We pride ourselves on providing excellent service to our clients

“In the future, an insurance company should offer a much wider range of services than just insurance itself. With a bit of exaggeration, I would say that a good insurance agent should know your overall situation and needs and offer you a solution. They should take care of you in a way similar to a family doctor.” We are talking to Petr Žaba, Vice Chairman of the Board of Directors of Česká podnikatelská pojišťovna (ČPP), responsible for the back office. Apart from insurance administration, claims processing and IT services, he is also in charge of product development. He is no newcomer at ČPP: he was the director of the Fleets Administration Division for almost ten years starting in 2011 and helped turn it into one of the company’s leading segments. Regardless of the question asked, his answers clearly reflect a creative mind with a strong client focus.

Let’s learn from the biggest natural catastrophe in our history

Last year posed a serious stress test for insurance companies. According to the Czech Insurance Association (ČAP), the volume of claims related to climate change (floods, storms, hail, rainfall) rose by two-thirds year-on-year in the first nine months of 2023, which is a huge increase. How has ČPP handled this situation?

It has been a major learning experience for us and we are doing our best to take lessons from it. As of March this year, we have registered over 6,800 claims for approximately 1.7 billion CZK, which clearly reflects the largest natural catastrophe in our history. So far, we have settled about 85 percent of these claims, including advance payments, with payouts exceeding 1 billion CZK. Private property insurance claims (i.e. family houses, apartments, households) are predominant, making up around 82 percent of all reported damages. Some cases are being re-opened because clients have discovered that their losses are greater than initially estimated and that the original compensation was not sufficient. Business insurance cases are typically more complex, so these payouts will take longer.

Speaking of lessons learned, what did the disasters of last year reveal?

They showed us that such events will likely occur again and that we must be better prepared. That the most important thing is prevention – be it the consistent implementation of flood protection measures, proper crop rotation, soil management, building retention reservoirs or planting floodplain forests. We have seen that in places where such measures are taken, damage can be prevented. One example is the Vltava cascade, which responded brilliantly to water authority recommendations last autumn, thus preventing damage in the South Bohemian Region and Prague.

And what about lessons learned by the insurance company itself?

Among other things, we are contributing to the update of flood maps, which should give us better insight into flood zones and support decisions on whether to start a construction in a given area at all, or possibly to build on piles, and so on. We also closely monitor details that ultimately matter – such as the transmissivity of a river under the bridge. A bridge can divert a river during a flood, thus pushing the flood zone into unexpected areas.

However, one fundamental issue that last year’s disasters brought back to light is underinsurance.

Eliminating underinsurance remains on the agenda

We have discussed underinsurance in TRADE NEWS before. Both ČAP and your insurance company have done a lot to raise awareness on this issue. What is the current situation?

Unfortunately, last year’s disasters also confirmed that the situation is still not good. It is estimated that around 60 percent of our clients may have a problem with underinsurance. This is mainly due to outdated policies and the clients’ reluctance to update them. We actively inform both clients and brokers about this when insurance policies are being arranged.

To improve the situation, we were the first insurance company in the market to create an online calculator for estimating a property’s insured value which is available to the general public for free without the need to provide contact information. The calculator was developed at the Faculty of Civil Engineering, Czech Technical University, so it provides a fair market value from an independent source. It is crucial for clients to make sure their property is not underinsured, because if it is the case, payouts from the insurance company are automatically reduced – even when the damage is less than the maximum insured amount. Naturally, clients are unhappy when that happens and claim processing gets delayed. If the insured amount is set correctly, payouts can often be processed automatically online and very quickly.

Is this a problem with other types of insurance as well?

Yes, of course, underinsurance does not only apply to real estate, but also to other types of insurance, including comprehensive car insurance. We deal with a slightly different situation there, as car values no longer depreciate with age and use as they used to. That trend has stopped, or in some cases even reversed, so a vehicle’s market value may actually increase. We recommend that clients check that the insured value of their vehicle in the policy reflects its current market value.

Finding a balance between digitalization and personal service

The speed of claims processing is a hot topic in the insurance market. You have mentioned that various factors may affect it, such as a correctly set insured amount. What else would you recommend in this context?

Over the years, we have seen the speed of claims processing decrease, largely because claims have often become more complex. This is particularly true for industrial insurance, business interruption insurance or group property insurance. Particularly with the last-mentioned type of insurance where clients insure all their properties as one unit, it has turned out that in the event of a natural disaster, payout is a major issue because we don’t know the value of individual properties, and typically, not all of them are damaged at once. We are now actively working to improve this and advising business clients on how to adjust their coverage. I would also like to point out the importance of setting the excess correctly – a higher excess can reduce the overall insurance premium. And above all, clients should be focused on covering against major or total losses.

As I have already mentioned, if the policy is set up correctly, simple claims can often be handled automatically online. In terms of digitalization, we want to be among the most modern insurance companies in the market. By implementing artificial intelligence into internal processes, for example through an internal chatbot, we are achieving ever higher work efficiency. We plan to use AI in ​​training our salespeople through virtual reality, and I could go on like this. We believe that the combination of modern tools and personal contact will remain ČPP's main competitive advantage in the future.

Giving clients more than they expect

You have spent much of your professional career at ČPP developing products. If you had to name one area in which your company is a leader, what would it be?

We strive to make all our products excellent, but if I had to highlight one area, fleet insurance is the first that comes to mind. You know, fleet insurance is one of the more complex segments and is often seen as a litmus test for an insurer. I dare say that this is an area where we are much ahead of the curve. This is due, for example, to the fact that as part of digitalization, we have developed a very user-friendly and simple online fleet insurance solution that covers all risks. On top of that, we currently offer one of the most comprehensive and high-quality service packages available. And I’m not just talking about Global Assistance services, which your readers know well, even if they may not be our clients.

I believe in the combination of modern technologies and personal contact.

Can you tell us more?

Together with Kooperativa, our partner within the Vienna Insurance Group (VIG), we are building a new ecosystem of products that will enable greater development and more convenient services. The point is that we will not only provide insurance, but also offer something extra. We have been developing this strategy for several years, and one example is that within VIG, we are the only insurance company in the Czech market that owns six car repair shops across the country. In these shops, we are able to provide our clients with high-quality and affordable services, including, potentially in the future, vehicle inspections and more.

We would like to build a similar ecosystem for private property insurance as well. That way, besides simply paying out money after a claim, we could arrange repairs and other services, that is, settlements in kind. This is the future, as the world is becoming increasingly fast-paced and people are less inclined or able to carry out repairs themselves.

We believe that interest in these services will grow, just like, for example, interest in self-sufficiency insurance, another area we are focusing on. As the population ages, more and more people will require follow-up care.

ČPP is celebrating its 30th anniversary this year. Are you planning any surprises for clients on this occasion?

There will be a few pleasant surprises and we will be rolling them out gradually.
For example, right now we are offering property insurance “Komplex” for medium-sized and large businesses with a 30% discount.

We wish your insurance company another thirty years of success.

Petr Žaba was interviewed by Jana Jenšíková

Photo credits: Marek Jenšík