competing in a distribution dynamic

Vienna, Jun 2010.

Margerita Boskovic, director Distribution Sales Channels Department

DUNAV Insurance Company

Vienna Jun 2010.

Dunav27%

DDOR21%Delta Generali

18%

Wiener8%

UNIQA5%

OTHER21%

0

20

40

60

80

100

120

140

160

Dunav DDOR Delta Generali

Wiener UNIQA OTHER

153

116 98

47

30

114

Vienna Jun 2010.

154,0

Vienna Jun 2010.

Insurance Market in Serbia - significant improvements are obvious

2004 2005 2006 2007 2008 2009 trend

Total premium 22,6 34,7 38,3 44,8 52,2 53,5

Life ins. premium 1,7 3,3 4 4,9 6,3 7,9

share in total premium 7,4% 9,5% 10,6% 11% 12,2% 14,7%

Non-life ins. premium 20,9 31,4 34,3 39,8 45,8 45,7

Insurance density €38 €55 €65 €77 €80 €76

Life insurance premium per capita €3 €5 €7 €8 €10 €11

Insurance penetration 1,6% 2,1% 1,9% 1,9% 1,9% 1,9%

Total assets 30,8 46,4 56 70,6 84,8 99,2

Capital 15,6 18,6 20,7 24,7 25,3 29,2

Technical reserves 11,5 22,9 28,9 39,5 51,5 60,5

Number of IC 40 19 17 20 24 26

Number of employees 5407 7283 7876 9697 11713 11142

In bilion RSDIn bilion RSD

Serbia

Vienna, Jun 2010.

Insurance sales via Distributive channels – “Dunav Osiguranje” a.d.o.

Vienna Jun 2010.

•Our financial sector did not operate with complex financial instruments, and was not plagued with so called toxic assets.

•IMF forecast: Serbia will record 2% (2,3%) of GDP decrease in 2009.

•Activities focused on: development and improvement of risk management functions; UW developing in the process of selling policies; strengthening corporate management, which requires education of insurants and improved sales network, also all kind of distributive channels


Vienna Jun 2010.7

Vienna Jun 2010.

Sombor

ZrenjaninNovi sad

SremPančevo

Šabac

BeogradPožarevac

SmederevoValjevo

ZaječarUžiceČačak

Kraljevo

KragujevacJagodina

Niš

Leskovac

Kruševac

Vranje

Pirot

Sales centres of Dunav Insurance Company

Insurance sales via Distributive channels – „Dunav Osiguranje“ a.d.o.

Vienna Jun 2010.

Vienna Jun 2010.

- INSURANCE COMPANY (2nd in Rep. Srpska - 19% market share)

- REINSURANCE COMPANY(1st place in Serbia, over 70% market share in 2008)

- PENSION FUND (1st place in Serbia, 50% market share)

Vienna Jun 2010.

LIFE – 4th place(cca 10% market share)

NON-LIFE - 1st place (cca 27,4% market share)

Vienna, Jun 2010.


Sales channels according to legal act:

• INTERNAL – sales force • EXTERNAL:-Brokers - 37-Legal Entities - 65-Physical Entities - Enterpreneurials - 123-Banks - 16-Tourist Agency - 1-Physical Entities licenced for insurance - 800

Also, insurers tend to develop alternative channels essential for segmentated clients, various by structure and type of sales and consistant with the needs and comfort aproach to the client.

Vienna, Jun 2010.


Elements of encouragement ambient in insurance:a)Tax deductions in part that is in correlation with the development of life insurance;b)Expanison of distributive channels - sales force by legal changes that are expected in the following period.

Main goal of these changes is to increase the number of employees, it is assumed that 5000 people can be educated in life insurance sales, therefore this can be practised as an additional business (current legal stand inhibit isnurers from having any additional practise).

Vienna, Jun 2010.


Vienna, Jun 2010.


Dunav evenly developes external and internal network guided by the following principles:

1.Maximum usage of advantages in internal network expertise (UW capacity, claim adjustment, extended network), with the concern on profitabillity of internal network.2.Operating with large number of external network sales – conditioned by the structure and client demands as well as actions on the market;3.In the process of Company transformation focus has altered from product to client. Client segmentation has conditioned defining sales channels determening which is the best way of aproaching a certain client category.

Vienna, Jun 2010.


Vienna Jun 2010.

Primal strategic directions which contain all of the standard and nonstandard products:

offering an integrated product and servicesimprovement cross sell and up sell technique of selling – better focus on the clientconcentrate on comparative advantages


• Internal network – 30% in the MTPL area and 50% in other types of nonlife insurance• Main objective is to increase sales via internal network using the following tools:Sales plans and defining product mix (for empolyees) Cross sell tehnique, education Recuperation of businesses that maintain MTPLInvesting in our own capacity, in developing our front desk sales, instalation and purchasing new Tehnical inspections) of the highest standards

Maximum usage of advantages in internal network expertise

Vienna, Jun 2010.


Vienna Jun 2010.

SHAREHOLDERSMEETING

SHAREHOLDERSMEETING

Sales and marketingSales and marketing ITITClaimsClaims

Sharedfunctions

department

Sharedfunctions

department

Insurance DirectoratesInsurance Directorates

Individual clientsand entrepreneurs

Directorate

Individual clientsand entrepreneurs

Directorate

SME’sDirectorate

SME’sDirectorate

Major corporateclients

Directorate

Major corporateclients

Directorate

Life insuranceDirectorate

Life insuranceDirectorate

MANAGEMENTMANAGEMENT

SUPERVISORYBOARD

SUPERVISORYBOARD

FinanceFinance LegalDepartm.

LegalDepartm.

Internal audit

Internal audit

Actuarial and

Statisticsdepartment

Actuarial and

Statisticsdepartment

HRHRProcurement

andmaintaines

Procurementand

maintaines

Client Segmentation and distributive channels eligable for sales:

Individual segment Small and medium businesses segment Large Commercial Clients

“Dunav” Sales network “Dunav” Sales network “Dunav” Sales networkMOT’S Independent Agents Independent AgentsIndependent Agents Brokers BrokersMunicipal utilities Leasing companies Associations Associations Travel agencies Call centers Call centers Internet Internet Banks Banks Mobile phones

Vienna, Jun 2010.


Individual Small & Medium Businesses

Large comercial utilities

Products / Segment

Automobile liability insurance

Hard Asset

General liability

Accident

Travel insurance

Life insurance

Pension insurance

Health insurance

Product liability

Farming insurance

Marine insurance/Cargo

Machine breakage insurance

Group Accident insurance

Group Health isnurance

Group Life insurance

Group Pension insurance Main product

Aditional product

Periodical productUnnecessary product

Vienna, Jun 2010.


Product importance Products Sales network. "Dunav"

Vehicle Inspection

Agents (independent)

Brokers Companies/Associations

Leasing companies

Municipal Utilities

Banks Call centres

Internet Travel agencies

Very importantAutomobile liability insurance

Very important Estate

Very important General Liability

Medium important Accident insurance

Travel insurance

Less important Life insurance

Less important Pension insurance

Less important/out Health insurance

Medium important Product liability

Very important Farming insurance

Medium important Marine insurance/Cargo

Medium importantMachine breakage insurance

Very important Group Accident inurance

Less important/out Group Health isnurance

Medium important Group Life insurance

Medium important Group Pension insurance

Main channel

Additional channel

Periodical channel

Future chanell

Unnecesary channel

Vienna, Jun 2010.


Product importance Products Sales network. "Dunav"

Vehicle Inspection



Leasing companies

Municipal Utilities

Banks Call centres




General Liability

Very important Accident insurance

Medium important Travel insurance

Medium important Life insurance

Less important Pension insurance

Less important/out Health insurance

Product liability

Medium important Farming insurance

Medium important Marine insurance/Cargo

Medium importantMachine breakage insurance

Group Accident inurance

Group Health isnurance Group Life insurance Group Pension insurance

Main channel

Additional channel

Periodical channel

Future channel

Unnecesary channel

Vienna, Jun 2010.


Product importance

Products Sales network. "Dunav"

Vehicle Inspection



Leasing companies

Municipal Utilities

Banks Call centres




Very important General Liability

Accident insurance

Travel insurance

Life insurance

Pension insurance

Health insurance Medium important Product liability

Very important Farming insurance Medium important Marine insurance/Cargo Medium important

Machine breakage insurance

Medium important Group Accident inurance Less important/out Group Health isnurance Medium important Group Life insurance Medium important Group Pension insurance

Main channel

Additional channel

Periodical channel

Future channel

Unnecesary channel

Vienna, Jun 2010.


Vienna, Jun 2010.


What determens insurance market in Serbia is high presence of (MTPL) – 30% of the total premium is generated from MTPL.

Sales structure of MTPL:• 70 % via external sales channels – agencies and tehnical inspections (MOT)• 30% is sold via internal network.

Vienna, Jun 2010.


The only way in conducting a concept of enhancement market share and cost decline is investing in our own capacity:• Front desk salesFront desk invesments Development of Precompensation system• Sales channels of „Dunav Auto“Recuperation of businesses that maintain MOT’s Instalation and purchasing of new Tehnical inspections in cooperation with „Dunav Auto“

Vienna, Jun 2010.


Vienna, Jun 2010.


•Brokers – relatively new channel on Serbian market

•Problem characteristics of MTPL – MOT•Banking insurance -used for non-life

products selling•IT tehnology, mobile operators, call

center – on the begining

Vienna, Jun 2010.


•Brokers – relatively new channel on Serbian market

Preferences: Rarely extrapole for physical entities Mostly clients are taken by the insurer – so

the brokers are our competitors and a great challenge is good relation with them

Vienna, Jun 2010.


• Concerning Tehnical inspections

obsolete Motor pool (around 2 million vehicles – average age of the vehicles is 12 years)MOT’s are conducted every year appliance of the new legal act that standardise the rules of tehnical inspections (MTPL)

Vienna, Jun 2010.


It still in its begining allthough in the end of the year 2006. it was enabled by an legal act for the banks to do business in presenting insurance. Characteristics and variety in relation to the foreign market:a)This sales channel is more succsesfull in non life insurances and thereby is uprising;b)Life insurances are sold less trough this channel for multiple reasons:•Low level of developing in life insurance due to historical reasons (inflation, war, etc);•Life insurance policy is not a liable element with credit products.Productivity trough banks sales is 2 times larger in relation with the traditional agent network.

• Bankassurance

Vienna, Jun 2010.


Vienna Jun 2010.


competing in a distribution dynamic

Economy & Finance