The FINANCIAL — More than GEL 1 million is being invested in Georgia by the newly opened insurance company Kopenbur which was established in Georgia in May 2014 by German founder and chairman of the supervisory board Franjo Vidichek. A new player on the Georgian insurance market, Kopenbur plans to occupy a significant share of the market and to make it into the top five insurance companies by the end of its first year of operational activities.
At the first stage the company will not be operating in the field of non-life insurance, but the supervisory board members do not rule out the possibility of being involved in this field later. The company is focused on high quality and innovative insurance products. To this end, the company is planning strategic cooperation with a variety of Georgia’s leading companies.
“The company will introduce such products and innovations that have not been released before by any market player,” Franjo Vidichek told The FINANCIAL. “Kopenbur will serve individuals as well as legal entities. The insurance products have been developed and fully fit local market requirements, the staff have been prepared as well as service points,” he added.
Today, up to 40 people are employed at the company, but by the end of the year the number of employees is set to increase to 150.
“In general, insurance is a very profitable business in Georgia. Perhaps some insurance companies have problems but in general their results are fine on the balance sheet. We intend to be included in the top five insurance companies in Georgia by the end of the first year of operational activities. It is everyone’s goal to achieve the best results and we will do our best to make this happen. The success will depend on our strategy, management, as well as all the products that we will introduce to customers,” said Vidichek.
Kopenbur is not going to offer cheaper products or less expensive service to win over customers from other insurance companies, but it does aim to offer adequate service at adequate prices.
“First of all, we put an accent on quality and not on low price. I do not think that it is right to be oriented at cheaper prices as if you offer high quality it is impossible to have low prices. The price should reflect the quality. Kopenbur will not be a cheap insurance company but it will be very high quality and have proper prices. In addition, Kopenbur does not have competitors in Georgia, on the contrary – it is we that are the competitors of local companies,” Vidichek said.
Kopenbur has already started designing its policies and receiving its first customers.
Franjo Vidichek, the head of Kopenbur, was born in Croatia. At the age of four he moved to Germany and has lived there since. His first professional activities were linked to insurance. Currently he has several businesses in both Bosnia and Croatia.
In Georgia Vidichek runs Kopenbur with local partners Zviad Chachanidze, a member of the supervisory board, and Ivane Kakhadze, CEO of the company.
“I was involved in the insurance business when I was in West. Compared to in Georgia the insurance market there is very developed. For example, all trucks are insured there and it is mandatory for them. However, I do see potential in the Georgian insurance market. I believe that it will grow and will be more similar to western markets. Now, as the Association Agreement has already been signed, the process of the insurance market’s development should speed up,” he said.
“This is my first investment in Georgia, but I am going to increase the investment volume. I have had business activities in Georgia for ten years already. During this time I have learned about this country and its market very well. I have witnessed all the positive changes that Georgia has gone through and I have seen the dynamic development process of the country. Before I came to Georgia, I used to get very negative information about Georgia from the Russians that I knew, but when I arrived here I saw that everything was the complete opposite – the people are very nice, and the culture and environment in this country are very impressive. I loved Georgia immediately!” Vidichek added.
Q. What are the challenges that hamper the development of insurance business in Georgia and how is Kopenbur going to contribute to the market development process?
A. One of the problems that hampers insurance business development in Georgia is lack of regulations. At the same time, the regulations which are implemented in Georgia are not correctly designed, I would say. For example, there should be some insurance products that are mandatory for everyone. This issue should be regulated. For instance, all newborns are insured in Germany. The mandatory insurance in the West is the state’s responsibility, but only until a certain age. Then it is financed by private entities.
The current attitude of Georgian insurance companies towards the insurance products is not enough. They do not sell insurance in general, I would say. The way that insurance products are introduced to customers needs to be more subtle. People should understand why they need insurance first of all. The products themselves need to be improved. Risk insurance is very important and especially for business. The main thing is to offer it in the right way. For example, it is impossible to offer one sort of bread to all customers because everyone has different taste. Accordingly, they need different kinds of bread. The same is true of insurance. Here in Georgia, all the companies offer more or less the same insurance packages, which is not right. We should all think about the different customers and their different needs. It is impossible for one kind of insurance package to suit all kinds of different customers. We are therefore going to bring a wide range of insurance products to the market.
Our contribution to the development of the insurance market in Georgia is that we are going to bring innovative and very useful products here. We also are going to give ideas to the Government and the responsible officials on the insurance market in Georgia.
Q. How would you characterize the current investment climate in Georgia and how easy was it for you to establish a company here?
A. How many foreign banks are there in Georgia? Several, yes? The foreign banks in Georgia are proof that there is a good investment climate. When we talk about a preferable investment climate, of course the main thing is political stability.
I saw how Georgia was moving forwards in terms of improving the investment climate. Then there was a slowdown during the period of the war with Russia in August 2008. But since then the situation has been getting better and better. I am very optimistic about the investment climate in this country and its future in general.
As for establishing a company here, it was very easy. I had no problems with getting a license. The procedures were very easy and simple. I would face more challenges getting a license in Germany than in Georgia.
Q. The company is not going to operate in the field of non-life insurance. Why is that?
A. We are not going to operate in the field of non-life insurance yet. We will get involved in this sector later though. The reason is that first of all we want to see the state’s approach to this issue. The state’s vision of the future of non-life insurance is still in the process of getting formed. When we clearly see the strategy of the state then we will think about offering products in this direction as well.
Q. Are you going to have any strategic partners in Georgia?
A. We will have strategic partners when issuing every new insurance product. Insurance is very complex. For example, health insurance is a synergy of the insurance company, clinic and customer. The same is true of other insurance products. We will have many partners and together with them we will create a very preferable environment for our customers so as to provide the perfect service for them.
