EFFECTIVE DISTRIBUTION STRATEGIES TO BOOST PRODUC T IVITY AND SALES Margerita Boskovic

1. EFFECTIVE DISTRIBUTIONSTRATEGIES TO BOOST PRODUCTIVITYAND SALES Margerita Boskovic DUNAV Insurance Company

2. Agenda: • Structure of channels developed on the Serbian market • Focus on profitable channels and actions in that matter • Balanced development of internal and external sales • Differences between domestic market and foreign market of insurance via distribution channels

3. ...andthe most significant indicator is thecontinous growth sinceyear 2004.

4. AMOUNT OF INSURANCE PREMIUM DUNAV SERBIADUNAV SERBIA

5. TYPES OF INSURANCE PRODUCTS IN SERBIAN MARKET Serbia

6. PREMIUM STRUCTURE Gross premium by types of insurances in the first trimester of 2007. and 2008. quarter I

7. FINANCIAL CRISIS IMPACT ON THE SERBIAN INSURANCE MARKET • Our financial sector did not operate with complex financial instruments, and was not plagued with so called toxic assets. • IMF forecast: Serbia will record 2% of GDP decrease in 2009; • Activities in the next period should be focused on: • development and improvement of risk management functions • UW developing in theselling policiesprocess • strengthening corporate management,that • requires education of insurants and improved sales • network, also all kind of distributive channels

8. CRISIS IMPACT ON INSURANCE - DUNAV • Primal strategic directions which contain all of the standard and nonstandard products: • creating packages - better image of company that • offers an integrated product and services • Improvement of cross-sellingand up-selling techniques of • selling – better focus the on client • developing of distribution channels – toconcentrate • on comparative advantages

9. Agenda: • Structure of channels developed on the Serbian market • Focus on profitabile channels and action in that matter • Balanced development of internal and external sales • Differences between domestic market and foreign market of insurancevia distributive channels

10. STRUCTURE OF CHANNELS DEVELOPED ON THE SERBIAN MARKET • Sales Channels according to Legal Act: • INTERNAL – sales force • EXTERNAL: • Brokers - 32 • Legal Entities - 65 • Physical Entities - Enterpreneurials - 123 • Banks - 13 • Tourist Agency - 1 • 800 Physical Entities licenced in • insurance. • Additionally, insurers tend to develop alternative channels essential for segmentated clients, various by structure and types of sales and consistant with the needs and comfort aproach to the client.

11. DISTRIBUTION CHANNELS

12. TRADICIONAL CHANNELS INTERNAL – SALES FORCE Elements of encouragement ambient in insurance: Tax deductions in part that is in correlation with the development of life insurance; Expanison of distributive channels - sales force by legal changes that are expected in the following period. Main goal of these changes is to increase the number of employees, it is assumed that 5000 people can be educated in life insurance sales, therefore this can be practised as an additional business (current legal stand inhibit insurers from having any additional practise).

13. Agenda: • Structure of channels developed on the Serbian market • Focus on profitabile channels and action in that matter • Balanced development of internal and external sales • Differences between domestic market and foreign market of insurance via distributive channels

14. FOCUS ON PROFITABLE CHANNELS AND ACTION IN THAT METTER Dunav evenly developes external and internal network guided by the following principles: Maximum usage of advantages in internal network expertise (UW capacity, claim adjustment, extended network), with the concern on profitabillity of internal network. Operating with large number of external network sales – conditioned by the structure and client demands as well as actions on the market; In the process of Company transformation focus has altered from product to client. Client segmentation has conditioned defining sales channels determening which is the best way of aproaching a certain client category.

15. Maximum usage of advantages in internal network expertise • Internal network – 30% in the MOT area and 50% in other types of nonlife insurance • Main objective is to increase sales via internal network using the following tools: • Sales plans and defining  product mix (for empolyees) • Cross sell tehnique, education • Recuperation of businesses that maintain MOT’s • Investing in our own capacity, in developing our front desk sales, instalation and purchasing new Tehnical inspections (MTPL) of the highest standards

16. DISTRIBUTION CHANNELS Client Segmentation and distributive channels eligable for sales:

17. DISTRIBUTION CHANNELS PRODUCTS BY SEGMENT

18. DISTRIBUTION CHANNELS AND PRODUCTS BY SEGMENT: INDIVIDUAL

19. DISTRIBUTION CHANNELS ANDPRODUCTS BY SEGMENT: SMALL AND MEDIUM BUSINESSES

20. DISTRIBUTION CHANNELS ANDPRODUCTS BY SEGMENT: LARGE UTILITY USERS

21. Agenda: • Structure of channels developed on the Serbian market • Focus on profitabile channels and action in that matter • Balanced development of internal and external sales • Differences between domestic market and foreign market of insurance via distributive channels

22. SHARE OF EXTERNAL SALES CHANNELS IN COMPANIES GROSS PREMIUM External sales channels gross premium: 7.353.358.000din. Companies gross premium: 15.142.985.426 din.

23. BALANCED DEVELOPMENT OF INTERNAL AND EXTERNAL SALES • What determens insurance market in Serbia is high presence of Motor third personl liabillity (MTPL) – 30% of the total premium is generated from MTPL. • Sales structure of MTPL: • 70 % via external sales channels – agencies and tehnical inspections (MOT) • 30% is sold via internal network.

24. BALANCED DEVELOPMENT OF INTERNAL AND EXTERNAL SALES • The only way in conducting a concept of enhancement market share and cost decline is investing in our own capacity: • Front desk sales • Front desk invesments • Development of Precompensation system • Sales channels of „Dunav Auto“ • Recuperation of businesses that maintain MOT’s • Instalation and purchasing of new Tehnical inspections in • cooperation with „Dunav Auto“

25. Agenda: • Structure of channels developed on the Serbian market • Focus on profitabile channels and action in that matter • Balanced development of internal and external sales • Differences between domestic market and foreign market of insurance via distributive channels

26. DIFFERENCES BETWEEN DOMESTIC MARKET AND FOREIGN MARKET OF INSURANCE VIA DISTRIBUTIVE CHANNELS • Brokers – relatively new channel on Serbian market • Problem characteristics of MTPL – MOT • Banking insurance is used for non-life products selling

27. DIFFERENCES BETWEEN DOMESTIC MARKET AND FOREIGN MARKET OF INSURANCE VIA DISTRIBUTIVE CHANNELS • Brokers – relatively new channel on Serbian market • Preferences: • Rarely extrapole for physical entities • Mostly clients are taken by the insurer

28. DIFFERENCES BETWEEN DOMESTIC MARKET AND FOREIGN MARKET OF INSURANCE VIA DISTRIBUTIVE CHANNELS • Concerning Tehnical inspections • obsolete Motor pool (around 2 million vehicles – average age of the vehicles is 12 years) • MOT’s are conducted every year • appliance of the new legal act that standardise the rules of tehnical inspections (MTPL)

29. DIFFERENCES BETWEEN DOMESTIC MARKET AND FOREIGN MARKET OF INSURANCE VIA DISTRIBUTIVE CHANNELS • Bankaassurance • It still in its conception allthough in the end of the year 2006. it was enabled by an legal act for the banks to do business in presenting insurance. • Characteristics and variety in relation to the foreign market: • This sales channel is more succsesfull in non life insurances and thereby is uprising; • Life insurances are sold less trough this channel for multiple reasons: • Low level of developing in life insurance due to historical reasons (inflation, war, etc); • Life insurance policy is not a liable element with credit products. • Productivity trough banks sales is 2 times larger in relation with the traditional agent network.

30. DIFFERENCES BETWEEN DOMESTIC MARKET AND FOREIGN MARKET OF INSURANCE VIA DISTRIBUTIVE CHANNELS Asumption for good cooperation between Banks and insurers is contribution and benefit for both sides. Foreign insurers in cooperation with foreign banks that are present on the domestic market use the same mechanism and similar is with the leading domestic insurance „Dunav Osiguranje“.