting to EUR 12, life insurance in Serbia is among the least developed, not only in Europe and in region. The fact that there is no economically developed country not having developed life insurance system can tell us something and impose obligation to deal, here in Serbia, with analysis of such situation.

I am of opinion that there are several reasons causing such situation. One of the most important certainly is lack of individual awareness, governmental as well, of usefulness and importance of life insurance. Due to a mentioned reason, immediately after starting operations in serbian market, Merkur Insurance together with colleagues from other insurance companies, started a range of actions aiming at providing population with information on importance and usefulness of having life insurance policy.

Besides, we held a number of meetings with government representatives, primarily with colleagues from the Ministry of Finances as well as with representative of global multilateral financial organizations in Serbia, with IMF and World Bank representative. I am glad that such activities resulted in more talking and writing about life insurance.

Although, the only actual result of such activities so far have been issuing government bonds denominated in EUR with 15 years maturity. It is well known that insurance companies dealing with life insurance are the only purchasers of such securities.

I think that the Ministry of Finances is now on the move to find possibilities and introduce some form of tax incentive for life insurance.

What are the most important characteristics of a person who wants to be a member of Merkur Insurance team?

Employees in Merkur Insurance represent one of the most valuable assets of our insurance companies. Insurance is very complex financial activity subject to constant changes besides its complexity.

Due to mentioned facts, we pay special attention to employment of new colleagues. Except having necessary level of knowledge and education background, very special attention is paid to character of person who expresses interest in becoming a part of team of Merkur Insurance. Such person has to be positive, with good communication skills and able to work in a team in order to meet successfully requirements of Merkur Insurance way of doing business.

What is the current situation in Serbian insurance market?

Largest regional insurance companies are present in Serbian insurance market, saying enough about attractiveness and potentials of Serbian market. Mentioned fact guarantees that citizens of Serbia will have insurance products offer on the same level as in developed European countries. Their further struggle for customer preferences by quality of their products and services they provide can be expected. Since current level of premium and profitability do not meet plans of insurance companies on long term basis, it is realistic to expect introduction of new products and new ways of selling insurance.

The fact that MTPL insurance has more than one third of total realized premium and that share of life insurance premium slightly exceeds 16%, total realized premium in my opinion shows two most important characteristics of our market. Life insurance is still developing and have increased its share in total premium from 9.5% in 2005 to 16.5%. I think it is respectable but insufficient growth. On the other hand, dominant share of mandatory insurances in total premium, especially of motor vehicle liability insurance, confirms that a long way to affirmation of non-mandatory types of insurances is in front of us.

What should be done to improve the situation? What are the insurance companies’ representatives in Serbia dissatisfied with, and which segments of the market are good?

For us, market represents given circumstances we try to adjust to in the best manner possible, and from that point of view, we have no objections. Therefore, conditions are the same for all insurance companies. But, I think that when we talk about life insurance, there are two unexploited opportunities for its further affirmation and growth.

Firstly, it is introduction of tax incentives, and the other opportunity is allow persons who are not employed on full time basis to deal with insurance agency. These suggestions were broadly discussed by professional audience and I am sure that insurance companies, by showing their responsible attitude towards obligations and insured, will convince decision-makers to allow such opportunity.

When speaking of stability of financial sector, especially insurance sector, I think that the National Bank of Serbia has an important role, as shown so far. Existence of clear and accurate regulator authority represent business environment where international companies feel good and work well, which also stands true for Merkur Insurance. In Merkur Insurance, we try to contribute affirmation of insurance as industry important for national economy through our relation with insured, colleagues from other insurance companies and regulator- the National Bank of Serbia.

What strategies of brand representing and positioning in the market does Merkur Insurance use?

Strategy of Merkur Insurance is to position Merkur Insurance as local company having individual in focus by using international experience.

In order to reach this goal, activities of our marketing team are very important. We carefully reach decisions on our next activities, we discuss a lot, confront our opinions. Your readers might find it interesting that during preparations of a campaign two years ago, we decided that each employee must suggest at least two slogans or messages for that campaign. I am proud that each employee, enthusiastically meet such obligation, and you can guess that suggestions were excellent. Identification with the Merkur mission and satisfaction of our employees in such situations can hardly achieve otherwise and messages or slogans created then cannot be more authentic.

I think it is very important that each marketing campaign completely reveals mission of each company and that message we send is in accordance with manner of work of such company. We are satisfied with present positioning of Merkur Insurance brand in Serbian market.

Which SEE countries does Merkur Insurance operate and can you compare those markets to Serbian?

Except Austria and Serbia, Merkur is present in Slovenia, Republic of Croatia, Bosnia and Herzegovina and Montenegro. Those are markets which have similar development, apart from their specificities. Global tendency in financial sector and in insurance field as well is that requirement of regulatory authorities are becoming stricter, especially regarding managing risks. Apart from that, EU member-countries prepare introduction of Solvency II. Mutual characteristic of all companies, majority owned by Merkur Vesicherung AG Graz is that management in all countries consists of local people.

Is there any professional association of insurance companies in Serbia, and what does it deal with and what are the results, if any?

There is Association of insurance companies in Serbia, which have mostly dealt with non-life insurance so far, and especially with MTPL and hull insurance. I expect to see positive transformation of work of Association and to impose itself as an important partner in promoting other non-mandatory forms of insurance, especially in promoting life insurance.

How does Merkur Insurance support local community? What actions do you take within social and corporate responsibility?

We have had the pleasure to support activities of Decije selo (Children’s Village) in Sremska Kamenica and Home for children without parental care in Kragujevac.

Besides mentioned, as insurance company considering physical activity as important for health of each individual, we organize traditionally Merkur Running Day, every year in Novi Beograd, at Usce. We organize several races, from those for our youngest citizens to races for youngsters and seniors. Mentioned event is real manifestation of healthy way of living and positive energy.

We participate regularly in events promoting healthy living, such as Health Fair, etc.

What is your usual business day like?

My business day does not differ much from business day of any colleague in similar branch. Business hours start at 8 AM until usual 5-6 PM. After that, if I am not at German lessons, I usually watch some sports on TV or read. During the week I almost do not have spare time for anything else but work.

Since I spend a lot of time in car, I phone during my drive. I do conversations requiring more time. Except business calls, I listen to interesting shows on the radio or some audio books. The last I listened to was The Treasure of Tzar Radovan by Jovan Ducic.
Is your job stressful and how do you relax?

Everyone who nowadays tries to deal with their business obligations in appropriate manner and to realize good financial results has to be under stress. I am no exception. First of all, I try to thought trough before making a decision and to observe all available information. I also try to be active physically and to lower stress that way.

How do you usually spend your spare time? Do you have a hobby?

I have always been in some sports, and I am still active. Whenever I have spare time, I run. I have run several semi-marathons so far, and the last was Belgrade semi-marathon and my time was 1 hour and 50 minutes. Besides running, I like playing tennis, but I can play only at the weekends because of my obligations. During winter, I prefer skiing. As you can see, I belong to group of those who believe in Mens sana in corpore sano.

What are you particularly proud of, both in business and privately?

Professionally, I am proud of the fact I lead a team of people who managed to achieve very good results in a short period, due to their human and professional qualities and their dedication to work. Privately, I am very satisfied because my wife and I managed to bring our three daughters up in to be positive and dutiful persons, Ivana and Jovana are successful students of Medicine and Maja is an excellent high-school student.

If you were not in insurance business, what are job would you be doing or love to be doing?

If I were not doing this, I would be probably dealing with something in connection with finances. The world of finances is something that has always attracted me and it is the field I feel good in.