Total investments operated by Clal group in Clal Asigurari, initially set up in late 2006, will amount to 50-70m euros over the next 5 years, Avigdor Kaplan, chairman of the group, told ZF. So far, the group has invested 11m euros to develop the Romanian subsidiary.
Kaplan says Clal Asigurari's goal is to become one of the top-ten general insurers on the domestic market, which will be achieved in time. Last year, the insurer posted gross underwritten premiums worth 1.8m euros, and this year expects turnover to double.
To reach this goal, the company will rely on Casco auto insurance and mandatory civil liability insurance, which account for the heaviest weight domestically, but will not consider an acquisition.
Instead, Clal group is in talks to seal a partnership with a strategic investor in a CEE country, a plan that includes Romania.
"We do not intend to sell part of the stake held in Clal Romania. The group we'll seal a partnership with will enter the company's shareholding structure through a capital increase," says Kaplan, who did not specify the name of the future business partner.
In the following years, the Israeli group plans to add several types of products to its portfolio, in particular liability insurance. "The market is not sufficiently mature for these types of products, yet, and meanwhile we'll develop along common insurance lines," says Kaplan.
He also explains the main target of the Romanian subsidiary is not to gain a market share, but income. "The market is settling now and competition will shift onto services quality and product diversity, but price also remains a major factor. Our goal is not low cost retail, but to compete against quality and diversity," added Valentin Tuca, the new general manager of Clal Asigurari.
The group recently decided to change the business model it uses in Romania. Clal Asigurari started its domestic activity by relying on the sale of policies by phone, but found out that the market is not developed enough for the use of this distribution channel.
"We found out customers preferred to buy insurance from agents and brokers, and not directly from the company. We'll retain phone sales, but this will not be a basic channel," adds Kaplan.
Sales through banks are a priority in Clal Asigurari's expansion strategy. With the business model, the group also changed the management of the Romanian subsidiary.
After strengthening its general insurance business, Clal group will also consider entering the life insurance segment.
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