Insurance company is a linchpin of national economy and of your business, too

"This year has proved that climate change is here. Historically, we have never had as many insured events as in 2024. At the beginning of September, ČPP has already registered six thousand reported claims caused by windstorms, torrential rains and hails. Some of our clients have even been flooded several times. The total claims will go well above 300 million CZK, which is a twofold increase compared to last year," says Pavel Wiesner, CEO of ČPP, at the beginning of our interview. This sad fact is confirmed by the data from the Czech Insurance Association (ČAP): During the summer 2024 alone, there were almost 32,000 weather-related insured events in the Czech Republic assessed at 1.8 billion CZK.

How difficult will it be for your insurance company to cover such extensive claims?

Our company is prepared for such big claims. This is thanks to our capital equipment and particularly thanks to our high-quality reinsurance coverage. Insurance companies are insured for NAT CAT claims with reinsurers, who have already responded to the situation several years ago, so the price of our reinsurance has increased. We are therefore secured enough to pay our clients everything they are entitled to as quickly as possible.

A lesser-known fact is, however, that we have not yet sufficiently and fully reflected this reinsurance price increase in customer pricing, and sooner or later we will have to do so, primarily due to the rapid increase in multiple NAT CAT claims. From the insurance company’s point of view, the problem is not so much the total extent of claims, but their growing number. We call it increasing claims frequency. Reinsurers have already reacted to this, and we will have to do so as well, so that we can still meet our obligations towards our clients, which is, above all, quick and fair claims settlement.

Another question comes to mind: Were all your clients sufficiently insured? Or did you find some of them to be underinsured again?

I think that in the year since we last spoke, a great amount of work has been done here in educating customers, both on the part of the Czech Insurance Association, the Czech National Bank, the insurance companies themselves, but also you, the media. However, the situation is still not good. Just one example for all: 40 percent of real estate in the Czech Republic is still not insured at all. And the rest may not be insured for the right amount.

What is the right amount?

Simply put, it’s the amount for which you could build a new property if it gets destroyed by fire or another disaster. You can easily find the current price of the property using the calculator on the ČAP website, at your insurance broker or advisor. In general, if the insurance contract is not reviewed for some five to ten years, it is usually underinsured. The high inflation of the past years has of course accelerated the unfavourable situation.

Why is this still such an issue?

The insurance company can only recommend an increase in the sum insured, but it’s the client who must approve it. And there are still some myths around that. For example, it’s a myth that an increase in the sum insured necessarily means a more expensive policy. It is true but insurers can also work with the other side of the coin, the deductible. It is not always reasonable to keep it as low as possible. For large entrepreneurs, we conclude the deductible of up to millions of CZK, if they think that they can cover such a claim themselves. But even smaller entrepreneurs can manage a lot on their own. They need an insurance company if they are no longer able to cover the claim themselves.

It is in the business segment that ČPP is growing faster than the insurance market as a whole - by 20 percent. In this year’s Zlatá koruna competition, you won a gold medal for Business insurance. What is the secret of your success?

To sum it up - we put a huge emphasis on customer experience when designing all our products and we constantly improve our products accordingly. We rely on quality communication and assistance. And then we focus on the simplicity and speed of contract conclusion and coverage of all risks.

A few months ago, you came up with an innovated product for SMEs, which you called Simplex. What is the product about?

We assumed that entrepreneurs do not want to waste time with a complex agenda and need a product that they can conclude as simply and quickly as possible. We also assumed that the basic package of the product should cover all possible risks associated with production and business activities, including all the natural disasters that we talked about earlier. We call it an all-risk product. Simply put, if you get into a difficult situation, the insurance company will help you without having to review the insurance terms and conditions to see whether you are actually insured for that particular situation. The range of Simplex is really broad and comprises assistance services for entrepreneurs, among other things.

Simplex has been on the market for a few months now. How do entrepreneurs like it?

The growing number of contracts shows that we have hit the nail on the head. As with other products, we are keen on getting feedback from entrepreneurs and try to incorporate relevant ideas. For example, we are currently increasing the sums insured for liability insurance. As inflation rises, I recommend setting a limit of indemnity at 20 million CZK at least for this essential risk.

ČPP also won again in the Car insurance category in the prestigious Insurance Company of the Year broker poll. This shows that you are a stable leader in this segment as well. What do you think is behind this success? Are you ready for the October digital revolution in the MTPL agenda?

Yes, we have been successful in this segment for a long time. We are the third largest provider of the MTPL, and we are doing well both in retail contracts and in fleet insurance for entrepreneurs. It goes without saying that we sell car insurance as a comprehensive product, which is why we present a comprehensive offer to clients that goes beyond the MTPL. We also accompany this product with a number of riders and motor hull risks. I should also mention the high-quality assistance services that we provide in cooperation with Global Assistance. Many of your readers have probably already used them. We are convinced that we offer some of the best services in the market in this regard, as these awards prove.

As for the digitization of the MTPL agenda from October 1st, that is, the implementation of new obligations arising from the current legislation, we have been preparing for it for almost three years and it has cost us dozens of millions of CZK. But I dare to say that we have done our best to be 100% ready, which is also confirmed by the ongoing testing of our entire system. We believe that all the parties involved are equally well prepared and that the MTPL will work as it should, i.e. online in real time, from October 1st.

So we will keep our fingers crossed to drivers and to you.

Pavel Wiesner was interviewed by Jana Jenšíková

Photo credits: Marek Jenšík