28 March - 3 April 2001
Interview with Jovin Rausi
Rising to the challenge
Rausi Insurance is undoubtedly on the forefront of Maltas highly competitive insurance industry. David Lindsay speaks to founder Jovin Rausi who, together with his son Nigel, is directing the agency toward a bright future. Mr Rausi shares his reflections on 40 years in the industry and his views on the sectors mergers, past, present and future.
What is your personal background and that of the Rausi Insurance Agency?
I have been in insurance for 40 years now, first working for the UKs Prudential, which had a branch office here in Malta. At the time I knew absolutely nothing about insurance, being straight out of school and I went into insurance just as a job a job that has lasted me a good four decades so far.
However, 10 years ago I decided to set up a company for my life assurance sales earnings, which I called Rausi Insurance. At the time I was still a manager at Prudential but Prudential had stopped writing life assurance which led me to set up this company.
Within a year, Prudential had a change of directors, who decided to diversify their strategy in Europe and they subsequently chose to withdraw most of its European operations including Maltas branch office along with other branch offices and agencies across Europe.
Because it was a branch office and I was the branch manager, I was the first to be told that there was business to be run off. Most importantly, there were life assurance policies, which cannot be simply wound down. In other words, if someone has had a policy for 40 years, you have to continue servicing those policies, or otherwise pay them off.
I was asked whether I would carry out the run off for Prudential and I willing accepted.
Rausi Insurance, which I had started off just a year before, suddenly became a full blooded agency, employing most of Prudentials branch staff, while carrying out its run off.
I was really very lucky to be the man on the spot, as it could have very easily been someone else. If there had been a manager higher than myself at the time, he surely would have received the business or, likewise, if Prudential had decided not to offer me the business, they would have surely given it to someone else.
It was a real case of being the right man at the right time at the right place. These kind of opportunities come along only once and sometimes not at all.
Following this development, I had gone to Lloyds in search of a new principle for the non-life business. To my surprise, I managed to engage Lloyds as a new principle. I say it was a surprise because, at the time, Lloyds was going through a very bad patch. Nevertheless, they agreed to take me on.
So Rausi Insurance Agency began business as an agency, carrying out the run off business for Prudential, insuring with Lloyds and here we are today.
Weve grown bigger and stronger, in terms of both business and staff, and were now housed in new premises. Weve come a long way in 10 years.
What are your views on the state of the local insurance market?
The environment today is slightly different from that of 10 years ago, when the local industry was protected. Nowadays, there are obvious signs - in almost every industry - that this sense of protection, especially from the government, has stopped. There was a time when those of us involved in the insurance industry used to communicate with the government - there was always corroboration with the government, as it used to be our regulatory body.
Now the government has appointed an independent body, the Malta Financial Services Centre, which is very much on the ball and I personally welcomed the move.
Things are changing and theyre changing for the better. However, when things are changed for the better, inevitably, there is a price to pay. Not a literal price but inasmuch as when previously you were dealing with an individual at a government department, now youre dealing with a corporation and matters are more oriented towards Europe.
For example, Europe has its own directives on insurance in particular and we follow those directives.
This does not imply that we are following exactly what Europe is doing. However, European regulations provide a professional guideline and, if we do join Europe, then we will have to comply. If we do not, on the other hand, there is still good in it because at least there is a guideline set in place dealing with how to run your business.
Thats why, despite the little inconveniences caused by adapting to new working methodologies, I personally welcome the development. Inconveniences arise through having to change ones mentality, working methodologies, ones office but eventually the insurance community is going through these motions to achieve something good in the end.
How have international and local mergers affected the Maltese market?
Even more importantly, there have been changes in the insurance industry itself, in that weve had a good number of mergers over recent years. Most of these mergers are what I would call shotgun weddings, as it usually isnt a case of people volunteering to merge. In most cases the choice with whom to merge was optional, but then again, the process had started off as a result of an overseas merger.
For example, two local companies represent two different insurance principles and are competitors on the local scene. If the respective principles decide to merge, the two local companies basically have two options open either they merge together or they go their own way. But obviously both have to do something about the situation. In effect, the decision is forced upon them, thats what I intended by a shotgun wedding. The companies involved follow through in one way or another, but either way you look at it, neither has a choice in the matter.
There have been a lot of changes in the local market and we havent seen the end of it yet, I think that there will be further mergers in the local market. Mainly, one will find that some principles could either withdraw from the local market, and this is very possible, or there could be further mergers. I could see the future also bringing in more local companies.
Basically, the two local principles Middle Sea and Citadel could very well be joined by at least one more local company. This company would be formed by different agencies.
A few large local agencies that still have foreign principles may decide to make a break for it and form their own local company, like Middle Sea for example, and invite some of the other insurance agencies, like myself for instance, to join them in their venture.
However, when two companies merge, one usually finds that the first to suffer are the employees because when two companies merge there would obviously be an excess of certain staff in certain departments.
It is normally the customer that benefits from such mergers, but then again, mergers do reduce the choice available to the customer. For example, there are about 18 local insurance agencies. Say these are reduced to four companies with no agencies, such a move would definitely reduce consumer choice while also reducing competition.
What does the future hold for Rausi?
I see a good future for Rausi in that we have established ourselves as an agency and are well into the market. Our competitors definitely know about us, as does the market as a whole. We are an important part of the insurance industry and we have been accepted as such.
Competition is, of course, something that you have to live with as it is the essence of all in life.
We have many plans, including expansion. We also have plans to launch our own web site, through which a client will have the facility to enter and check on his or her policy.
As they say, no man is an island and you cant run your own business without looking around you. Not that you should copy whats going on around you, not at all, but you do always need to be aware.
With me is my son Nigel, who is the other director of the company. Hes young and is, of course, the future. He is an integral part of the company and we formulate our policies together.
Hes typical of the modern young executive who has been through the proper schools and management courses.
I, on the other hand, am from another school, the school of 40 years experience etc. Im not saying that one is better than the other - you should, ideally, have a mixture of both. But I didnt have the opportunities that young people have today, what with todays abundance of management courses and the like.
With the mixture of my experience and his studies, I believe that the company is based on very good foundations and I look forward to the future.