The FINANCIAL — “Brokerage services are gaining popularity in Georgia,” said Margo Zhiznevskaya, CEO and owner of Financial Brokers Georgia.
The company was established in February 2011 and already has seven large corporate clients along with many others. The company plans to expand its staff as well establish an office in Batumi in 2012 due to increasing client numbers.
“Financial Brokers Georgia became a registered authority by National Bank of Georgia in February 2011. The past year has been a long road to the success which we are now experiencing,” said Margo Zhiznevskaya.
She says that the brokers market was not developed at all when they first established their office.
“Only four broker companies were registered and two of them are not operating any more. General awareness of broker activities in society was very low. We had difficulties in explaining what insurance brokering is to our clients. It was difficult to prove to our potential clients that an insurance broker is not just an intermediary in the process of choosing insurance policies, but also a professional consultant for the client during the period of the insurance contract.”
“Now companies are more familiar with insurance brokering companies and general awareness of our activities has increased as well,” Zhiznevskaya said.
“It was slightly difficult at the beginning for us to prove that we were not owned by any insurance company. When we had negotiations with one insurance company they were suspicious about our owners. But we managed to prove that we are independent and they have an equal chance in our tenders. We currently cooperate with nine of the insurance market’s big players.”
Q. What are the main duties and responsibilities of broker companies?
A. After we sign a contract with a client, we hold a high class competitive tender. This means that we study all the needs of the client. Then we calculate all risk-factors and make an insurance proposal which is our tender document. After the clients read this proposal and agree to all the terms, we send it to insurance companies. The tender document includes prices as well, according to our commission and client.
When we receive proposals from the insurance companies, we review them, compare them to each other according to prices, exceptions etc, and choose the best one. We send all proposals to our clients and tell them which one is our favourite. But the final choice is up to them.
When the contract is signed the monitoring starts. The first and last months of a year’s contract are the most difficult periods. In the first month people try to get maximal service as it is new and in the last month they try to use up all the service they have left.
When there is a problem, our clients should know that they will get a solution to their problem in a very short period of time, from two hours up to a day. But if they aren’t right, they will get a clear answer why and what they should do to be in the right. I always tell my clients to call us on the first day of a problem arising. They shouldn’t make it worse by wasting time while trying to sort it out themselves. We can solve the problem at the very beginning.
But unfortunately most people aren’t actually informed of how insurance companies work, even if they have been using insurance for years.
We recently offered a new feature to our customers. By using their ID and password our corporate clients can look through all the cases concerning their employees on our webpage. This is a sort of archive of problematic cases with all the details. In this way big companies always remain informed and up-to-date with the processes. This service has no analogue in the Georgian market.
In addition we have a new webpage where people can see information not only about Financial Brokers Georgia, but about insurance in Georgia in general.
Q. How would you estimate the Georgian broker market?
A. The Georgian market is quite specific. You can’t just come and start operating even with international experience, because it is more specific than that. Broker companies abroad are very developed and everyone there knows what brokers do. The Georgian market is only just developing in Georgia now. And generally speaking, a developing market is very risky. In this case, companies depend not just on their job and clients. They have to know the market’s problems from a broker company’s point of view, and not an insurance company.
Q. How many broker companies are currently registered in the country and who are your competitors?
A. At the moment we have eight broker companies registered by National Bank of Georgia. But not all of them are operating. I can say that they are our competitors. I believe in healthy competition. I’m always very glad when a new broker enters the market. That results in a high level of service.
Q. Is there any law regulating broker business here?
A. The regulator of broker companies is National Bank of Georgia. I can say that they are quite flexible.
I am personally very thankful for the consultations they have given us. I got lots of useful advice for them when my company was just established. Representative of National Bank of Georgia Manana Tsitsishvili told me that the market needed real service and not low prices. This was very good advice. The insurance market doesn’t need exclusively low prices. It needs to really use the service. I do not offer my clients low prices. But I say that they will be able to get 100 percent out of their insurance. That really works. According to that we have also managed to have low prices. This is a two in one.
NBG is quite a useful authority in our case. The market is currently developing and they are observing the process. I’m sure that they are going to impose some regulations in the near future because the market is growing and already has eight players on it.
Q. How many employees do you have? Do you plan to expand their number?
A. In general staff is very important for broker companies. They have to be highly qualified. At the moment I have six employees. We are going to expand their number as we get new clients. Each client needs a separate insurance manager etc.
I have employees with experience working at insurance companies. But when they started working here, they needed retraining because broker agents aren’t protecting the interests of insurance companies, they are protecting the interests of clients. And this is more specific. Therefore they can’t act like an insurance company employee.
Q. What are the prices of your company’s broker service?
A. The price depends on the company’s size. In regards to big companies with more 1,000 employees, our commission is eight percent of the insurance premium. For smaller ones the commission is ten percent. These prices are flexible. In most cases we stick to eight percent. Very rarely do we have more than ten percent. Our key point is that we always try for our commission not to be bigger than it was in the year before. We have cases of lowering insurance prices compared to last year.
Q. Are the majority of your clients big companies? Is there demand for broker service from small and medium size companies?
A. Most of them are big companies. I’d single out Populi and Heidelberg Cement as two of our high profile clients. Both of them are our clients and we have very good relations with both.
We can insure companies with 20 or 30 employees for several products. We are a commercial company and working for financial profit. Cooperating with small companies would simply not be profitable for us.
Q. Do you offer broker service to private individuals?
A, individual contracts work well in the case of real insurance and not small insurance packages. In terms of companies we have one contract for all employees, one exception for everybody. It takes so long to review a contract for each individual. Therefore it isn’t worth it for us.
But in general I’m happy that individual insurance is seeing a high level of growth.
Q. What direction of insurance is most in demand?
A. Medical insurance is more in demand. About 70 percent of our contracts are medical ones and the remaining 30 – other types of insurance. People insure something they really use. Companies don’t have much real estate. Therefore demand for that isn’t so high. But insurance is very useful. Because in the event of problems, the premium paid during a year is much less than covering the damage would be. All risks are covered by good contracts.
Q. Do you have foreign clients? What is the share of local and foreign clients?
A. I’m quite happy with foreign clients because they know what an insurance broker means and they know this internationally. I’m glad when they are satisfied with our service. In these cases my company is compared to international companies. 70 percent of our clients are foreign companies or Georgian companies with foreign management.
Q. What would you name the biggest achievement of Financial Brokers Georgia?
A. My biggest achievement is my employees. I built my team over one year and it was a tough year. People were coming and going. I managed to find diamonds in the rough as they say, which are now running my company with me. I have sale, medical and technical managers as well as my deputy, which I rely on 100 percent. Choosing suitably qualified staff took time. But this brought about the desirable results. After one year I can say that I don’t have clients, rather I have employees who bring in clients.
Q. What do you consider the company’s main challenge to be in 2012?
A. Unhealthy competition will be our challenge. I am not afraid of competition but I am afraid of unhealthy competition. My challenge has always been dealing with unrealistic promises from other broker companies. I see this now as well and it is sad. I am totally against promises that aren’t going to be kept. I always admit to what I can and can’t do. Basically the things that I can’t do are those that are restricted by Georgian law. When a broker company names his real benefits, the client has the possibility to choose which broker he/she wants. This is a healthy market. I’m against brokers who ruin the overall name of the sector.
Q. What are your plans for 2012?
A. We will continue offering good service. We are going to open a branch in Batumi in the summer to serve clients from Batumi and Poti. There are lots of corporate clients. Some of our current customers have branches there as well. Batumi and Poti have very good potential and I’m not sure that they have good insurance service there.
I plan to expand the number of our employees and target more clients. We choose our clients. We will not cooperate with just any company. We have our target market. Financial Brokers Georgia is not for everyone. It is only for select clients. We aren’t working for cheap insurance, because you can’t provide service and ask insurance companies to fulfil their obligations when there are no obligations.