PZU SA is starting to take notice of the country's most important business segment as it begins to offer corporate insurance packages geared toward the varied needs of the nation's 1.6 million small- and medium-sized enterprises (SMEs).

Indeed, the country's largest insurer already offers insurance products to smaller companies, but in response to expected exponential growth among SMEs - and a saturated market for big corporations - it is drafting a more targeted business plan for the segment.

Rafal Grodzicki, director of financial insurance and SMEs, was hired out of the banking sector three months ago to do just that.

Grodzicki explains that, at present, SMEs - especially smaller companies - are underserved by insurance, either because they are unaware of its necessity in today's marketplace or because they are simply short on cash. In such an environment, he points out, PZU, along with its competitors, are seeking to educate the public on the 'virtues' of corporate insurance - namely that it can be used as a financial tool as well as protection for a rainy day.

Further, he says that he was hired to find the variety of insurance needs of smaller corporations and create new products. He plans to work on this strategy for the next year, after which PZU would come to market with a new face for SMEs.

Also, he is devising the optimum way to divide up and categorize the different elements of the SME sector - whether by company assets or business type - and then tailor a suite of corporate insurance products accordingly.

"SMEs do not make up a homogeneous market," he explains. Thus he is talking with a variety of smaller companies across the gamut of sub-segments. Each segment, he figures, will desire a different, flexible package.

Typical products for companies include asset insurance and fire insurance. At present, the company offers SMEs products such as insurance for robbery, electronic equipment and goods in domestic transport, among other items that fall into the firm's package it calls Bezpieczena Firma. But Grodzicki warns that existing products seem fit for large corporations rather than their smaller brethren.

However, as the market leader, getting more business has hardly been a problem. And that is one of the reasons the company stands to gain so much, he adds. He explains that it's easier for the market leader to break open new markets than smaller, newer insurance entrants.

With that view in mind, PZU is seeking to educate entrepreneurs, creating a more insurance-savvy public and, most importantly, earning more capital.

He explains that products such as disaster insurance are only used in dire emergencies. In that case, entrepreneurs often don't even want to think about such scenarios, and insurance is thus put on the back burner.

He contests this view as, besides just insuring against potential disaster, there are insurance products that can be leveraged to help customers, for instance, borrow money from banks. In that way, PZU's products can be used as offensive, rather than defensive, tools.

"We want to create demand for the products," he notes. One way to do this, he says, is by cross selling with banks - employing a bankassurance business model. Althoug he did not mention which bank PZU would work with, the financial markets are still contemplating the potential for some type of merging of operations between PZU and state-owned banking giant PKO BP.

Also, he points out that the next key gripe among SMEs is that insurance is too expensive. This is particularly true when a number of entrepreneurs are building their businesses with their own personal fortunes. PZU is thus devising a new pricing strategy to fit all ranges of business size, noting again that the needs among smaller companies are different to those of larger ones, with products being priced accordingly.

(WBJ 31.v.04)