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Slovaks slow to buy complete coverage

While many industries and services in Slovakia currently find themselves being overhauled to fit into the western business mold and get ready to compete with foreign firms, the insurance sector stands on relatively stable ground.
Representatives of the companies themselves have said that Slovak insurance practices are on par with those in the West, although the Slovak market itself retains a conservativism rooted in a struggling economy and hangovers from a command market.
The insurance sector is dominated by Slovenská poisťovňa - a firm which now holds monopoly control in auto insurance - and a host of foreign entities that seized on post-Velvet Revolution opportunities when the country moved to a free-market economy in 1989.

While many industries and services in Slovakia currently find themselves being overhauled to fit into the western business mold and get ready to compete with foreign firms, the insurance sector stands on relatively stable ground.

Representatives of the companies themselves have said that Slovak insurance practices are on par with those in the West, although the Slovak market itself retains a conservativism rooted in a struggling economy and hangovers from a command market.

The insurance sector is dominated by Slovenská poisťovňa - a firm which now holds monopoly control in auto insurance - and a host of foreign entities that seized on post-Velvet Revolution opportunities when the country moved to a free-market economy in 1989.

The predominance of these other large western companies is based on their strong financial background and the relatively laggardly entry of domestic firms onto the market. To further handicap domestic players, local expertise was concentrated at Slovenská poisťovňa following the transformation of the economy, making a rarity of domestic insurance start-ups.

Headquartered in Germany, the insurance giant Allianz stands as one of the top 10 players in the Slovak market. Company director Manuel Bauer explained that there was not much difference between doing business in Slovakia and elsewhere, beyond minor adjustments the firm has had to make for cultural differences.

"I would not say in general that there is a higher risk [for insurance firms] in Slovakia. I think this has been more or less equalised over the last year. Due to the competition that has been established among the five or six big companies, there's no big difference in rates any more," he said.

"The customer focus that we take here is the same as we do in Germany. We don't try and press the customer into a decision, we try and find the best possible solution for them, whether they are in Germany or in Slovakia." Bauer added that by using local agents any of the potential problems that may come from cultural differences were headed off.

Director of the foreign insurance department for Slovenská poisťovňa, Katarína Janaková, agreed that where insurance was concerned the local business environment differed little from those in more developed western economies. "I don't think there are any really big differences - insurance is insurance - but I'd say there are differences in each market. It always depends on the local situation, on the local economy and local indicators, but I don't think you can really generalise."

Although Slovak insurance practices may be similar to those in the west, however, a greater disparity can be found in the type of coverage asked for by the average Slovak. In the west people tend to have more comprehensive coverage, while the domestic market centres on home-owners' insurance and shies away from life and health coverage.

Janaková said that while life insurance was becoming increasingly popular, only 30% of Slovenská poisťovňa's premiums came from life insurance in Slovakia, whereas in EU countries this figure was over 50%. As the middle class in Slovakia grows, however, the number of life insurance policies is expected to follow suit.

"For the middle class or the upper-middle class, life insurance is becoming increasingly popular, and among some groups it's even a status symbol to be insured with some companies," Janaková said.

Milan Hrotka of Genrali Insurance, a firm specialising largely in life insurance, said that the market for this particular line of insurance had grown over 25% in the last two years.

"The market here for life insurance should just keep on expanding," he said.

Like many of his countrymen, Eduard Bohunický, director of loans and bank liabilities at Exim Banka, is only covered with home insurance. As for the other types of coverage, Bohunický said it wasn't worth the time or money involved.

"You might have a neighbour who can cause you some difficulties with water or if you have a fire in your household. There is a greater probability that this would happen as opposed to other things you might be insured for," he said. "Health insurance is only important to me if I go abroad - it's necessary for me to get a policy to ensure treatment and because of the very high costs which you would have to pay."

Janaková explained that the lack of popularity of health and life insurance was rooted in the communist regime, when the state provided most social benefits; few people even now were willing to take full responsibility for these maters themselves. She acribed the prevalence of property insurance, on the other hand, to the everyday materialism inherent in this type of coverage.

"Your property is very visible and real - it's a major part of your life," she said, adding that many ordinary people also didn't have the money to spend on life insurance, a claim borne out by Hrotka's depiction of his firm's core clients.

"We're focusing on well-situated clients," Hrotka said, "managers and middle-class people in their forties."

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