EU – Baltic States, Financial Services, Insurance

The situation in the Baltic countries is well-illustrated not only by the commercial banking sector but also the non-life insurance sector, in which major Scandinavian insurance groups such as IF (part of Sampo Group), Codan and Pohjola Insurance compete on a regional level. Competition is quite severe among them, writes LETA.

"Those who fight for market share by offering the lowest prices can hardly ensure quality: they soon start to look for reasons to reduce insurance benefits and the end result is that an unsatisfied client will try to find another insurance provider," the Torbjörn Magnusson noted.

Active competition in the Baltic insurance market has both good and bad sides. The negative effects include the problems with quality mentioned above, while one of the key advantages is receptiveness to innovation and modern ways of organizing activities.

"In my view, the present economic situation in the Baltic region is favorable. You have already experienced that it is possible to go through an economic recession and return to a growth phase, so expectations about the economic future are positive. The Baltic countries managed to return to a positive growth trend much faster than the countries of 'Old Europe'. I think this is due not only to government policies, but also a young market that has a greater scope for business development than is available in Western or Northern Europe. I believe this is further reinforced by your determination to work hard and overcome the differences that, though rapidly diminishing, still exist between Western and post-Soviet Eastern Europe," the expert said.

We, as well as other representatives of Scandinavian financial companies, are often asked: How did you manage to make profits during the recession? The answer is simple: we are oriented towards a long-term perspective. We are therefore not frightened by poor results in one quarter or another and this doesn’t make us abandon our company’s values – orientation towards our clients and high-quality services. The business strategy is not created just for one year and it necessarily takes into account factors such as a possible economic recession. One can pursue long-term goals even during a crisis.

Scandinavians admire the flexibility, enthusiasm and energy that Lithuanians have and the fact that everything still lies ahead of you. However, I would wish Baltic businesses patience and a sustained effort. At present, this is one of the fastest-growing regions in the EU with perhaps the most promising economic prospects. Although aggressive competition is not uncommon here, time will show that the winners even in the most dynamic markets are those who determinedly follow their chosen path and remain faithful to their long-term strategy.

As LETA reported, ERGO Insurance Group has written for almost EUR 107 million in premiums in the Baltic States in the first nine months of 2012, nearly a ten percent increase on the corresponding period in 2011.

ERGO Insurance Group earned EUR 7.9 million in profit in January-September 2012, compared to EUR 2.9 million and its clients in the Baltic countries were paid EUR 65.5 million in claims, 8 percent more than in January-September 2011.

According to ERGO Insurance Group Chairman Kestutis Bagdonavicius, the gradual and moderate recovery of the Baltic economies revitalized the insurance market.