Cyprus is finally on the road to recovery after its devastated economy, heavily hit by the recession in 2009, resorted to a €10bn ($12.4bn) EU and IMF bailout in March 2013, becoming the fifth country in the eurozone to need rescuing. That year was one of intense economic strife, resulting in a significant scaling down in the banking sector after its second largest institution, Laiki, was closed down at the expense of non-insured depositors.
Marking “the most serious recession since the Turkish invasion in 1974”, according to Cyprus’ Finance Minister Harris Georgiades, the crisis created a troubling climate for businesses. GDP dropped 5.4 percent in 2013 – although lower than the 8.7 percent forecast by the Troika – and tourism fell 2.4 percent.
The finance sector was particularly badly hit, with insurance companies suffering under the conditions. Policy cancellations rose in the face of reduced income, as did the levels of debt and unemployment – the latter of which reached 17 percent in 2014. Those issues are likely to continue to impact the sector over the medium term.
Despite the troubling climate, Cyprus has proven more resilient than expected, with a recovery now clearly in sight
Leading insurer EuroLife was among the insurance companies affected by policy cancellations. But while competitors proved unable to respond to customer needs, EuroLife was able to strengthen its proposition, demonstrating its desire to help customers by focusing its approach on them and tailoring its services appropriately – thereby coming out stronger than before.
Despite the troubling climate, Cyprus has proven more resilient than expected, with a recovery now clearly in sight. That revival is providing EuroLife with an opportunity to grow its company through an ambitious strategy focusing on developing its digital offering, increasing the segmentation of its services and stepping up its emphasis on the customer to an even greater level.
EuroLife’s General Manager Artemis Pantelidou spoke to World Finance about how the company dealt with the crisis, what the future has in store for the firm and the wider industry, and how EuroLife is achieving its ultimate goal of helping customers in each and every stage of their lives.
How did the financial crisis affect EuroLife?
EuroLife actually came out stronger, as the crisis provided us with an opportunity to deliver our customer promises and prove our resilience against a background of very difficult financial conditions. Being able to keep customer values at the heart of our business and to immediately respond to customers’ liquidity needs, at a time when our competitors failed to do so, provided an ideal opportunity to demonstrate our strong proposition, customer focus and financial expertise. That has had a positive influence on how our company is perceived in the market.
The general economic downturn has, however, led to a reduction in the volume of our business as a result of policy lapses and cancellations. The company still has a strong capital base and is well prepared for the Solvency II requirements, which are set to come into place in 2016.
How did EuroLife protect itself from the worst of the financial crisis?
Maintaining our customer-centric business philosophy helped us to prevent an insurance run. We made sure we did what was best for our customers, acting in a transparent and responsive way and communicating the customer’s benefits and savings very clearly to them.
Our diversified investment strategy and strong risk management practices embedded in our daily business, meanwhile, protected the company’s balance sheet and ensured our overall financial robustness. We reduced our payroll costs through an early retirement offer, which several of our employees took up. Together with improving operational efficiency, that helped to reduce the company’s overall expenditure.
Cyprus’ economy is beginning to recover. What does that mean for the business?
High unemployment, reduced disposable income and high household debt mean the economic environment will remain challenging for our business in the immediate future. Sustainable growth will need to come from innovation. In the longer term, the area of retirement savings will be a big opportunity for growth and we aim to capitalise on that.
What is your growth strategy for the future?
We aim to widen out our market by attracting younger, more digital-savvy consumers. We will also focus on strengthening relationships with our existing customers, ensuring the best possible experience for them throughout their lives. In order to do that it’s important we make the service personal to each customer as well as ensuring we deliver on our promises, communicate effectively and reward customer loyalty.
We also aim to strengthen our customer segmentation and to develop a clearer understanding of buying behaviour. That will enable us to better align our services to the needs of our customers and to help them get the right insurance throughout their lives. We will focus on analysing customer data in order to identify and understand their needs, and offer them products according to their personal preferences.
How have you adapted your service model to better serve your members?
We trained our customer-facing staff to deal with panic policy withdrawals and reconfirm the need for insurance cover to the customer. For customers struggling financially, we offer alternative solutions to cancelling a policy such as partial surrender, reducing the insurance premium or even making some of the policy free of charge. For customers whose policies lapsed, we increased the period for reinstatement without underwriting them, and relaxed the partial reinstatement rules.
What challenges does the insurance industry in Cyprus face?
One of the biggest challenges is staying ahead of customer needs, as they are constantly being reshaped by changing demographics and behaviours. The customer proposition has to be continually adapted to remain relevant, necessary and desirable. Another challenge is embracing digital technology, which is rapidly transforming consumer behaviour and business models. Doing business in a more heavily regulated environment – with Solvency II, FATCA, Prips, IMD and MIFID II all coming into play – is also likely to present some challenges.
How will EuroLife use its expertise to overcome these challenges?
We have a team of talented and dedicated professionals who listen to the voice of the customer, and design products and services in line with their evolving needs and preferences. Our agents are trained to offer excellent customer service. They are also provided with innovative tools in order to assess the customer’s needs and assist with their financial planning. We are experts in underwriting, investment and claims management with a proven track record and a
risk-based approach.
How does EuroLife differentiate itself from competitors in the market?
We put the customer at the heart of everything we do and focus on building strong relationships, delivering tailored insurance solutions based on customers’ individual needs. Many of our competitors focus on pushing products and increasing business volume, often adopting practices that are in the interests of the company and its agents rather than the customer. We want our relationship with the customer to be life-long. The insurance products we offer are flexible, making us able to respond to their changing requirements. We are in a business driven by people and it’s important to serve their individual insurance needs.
Does EuroLife have any projects happening now or coming up in the future?
We are in the midst of a project that aims to strengthen the segmentation of our market. We aim to define the segments of our insurance more clearly, in line with the needs consumers have at different stages of their lives.
We intend on using customer insight, with regard to the particular segments, to tailor our services according to customers’ specific preferences. We are also developing and strengthening the workforce in our agencies, equipping our employees with the skills needed to respond to the demands and expectations of our consumers.
Embracing digital technology in order to optimise our business activities on a day-to-day basis (in terms of marketing, customer communication and the services we provide) is another of our key current focuses for development. In addition to that we are modernising our core system in order to ensure our business responds immediately to market needs, bringing out new products and services quickly.
What does the future hold for EuroLife?
We remain focused and committed to delivering value to our customers and building lifelong relationships. With a proven track record of delivery, and a determination to keep ahead of market developments, we aim to remain competitive in an ever-changing world. As the country’s economy recovers we are well placed to achieve strong growth, and we aim to remain the number one choice for Cypriots for their life, pension and health solutions.
