ArmInfo. Successful business forges for years, leaving behind itself the difficult years of becoming. And from what principles were used as the basis of this process, what mission accompanied and guided the company in the process of its growth, this is the result of achieving a qualitative maturity. These days, INGO Armenia, one of the most successful insurance companies in the country, celebrates its 20th anniversary. And she began with the idea that appeared in a small company of like-minded people who decided to start an insurance business in the country in the classical sense. So was born in 1997, an insurance company called "Efes", denoting a medieval cold weapon with an obligatory attribute of security - a guard designed to protect the hand. For many years, the company was led by its co-owner Levon Altunyan, a medical student who apparently failed to deny the new Prime Minister Karen Karapetyan an invitation to head the Ministry of Health for the sake of major systemic changes in the field of national health. The company was headed by his youngest comrade, like-minded person who has worked in the company since the beginning of the 2000s, having studied at Cambridge University, Arevshat Meliksetyan. We asked him for a meeting to talk about the company's path, the situation in the insurance market and its prospects. The company you led was one of the first companies in the Armenian insurance market. And you joined her pretty early. Could you briefly describe the path that has been taken? After all, the market grew with great difficulties and huge numerical losses. How did "Ephesus" manage not just to survive, but by attracting a large strategic investor, to become a leading player in the market?
First a bit of history. The company "Efes" was registered in September 1997, having obtained the license of the insurance inspection of the Ministry of Finance of Armenia and thereby enlarged a large list of insurers, consisting of almost three dozen companies. This was the time when the legislative ordering of any commercial activity began in Armenia, laws were passed on LLC and Joint Stock Companies. But the insurance market itself was poorly regulated, and many companies were created as capped ones, I would say "pocket", and worked in the orbit of relatively large business structures that used insurance for their own commercial purposes by well-known at that time different financial schemes. We were not connected with anyone and the company went the other way, by becoming a classical independent business structure.
When I joined the company while still a student at the Institute of National Economy, there were only 5 of us. Studying in the institute of insurance business and while working for the company, I fell in love with this work. She absorbed me all, it was very interesting, and I soon realized that I had connected this work all my life. I was one of the first, after me tens and dozens of young specialists came to us, and so the company began to develop its own corporate culture, inspired by its co-founder, Levon Altunyan, and supported by a desire for professional excellence. This was a very important circumstance, for it seems to me that it played a crucial role in the fact that out of a large number of existing insurers, the Russian insurance giant, Ingosstrakh, which decided to enter the Armenian market, in 2004 chose us quality, if I may say so, of the takeover object, acquiring a 75% stake in Efes and renaming it, according to its strategy, to INGO Armenia.
I remember that during these years the insurance market was shaking from time to time. Even HSBC Holding established its insurance company in Armenia, but after the first serious insurance event, it turned down its activities. Apparently, there was no faith in the market.
Initially, Ingosstrakh also came to Armenia after its customer, the investor - Siberia Airlines, which purchased our Armavia, and under Armenian law, only Armenian insurers had the right to insure aviation and other risks. But even before the deal with Ingosstrakh, Efes set itself an important task of meeting international standards, thanks to which the majority of the company's clients were Armenian representative offices of foreign companies, funds, international and diplomatic missions, which demanded a high level of service. We already had contracts for reinsurance coverage with a number of the largest reinsurance companies of France, Germany, companies - members of the London market "Lloyds". I think this fact helped also that the Russian investor paid special attention to us. In fact, if you remember, 2004 was called the year of the Russian financial assault in Armenia, marked by two major deals: Ingosstrakh bought Efes, and VTB Bank - Sberbank of Armenia. But soon the undeveloped Armenian insurance market faced serious challenges ... After the transfer of the functions of the financial mega-regulator in 2006, the subsequent adoption of a number of legislative amendments, regulatory decisions, including the increase of the minimum statutory capital stake, the market began to clear. After the adoption of the 3-on-account law on insurance, the market left about a dozen players. The process of consolidation continued, but at the same time in 2008, new players came to our market in the person of large Russian companies Rosgosstrakh and RESO-Garantia.
And, nevertheless, it was the major players that helped consolidate the market.
Shareholders of large companies had a direct interest in the absorption of small. The struggle was for every client. We, for example, purchased portfolios of five insurance companies - Fintrast, First Insurance, Griar Insurance, Alliance Flush and Cascade Insurance. And we believe that we have acquired not only a clientele, but also specialists, and people started working in our company who created the insurance market from scratch, they know him well, both professionally and, I would say, on an intuitive level. Today these people occupy top positions in INGO Armenia.
And of course, the turning point in the development of the market was the adoption of the law on OSAGO, which gave a powerful impetus to the development of insurance culture and the market itself. So, with the adoption in 2011 of the law on compulsory motor third party liability insurance, our company has grown in size by 7 times. If before the law we worked a little more than 40 people, but now more than 280. We never saved our employees' training. We have 7 candidates of science, several people have graduated from major Western universities in the specialty of insurance, our employees teach in leading universities of the country. And, nevertheless, the company is young, the average age is 28 years, there are a lot of young people and we train it.
"INGO Armenia" is the market leader in the class of medical insurance. And all of us expect in the near future a new kind of compulsory insurance - medical.
We are now seriously preparing for the second key stage of market development - the introduction of CHI. The program of transition to MHI will be implemented in stages. First, from October 1 this year, civil servants will receive a social package, then citizens falling under the category of underprivileged and in the future, the timeframe has not yet been established, all other working citizens. We are insurers, we are aware that from the success of the first stage, the state will entrust us with the management of the second and third - full transition to the compulsory medical insurance.
Our analytics shows that "INGO Armenia" has the most diversified portfolio. How do you manage to keep the middle ground with such temptation as compulsory motor third party liability insurance (MTPL)?
The company's board of directors adopted a special decision limiting the CMTPL premiums to a 50% limit. All the rest is a well diversified portfolio of voluntary types, symmetrically disaggregated by property and medical insurance, car insurance (CASCO), liability insurance (professional), insurance of tourists leaving abroad. Actively working with banks, insuring property on mortgages, borrowers insure against accidents.
That is, do you manage to maximally diversify the portfolio in order to achieve moderate market risks?
Of course, we must have a balanced portfolio and we succeed. Otherwise, we may find ourselves in a zone of increased risks. You said about the important direction of corporate culture - the serious costs of training. I remember "Ingo Armenia" actively participated together with other companies in the training program for insurance mathematicians - actuaries. The demand for such specialists is formed in the market or is it too early? The need for such specialists is growing, certainly. Our work with universities has something to give, but it seems to me, while the return is incomplete. But there is a demand for actuaries - these are those experts who are important for us, who are counting the line of risk for which it is impossible to intervene. They also calculate tariffs, provide analytics, carry out technical analysis and give forecasts. Moreover, the Central Bank, by its force decision, ordered the company to have a staff of actuaries, they are responsible for both reserves and tariffs. Before any conclusion of a serious contract, we need to have an actuarial conclusion. This is correct, without it anywhere. However, in reality, despite a certain demand for such specialists, there is still little or no qualitative offer, or universities fail to cope, or people are leaving to work in another area. About why activists are needed, the development of a concept on CHI can serve as an example. Calculations for the Ministry of Health on these issues have been conducted by specialists from the insurance companies - actuaries since months 5-6, since the Ministry of Health itself was not in a position to do so.
Today much is said about agricultural insurance. INGO Armenia" tested this market a couple of years ago and came to the conclusion that the risks there simply go off scale, since the industry is completely unprepared for this. You are right, the industry is completely unprepared and, secondly, there is no scale effect. A large number of laws does not work here yet, which means it is too early to talk about insurance of agricultural risks. The government and the market are thinking about this, thinking about how to prepare the industry for this service. But, at the same time, there is already a concept of insurance of dangerous objects. It's also about compulsory insurance. This document, on behalf of the government, is prepared by the Ministry of Emergency Situations and we help it in this. The bill is discussed, opinions are collected. I think not far off, when another type of compulsory insurance of dangerous objects will be adopted in Armenia.
Our company strives to be a locomotive in the further development of the insurance market. Having penetrated this idea, the whole staff of our employees lives and works. Thus, we are changing our country for the better and transferring our experience and our attitude to work from generation to generation. Only in this way, I'm sure, our company will dynamically and harmoniously conquer tops after tops.
Thank you for the interview, success and with the anniversary of you!