Sebastijan ZLEBNIK: CDA 40 Zavarovalnica is a Slovenian insurance company that was founded in 2015 and is authorized by the Slovene insurance regulator AZN to carry out insurance activity. CDA 40 is an insurance mono-liner specialized in Surety bonds with authority to operate in all European member states under Freedom of Services. Since beginning activities in December 2015, CDA 40 has managed to surpass a 34% Suretyship market share in Slovenia and is continuously growing.
XPRIMM: What do you consider to be the main advantages offered by your company, compared to your competitors?
S.Z.: One of the key advantages is bonds issue within 48 hours using a sophisticated cloud-based IT platform. CDA 40 is able to meet our client's requirements for sureties, thanks to the wide range of services available for surety bonds. The support of a knowledgeable experienced, and professional staff and an innovative web software allow us to quickly issue sureties through certified digital signature.
Additionally, in August 2018, CDA 40 was granted full membership in the international SWIFT system with an active BIC code. Not only does this make CDA 40 the first but also the only Slovenian insurance company with an active BIC code.
In order to be assigned an active BIC code, CDA 40 had to undergo intensive and detailed controls and procedures carried out by SWIFT, proving the company's sound business structure and operations.
Like in Romania, Slovenian beneficiaries tried to "squeeze out" suretyship bonds from public tenders by requesting active SWIFT codes as a compulsory element with all public tenders. Only banks otherwise use active SWIFT codes. Despite that, CDA 40 is the first and so far, only insurer in Slovenia that managed to acquire an active SWIFT code, and also the only Slovenian insurer that is an active member of the SWIFT network.
In the spring of 2018, the Active SWIFT BIC code was introduced as a compulsory element for Slovenian public tenders by the biggest national beneficiary, DARS. Not only was this an attempt to limit the guarantees in PTs for bank guarantees, but it also prevents the issuing of Surety bonds for PT's.
BIC code is a standard format of Bank Identifier Codes (BIC) and serves as a unique identifier for a bank or financial institution. These codes are used when transferring money between banks, particularly for international wire transfers. On top of that, the code is used to transmit messages between financial institutions and banks.
XPRIMM: CDA 40 is now targeting the Romanian market. What do you consider to be the potential for the surety bonds line of business in this market?
S.Z.: Romania is a bigger market than Slovenia and is expected to grow. We're aware of the trends in the market as well as data that was published by the Romanian Supervising Authority showing the estimates for the Class 15 (Surety) to have a GWP of RON 170 million (about EUR 37 million) in the form of roughly 35,000 insurance policies. According to the information we received, there are also a lot of projects waiting to be launched and this gives us an optimistic outlook on the development of the business in Romania. The construction market also shows a positive trend in 2018.
XPRIMM: What are the particularities of Slovenian surety bonds market compared to those in Romania?
S.Z.: In terms of the Slovenian market, because surety bonds have been legally equaled to bank guarantees since 2015, roughly 93% of the market tied to public tenders is dominated by the banking sector. However, a significant increase of surety bonds has been noted in past 3 years. I'm glad that the major part of this increase is managed by CDA 40. Brokers in Slovenia do not play a major role as the majority of guarantees in Slovenia are acquired directly from the banks or insurance companies. CDA 40 is the only insurance company specialized in surety bonds. The certified digital signature is becoming not only a standard in Slovenia, but it will also be a legal requirement, which gives our insurance company a competitive edge.
Regarding the Romanian market, brokers dominate it; over 60% of the intermediated premiums go through brokers. In this market, competitors are banks and non-banking financial institutions. We see that clients do prefer insurance policies. Also, there are no insurance companies specialized exclusively in financial risk insurance in the Romanian market.
XPRIMM: The Romanian insurance market is more focused on mediation through brokers. How do you plan to access this distribution channel? What are the methods you plan to use to convince brokers that your products are better?
S.Z.: We benefit from the advice of some local specialists, well-known in the market and throughout the broker community. In addition, the innovative cloud-based IT system brings significant advantages for the brokers, clients and beneficiaries. Not only is it possible to issue bonds within 48 hours but it also makes it possible for the clients and beneficiaries to check the authenticity of issued bonds. This, combined with SWIFT capabilities, provides us with a true competitive platform in Romania. Beside this, we rely on our processes being certified by digital signature, which makes a real difference in the time it takes to issue bonds. The process is more appealing, with a reduced response time that allows us to manage each and every request promptly. Actually, brokers will be part of it, too.
XPRIMM: What are your plans and objectives for the Romanian insurance market?
S.Z.: We are committed to the Romanian market and intend to become an important and well-known player. We'll start to sell under "freedom of services," but if the business is developed according to our expectations, we don't exclude the possibility of opening a local branch in the future.