UNIQA formally started its business operations in Serbia on 7 November 2006, by incorporating two companies - UNIQA zivotno osiguranje a.d.o. dealing with life insurance and UNIQA nezivotno osiguranje a.d.o.dealing with non-life insurance. Thus, UNIQA became the first company in Serbia to enter the final stage of dividing the life and non-life insurance operations, in accordance with the regulations of the National Bank of Serbia.

For years, UNIQA insurance has been the fastest growing company among the top five insurance companies in Serbia, and for six consecutive years it has been the best in prompt settlement of damages on the car liability insurance market.

It took UNIQA only half a decade to grow four times in Serbia.

During the first seven years of its operations, UNIQA has provided security for a large number of its clients and today deals with more than 400.000 insurees in Serbia.

After the official acquisition of the Swiss Basler insurance which took place on 11 March 2014, UNIQA has additionally fortified its position on the Serbian market. Together with the Serbian “Basler”, UNIQA Serbia will increase its market share to 8%.

Mr Franz Weiler, CEO, UNIQA Insurance, Serbia speaks to PROFIT magazine.

1. Mr. Weiler, where were you born, and where did you grow up and go to school?

I was born in Salzburg, which is where I attended primary and grammar schools. I went on to graduate from the Faculty of Agriculture.

2. What was your career path like before you came to Serbia to become the CEO of Uniqa Insurance?

My business career began in 1979, in the company Bundesländer Versicherung AG, Salzburg, as Manager for non-life insurance damages, after which I attained the position of Director for risk-taking in non-life insurance with Salzburger Landes - Versicherung AG Salzburg, in 1996.

Before reaching the position of CEO with UNIQA Insurance Serbia, I worked as executive director of UNIQA Insurance in Zagreb (2005-2006), before which I also worked in Croatia as project manager for insurance programme optimisation in ‘UNIQA Osiguranje d.d.’ Zagreb (2004).

3. This year, UNIQA is celebrating 7 years of business in Serbia. What were your expectations like 7 years ago, and what results has UNIQA recorded in the Serbian market so far?

UNIQA has a clear strategy for development in Southeast Europe. Serbia’s very close to UNIQA’s domestic base in Austria, and so entering the market was a natural step towards enabling us to develop our services here, and it came at a time when we expected to see stable development politically and in the market environment. UNIQA’s success story in Serbia has proved that this was the right decision. Unfortunately, when it comes to the regulatory and economic framework, the situation isn’t so good.

We lack predictability from legislation, and sometimes we also encounter a lack of understanding regarding economic principles.

UNIQA Serbia didn’t appear out of thin air. To have a achieved a position among the top five companies in the insurance market, and for years to have seen the highest rate of growth among the leading insurance companies, as well as maximum efficiency in the settlement of claims, means that behind the success there must be a team of dedicated, talented and experienced individuals. In fact, this is a major prerequisite for achieving more than satisfactory results. For that reason, I must point out that I'm proud of our team in Serbia. Recognition of our record thus far has come in the form of several awards, of which I'd highlight one given by the prestigious London magazine 'World Finance', which declared UNIQA the best insurance company in Serbia for 2012.

The results we achieved in 2013, and over the previous five years, speak for themselves. The key parameters that define our business are a successful strategy, inventiveness, investments, and exceptional customer care. We are particularly proud of the high professional standards we maintain, our strong ethical principles, the way in which we offer diverse products through a range of sales channels, and our commitment to the needs of our clients. In these areas we see examples of the best business practices, and factors that make UNIQA Insurance unique and recognizable, not only in the Serbian market.

4. The aim of the UNIQA Group is to double the number of clients on its books by 2020, so as to carry it to third place in the South and Eastern Europe region, and first place in the Austrian market. What is the strategy in place for achieving this goal? How much will the Serbian market contribute to the plan’s success?

Yes, that’s the aim of the UNIQA Group, to double the number of clients by 2020 and thus reach third place in the region of South and Eastern Europe, and first place in Austria. The strategy was announced and launched in 2011, when Mr. Andreas Brandstetter became CEO for the entire UNIQA Group and faced up to many challenges - the EU Solvency II Directive, the financial crisis, the requirements for recapitalization, and increased customer expectations. Because of all these requirements, UNIQA has focused on the market and on customers. The idea came from the group having companies that are growing faster than the market in all the countries where it’s present, and a very simple way to measure that is the number of customers and its position in the market. And so this ambitious goal has been clearly set; we aim to develop the company so that we have twice as many clients by 2020. In Serbia, this means going from 400,000 to 800,000 customers, and we believe that we will exceed that number, so we are confident regarding our ambitions. As one of the first measures, recapitalization of our insurance group was implemented successfully in October 2013, in the amount of 757 million EUR, which contributed to an improvement on Standard and Poor's rating of the company at A-.

5. You’ve said that people in Serbia are ‘financially illiterate’. What exactly does that mean, and how does UNIQA educates citizens about the benefits of the services you provide?

It’s definitely true that the entire industry and the market as a whole are grossly under-developed. This is evident from a quick look at insurance premiums per capita. What is the amount of the average premium paid in Serbia? When you take a look, you’ll see that it’s far lower than for our neighbours, and far below the level that the economic situation would seem to dictate.

Serbia’s endured a restless and difficult history, and the same applies for the world of insurance. People have largely lost confidence in banks and insurance companies in the recent past. Trust has not yet been sufficiently developed, and also there’s a lack of what the OECD (Organisation for Economic Co-operation and Development) calls ‘financial literacy’.

Financial literacy is the ability of individuals to understand the services available to them, and then to make informed decisions based on their own financial needs. This means, for example, that I’m able to predict what I will receive as a pension, and make the necessary calculations to realise that I’ll need additional money each month. I also need to know what might be necessary in order to achieve that goal.

Or, perhaps I’d like to buy an apartment, and I want to take out a loan. I ought to be able to compare those on offer and choose the one most favourable to my circumstances. People should have this kind of knowledge. Indeed, it is under-developed throughout Europe, and a study by the OECD found that the average citizen of a European country knows less than they should. This is no less true in Serbia.

This is certainly a problem about which the insurance industry, as a source of information for clients and consumers, is required to do more. We are aware of the difficult economic situation around the world, and closer to home in Serbia.However, investing in your future and that of your children, and seizing the reins when it comes to making decisions that affect one’s future income, should be a priority for all those who think ahead in life. For those who care about their own destinies and the future wellbeing of their families, it is the only way to ensure security.

What UNIQA insurance provides to all existing and potential customers is education regarding the options and offers available to them. We draw their attention to the possibilities that are opening up, as well as the risks, benefits, and opportunities that might help them achieve the ultimate goal, peace for the individual and security for the family.

7. What changes will be brought in as a result of new amendments to the Insurance Law, to be adopted in 2014?

As there are no specific regulations for insurance contracts, so there is no consolidated version of the Law on Insurance Contracts. Part is to be found in the Law of Obligations, and another in Insurance Law. So, there is a need to harmonise regulations in order to make the market more transparent and more reliable for customers. For example, when we consider the car insurance market, we are talking about a very non-transparent operation.

It is necessary for the Government of the Republic of Serbia (the Ministry of Finance and the Ministry of Internal Affairs) together with the National Bank of Serbia and the insurance companies, to reform the legal framework for vehicle registration, which is overly complex in its system of administration. At the same time, non-compliance with existing regulations and a failure to adopt appropriate new system laws (the Civil Code and the Law on Insurance) prevent existing companies from functioning properly in the market, and also have the effect of discouraging other potential investors.

8. UNIQA has already separated life from non-life insurance. What does that mean for the operation of your company, and for those who use your services?

UNIQA received its license for the provision of life and non-life insurance in 2006, and then answered a request by the supervisory authority in the NBS to split the company into two parts, life and non-life. It was expected that the same rules would apply within a few months (by the end of 2007) for the entire market. The division between life and non-life means that we need to manage two companies with all the extra costs that duplicated structures carry. Other companies face a different situation, since enforcement of the law has, if I'm not mistaken, now been delayed for the fourth time. This creates an unfair, unequal and non-competitive environment.

9. What, in your opinion, does Serbia need to do in order to encourage growth and development for the insurance market?

The existing legal environment has to change, because it is largely a barrier that stands in the way of development. It is necessary to remove doubts regarding the division of insurance companies into life and non-life categories, apply the rules consistently to all players, introduce tax breaks for life and supplementary health insurance, and relax the strict regulations in place regarding employment insurance. We need to create conditions conducive to fair competition with regard to state insurance companies, and change the means of concluding contracts when it comes to the compulsory insurance of motor vehicles. These are just some of the measures possible. Also, in line with a deep conviction of mine, the process of privatising the insurance market in Serbia must be seen through to the end, as this would remove many of the obstacles that currently stand in the way of the fundamental reforms necessary for further market development.

The aforementioned subject of tax breaks has been on the table for several years, and the pendulum has swung many times. At this present time we are without a definitive answer. What is clear, of course, is that it's difficult for the government to speak of crisis measures one minute, and tax breaks the next. Despite this difficulty, I think that in the medium-term it makes sense for the government to support and develop the tendency of the population to want to take care of their own futures.

If you allow people to take care of their futures by themselves, the country will have no obligation to look after them financially.

There are also positive side effects - in almost every country the insurance industry provides funding for various institutions, but this is not the case in Serbia.

The insurance industry is usually the ‘pool’ from which they can collect funds managed by insurance companies. These funds are used to finance the needs of the country. This is the case with many countries; insurance companies are among the largest buyers of government bonds. This avenue is underdeveloped in Serbia for one simple reason - the size of the industry, since it can boast less than 600 million EUR annually, with this amount divided between 28 companies. The figure should be closer to 6 billion EUR.

Croatia has a little over half the population of Serbia, but their market is worth about 2 billion EUR. If we are to reach that level, one of the main engines of change has to be for the legal environment to provide transparency for users.

10. Does ‘Dunav Osiguranje’, the state insurance company, represent unfair competition to private insurers?

People have a wide variety of opinions on ‘Dunav Osiguranje’, but I take into consideration only what I read in newspapers. According to that, it seems like ‘Dunav Osiguranje’ fails on a commercial basis to perform. There are always additional motives behind a situation. I'm sure it is not the job of the government or the country to take care of private insurance.

Also, a big question mark for me is why insurance that is owned by the country extends to auto liability or various other types of insurance. This eventually leads to the destruction of its value. Wherever a country has been engaged in commercial activities, and I’m not just talking about Serbia now, but from general observations, it hasn’t succeeded. It proves to be less efficient than that offered by private companies, and is prone to less-than-transparent activities.

11. The UNIQA Group has taken over the activities of the Swiss Baloise Group in Croatia and Serbia, and in both locations it is about to purchase Basler Insurance. What does this expansion bring to UNIQA Insurance? What are the expectations for the next period?

Since the formal takeover of these companies, on March 11^th 2014, UNIQA has further strengthened its market position in Croatia and Serbia. Together with 'Basler' locally, UNIQA Croatia will increase its market share to 7%, and take fourth place in the Croatian market. Together with the Serbian 'Basler', UNIQA Serbia will increase its market share to 8%. There won’t be any changes for clients and business partners of Basler in these markets. The execution of commitments, safety, and maximum dedication to servicing clients are, and will also be in the future, the focus of UNIQA insurance. We believe that after this acquisition, clients will still have a trusted partner in what is a stronger and more powerful company.

12. Competition in the Serbian insurance market is fierce. Which strategies do you employ in order to position the company well in the market and win new customers?

Currently, UNIQA insurance premiums in Serbia grow at a rate of 5.2 percent, which is far above the average for the domestic market (with an expected market growth of between 2% and 3%). UNIQA records a large increase in the field of life insurance, where premium growth is at 19.67 per cent. The strategy of UNIQA 2.0 began in 2011 when, because of new requirements, the company came to focus on the market and on customers .

The idea arose from the group having companies that are growing faster than the market in all the countries where it’s present, and a very direct way of measuring that is the number of customers it has, and its position in the market.

UNIQA insurance continually develops new products according to the needs and capacities of our consumers, so I don't think there is one product that should be favoured above others. However, what we'll certainly focus on is sustainable growth, with particular attention devoted to further developments in terms of life insurance, voluntary health insurance and our property insurance products. Also, quality of service remains our primary objective, by which we ensure the loyalty of our clients in the long term.

13. What new products is UNIQA offering to clients this spring?

UNIQA is constantly working on the process of improving its services and products. The common understanding of our services has changed significantly in recent years, so that our products are seen as a comprehensive solution to the needs of our clients, and this certainly does not just mean insurance, but much more. In addition to coverage for financial and material damages, we now also include in our services the provision of professional help in the event of any number of difficulties in life. This is an opportunity for UNIQA to differentiate itself precisely through the added benefits we provide to users. An example of such assistance comes in the form of the newly introduced insurance in the case of a need for emergency home repairs, which can be taken out with UNIQA household insurance and includes coverage for the fees of a professional who visits, and is available to clients 24 hours a day. Or, as another example, the Roadside Assistance service, which is completely free for our clients who take out fully comprehensive policies.

14. How do you see the insurance market in Serbia in the next 5-10 years?

There is without any doubt a great potential, but I have to admit that this potential was not efficiently used since 2006, when UNIQA entered the market. The penetration rate *share of insurance in GDP( hasnot changed but even slightly decreased. If no decisive action is taken to develop the market we cannot expect significant changes.

A strong initiative from side of all stakeholders, Government, NBS and insurance industry in the areas of legal framework, promoting financial literacy of citizens and a strict self control of insurance industry. On top there is no chance of a healthy development as long as the market is dominated by a state owned insurance company, preventing to play on level field for all market participants

15. How do you spend your free time in Belgrade?

First of all there is not so much free time, but the little I have I enjoy doing some sports exercises and from time to time I use the opportunity to join the cultural life in Belgrade

16. How do you cope with everyday stress associated with your job?

There is not much secret about stress management. It is all about balancing your life between family, free time for yourself and profession.

17. If you could, what would you change in your career up to now?

I made all types of mistakes and errors you can make, but I would not like to miss any of them. All I learned was not in comfortable situations but out of comfort zone. My career was going through ups and downs, and I have to admit that the learning in down phases was tremendous. So after all I would not much change from my todays view.