The Russian insurance market transformed during the pandemic, as customers flocked online and sought new and more customised services.
Renaissance Insurance, the country’s largest online policy provider, introduced foreign audiences to the Russian insurance market as the industry’s first company to hold an IPO in October of this year.
NEO spoke with Yulia Gadliba, CEO and Chair of the Management Board at Renaissance Insurance, about how the company and sector has transformed as well as what lies ahead.
1. Renaissance Insurance was the first Russian insurance company to hold a full-fledged international IPO. Was there anything you had to modify in corporate management as a result of the IPO preparations?
Our company works hard to implement advanced corporate governance methods to ensure that our operations benefit our clients, partners and shareholders. As a result, three independent directors with substantial experience in various sectors of the economy joined the Board of Directors. In addition, the company established three committees: audit, strategy, and human resources and remuneration.
Since we were the first insurance company in Russia to hold an IPO, we had to educate international investors on how insurance works in Russia. We tried to cover as much ground as possible on the Russian insurance sector and how digitalisation is changing it, how our company operates, and why it is worth investing in it now. Our main argument to international investors was that our company is a digital disruptor in the Russian insurance market. All of the company’s retail sales and services are built through digital channels. We see enormous opportunities in the growth of direct sales, which are expanding at a rate of more than 60% a year.
We are happy that as a result we now have funds among the company’s shareholders that have invested for a long time, understanding the prospects of our business model and fully trusting the shareholders and the management. At the same time, the company received $250 million, which will greatly help develop its business and future digital transformation.
2. How has digitalisation changed the insurance industry? What technology does Renaissance Insurance employ, and how does it affect its financial results?
It is now inconceivable to envision using insurance products offline. This trend will only intensify with each passing year.
Our products have become more personalized thanks to the use of big data and client analytics. We provide our expertise to partners in the form of OpenAPI technology, which allows us to connect new partners in a matter of hours, giving their clients additional value in the form of insurance services.
Our business is growing without increasing costs. We are just increasing our expenditures on IT teams.
Customer growth, the number of monthly and daily active users (MAU and DAU), positive customer experience, net promoter score (NPS), number of products per customer, and customer live time are critical performance metrics for us. These figures reached an all-time high for the company this year.
3. Do you notice the focus on ESG or energy transitions changing the way you insure cars? What impact does the expanding ESG investment trend have on the insurance industry?
ESG is one of our key focus areas. We are far ahead of traditional companies in many critical parts of the ESG agenda since we are an inherently digital organisation focused on efficiency and the comfort of our customers and staff. Within car insurance, we provide unrivalled insurance packages for carsharing and electric vehicles on the Russian market. We are already hard at work developing a full-fledged ESG strategy and want to turn it into a competitive advantage. Of course, the emphasis on ESG will grow significantly in the near future.
4. How has the pandemic changed the way customers choose insurance? What differences have you noticed?
The pandemic has become a driver for customers to move online. While our online business had been growing even earlier, the growth rate increased significantly during the pandemic. In the first half of the year, we doubled our online sales of new business compared to the same period last year. Meanwhile, in the first half of 2020, during the active phase of the lockdown, we were also growing against last year. At the end of this year, we saw growth of about 60% and this trend continues, since online is the most convenient and comfortable way to buy insurance services and settle claims (the volume of settlements conducted via digital channels is at around 70%).
The second obvious trend caused by the pandemic is people’s desire to pay more attention to their health.
We launched our own medtech startup, Budu, after seeing greater interest in online consultations — over 100,000 online consultations with doctors have been conducted on the platform. The main difference between Budu and existing telemedicine providers is that we have our own team of doctors who consult in hybrid clinics (both online and offline). The goal of our doctors is not simply to provide consultations, but to solve clients’ problems and guide them to a full recovery. We are also seeing significant interest in mental health in Russia. This year, psychologists are the most popular doctors for online consultations, with therapists coming in second.
5. What do you think the future of insurance will be like, especially with regards to adapting to businesses building on new technologies? Is Renaissance Insurance looking to make any acquisitions right now?
Renaissance Insurance is a digital company that offers technological solutions with a convenient client path and personalised service for b2c and partners. We do not work with large industrial risks, which makes us very different from other large companies on the market. Unlike traditional insurers, we have digitised all major processes, allowing our clients to resolve any difficulties in a convenient way.
Today there are many “new economy” companies among our partners, and we are integrating into their ecosystems, which is why we are developing OpenAPI. We see how business is growing rapidly in these areas. At the same time, in terms of growth rates, our direct insurance is outpacing the online sales channel through partners.
Of course, the role and share of “new economy” companies will grow.
The future of insurance is absolutely connected to digitalisation, and the leaders of this market will be those who develop the most technological and customised solutions – with more higher-frequency products, where monthly active users (MAU), lifetime value (LTV) and customer life time (CLT) will be key indicators of customer analytics, and, most importantly, that will become number one in terms of customer choice.
As far as acquisitions are concerned, with new capital requirements for insurance companies, now is a good time for M&A. We are considering acquiring several insurance companies in the near future, focusing primarily on expanding our retail client base.