Chartis setting its sights on Russian market expansion
With Russia’s insurance market having huge growth potential, Business RT talked to Christos Adamantiadis, Vice Chairman at Chartis Russia, about the main challenges and prospects for international players.
RT:For a global insurer such as Chartis, what opportunities does the Russian market hold?CA: “The combination of a developing corporate segment, low insurance penetration at the retail and corporate sector, and lack of extensive product and service innovation, make the Russian insurance landscape very attractive for a global insurer like Chartis.Based on these considerations, and in combination with Chartis' long established presence in and understanding of the Russian market, Russia has designated as one of the top ten countries for future expansion for Chartis.”RT: Do you believe that the forecast increase in Russian consumer demand in coming years, and growing GDP will see increasing focus both by Russians on household and retail insurance, as well as global insurers looking for a piece of that market?CA: “As any society matures, private insurance becomes an increasingly important part of family planning. Obviously, the pace at which each society adopts private insurance as a core and inherent part of its workings differs, and in this respect, Russia is probably in a "middle road" in terms of the BRIC countries' insurance development – a bit slower than Brazil but probably closer in time than India and China. In this respect, Russia represents more of a medium-term (rather than long or short term) opportunity, even if in the short term, the expected rate of growth will far exceed the European average – which, by itself, is a vary intriguing attribute and bound to attract the interest of foreign carriers.”RT: How do you believe that Russian accession to the WTO (forecast for the coming year) is likely to impact on the Russian insurance market?CA: “Accession to WTO will not have a direct impact on the insurance market but will indirectly give a strong boost to the marketplace, through the opening of trade and investment.As economic, business, investment and financial activity pick up, more and more companies will seek to divest non-core risk management through the purchase of insurance.Accession to the WTO will surely benefit the Russian insurance market – and ultimately, through increased competition and service improvement – the Russian corporate and individual buyers of insurance.”RT: Does Chartis have expansion plans in Russia?If so in what sector and markets?CA: “As said earlier, Chartis is a strong believer in the Russian market.Our plans revolve around three market segments: the large corporate accounts, an area which has historically underlined AIG's/Chartis' long presence in the Russian market; the nascent middle-market corporate segment – still not fully developed in Russia but with great potential; and the middle / upper income segments of the retail market.At the same time, we maintain our focus on specialty product areas, such as Environmental and Director's & Officer's Liabilities.”RT: Would Chartis look at building its presence in Russia generically or would it look at M&A activity to boost its market presence?CA: “The size, underpenetration and growth potential of the Russian market is such that it makes organic growth extremely attractive; the marketplace will offer so many opportunities for innovation, fresh applications, out-of-the-box thinking, that organic growth by itself promises to be extremely challenging and exciting!”RT: What do you believe are the biggest risk factors for global insurers operating in the Russian market?CA: “Like in any market, a global insurer must think and act local.What works well in Sydney, New York or Buenos Aires, does not necessarily work best in Moscow or St. Petersburg. Each market has its own unique characteristics, customs, habits; the biggest trap any global player can fall into is to overlook these idiosyncrasies and try to apply a uniform strategy globally.At the same time, each global insurer needs to respect and adhere to the global corporate values and operating principles.Finding the precise balance between the corporate "inner-self" and the local "outer-self" is the biggest challenge of any international insurer.Only very few will get this right – and Chartis, as a true global carrier, has consistently proven its skill in getting the right blend.”RT: How do Russian consumers differ in their understanding and expectation of insurance, from their European/global counterparts?CA: “Consumer habits differ in all countries, even within the more insurance mature Western Europe.Having said that, insurance is not yet seen in Russia as a true risk-management/risk-mitigation tool in corporate or family planning.In other words, the insurance market has a long way to go and a lot of ground to cover to convince the Russian consumers and businesspeople that it is offering a truly socially & financially beneficial service.In this context, more professional distribution, better services and more sophisticated products will come a long way in highlighting insurance as a core pillar of the workings of the fast maturing Russian society and economy.We believe that Chartis will be at the heart of these fascinating developments.”