Mr. Cholakov, in the great dynamics of change, what is the pressure on insurance?
The insurance market in 2018 was extremely dynamic. Among the factors behind this change is the rapid development of technology and the dynamics of the market. Besides, DZI acquired the life insurance company UBB – Life Insurance and we are in the process of merger. So we cannot complain that it is boring. In the medium and long term, dynamics is driven by the expectations of our customers, and they are becoming increasingly demanding and informed and want us to provide them with constant access to the services they use. Such opportunities are already available in many other areas of the economy, and insurance is lagging behind in meeting these expectations.
What are the reasons for reacting more slowly?
They are complex - on the one hand, there are regulatory reasons and, on the other hand, profit rates are not yet as good as to enable insurers invest more in the development of new technologies. But customers have high requirements and this is an incentive to raise the bar of expertise and preparedness of our staff. That brings us to the other dynamics that puts pressure on us – the problem with staff. This shortage makes us invest more and more in the satisfaction of our staff members.
How do you keep up with the overall dynamics of technology?
Technology is becoming increasingly important and we are digitizing processes in the company through the implementation of several projects. But insurance will largely remain business by the people and for the people. In fact, our license is formally given to us by the regulator, but we actually get this license from end customers through their trust. And trust is conditioned by many factors, but the main one for a long time ahead will be the human factor. New technologies will not eliminate it, they will only help us do our business more efficiently and do more business by using fewer people. In DZI there are several ongoing major projects related to the digitization of business. We outsourced part of these activities to some large external vendors because we cannot possibly do it by ourselves. We are seeking partnerships with innovative companies, but before that we ourselves need to have the foundation to enable us upbuild together.
Is it time for robots and artificial intelligence in insurance?
There are processes we are trying to robotize, and robots are already in place in KBC group. The effect of such solutions is that people are no longer engaged in dull activities - for example, to fill up excel tables and send emails all day long. When we relieve them from these unpleasant obligations, we give them the opportunity to develop and take better care of our customers. There are already many solutions related to artificial intelligence. They have not penetrated here yet, but it is a matter of time. However, we should not be deceived or reassured that they will solve the issue of shortage of staff. They will only help us be more efficient and better serve our end customers.
What factor was the bankruptcy of an insurer in our market?
An event like the bankruptcy of Olympic is not good for the market. Every bankruptcy shakes confidence in the industry as a whole. It is better to have insurance companies in good health, good regulation and market stability.
Which is the real driver of the major changes in insurance?
Insurance is part of the overall economic situation in the country. It follows the development of the economy and when it goes well as it is now, then insurance goes well. When purchasing power increases, this also affects the insurance market - especially as regards property and life insurance.
End customer, economy and technology are the driver of insurance. In the future, this business will be increasingly becoming more digitized and will offer increasingly easier processes to the end user. The insurance product will be increasingly tied to the basic products people buy – a home, a car… Nobody gets up with the intention to just go and buy an insurance. Insurances will complement other major products.
How do the risks change and how are new products and services created in the industry?
New technologies shape the change in risk evolution. Sooner or later, autonomous vehicles will emerge and there the insurance risk will change dramatically. New risks will manifest themselves, such as the risk of cyber attacks and the need for online protection. Starting January 1, we are introducing a new product and every home property insurance policy will also have a coverage for online security. It will include, for example, protection against identity theft, reputational risk and protection against an incorrect online trader. The product was developed jointly with one of the largest reinsurers. The rise in cost will be minimal and this will be the standard coverage in our property policy. We also developed two individual health protection products. One of them provides access to the great international network Best Doctors, its specialists give a second medical opinion and advise on the best way to perform treatment. The other product is the individual insurance Good Health, which gives access to selected healthcare facilities in Bulgaria for prophylaxis, inpatient and outpatient care. We see great potential in the field of health insurance.
In the future, insurance will be increasingly becoming…
… an integral part of people's needs. It will continue to be a social business that helps people overcome unpredictable events in their lives. And anything that emerges as a risk can find a solution in an insurance product.