Looking to capitalize on the rise in household debt in this country, Genworth Financial entered the market last year offering insurance for all kinds of personal debt, from mortgages to consumer loans. Petr Krejčí, the firm's general director, says Genworth Financial wants to expand the popularity of personal debt insurance on this market. He talks to The Prague Post about why people are taking on more debt and discusses what needs to be done to make people realize that insurance isn't a waste of money but an effective financial risk management tool.

1 Genworth Financial only entered the market here last year but nevertheless came pushing a relatively new product: personal debt insurance. Why do you think this type of insurance has had some difficulty catching on here?

[Personal debt insurance] is not entirely new to the Czech market. Nevertheless, Genworth Financial has come up with an offer of much larger insurance coverage, and offers extensive lectures to partner financial institutions and dealers. At the end of the day, this should help clients to better understand the advantages of this insurance, which will lead to increased demand.

2 When you were looking to emphasize personal debt insurance on this market, were you convinced this product could take off here or just trying to get quick attention?

Genworth Financial is an insurer exclusively focusing on personal debt insurance. Our objective is to become a preferred partner of financial institutions on every market where we are present, regardless of how developed a particular market may be.

3 There are currently about 40,000 different insurance providers here, be they institutional insurers and brokers or individual dealers. Do you think people get confused when trying to choose between myriad insurance providers and products?

Genworth Financial offers personal debt insurance coupled with loans issued by financial institutions. We provide extensive training to their staff in order to guarantee that customers receive high-quality service. We don't focus primarily on selling this insurance through brokers and individual dealers.

4 How difficult is it for an insurance provider to penetrate this country's network of insurance brokers and individual dealers?

Our strategy doesn't consider using those distribution channels. However, to answer the question, I don't think that cooperation with independent distribution networks here is much different than in other countries.

5 A growing number of Czechs are taking on debt. Are you at all concerned that personal debt insurance will become a risky business if people aren't able to pay?

Well, it's essential to differentiate between two types of credit risks that influence the ability of debtors to pay their liabilities. On one hand, there are the classic credit risks that loan providers consider. And, on the other hand, there are risks that affect debtors' abilities to pay in the event of an extraordinary circumstance, such as suffering a permanent physical handicap or losing a job. In this field, we rely on our 30 years of experience to help predict what to expect in different stages of a particular economy's development and also how to assess the different situations people face.

6 When promoting personal debt insurance, will you try to convince debtors that they should have this insurance, or will you try to persuade financial institutions that they need to require it?

Genworth Financial values the transparency and simplicity of its products and the training of all personnel involved in the sales process. Therefore, it's up to all players operating on the market to identify the risks and [figure out ways] to limit them.

7 Do you think the growth of personal debt insurance, or rather requesting that all debtors have it, could halt the rise of household debt in this country? Will people be willing to buy such insurance?

The popularity of various loans is rising along with people's changing lifestyle, which follows trends in other countries. The rising demand for eliminating related risks is consistent with that trend. Personal debt insurance [is about] offering customers a solution for reducing risks associated with their changing lifestyles.

8 Who will want this insurance?

Basically, anyone using various loan instruments — such as credit cards, consumer loans, leasing or mortgages — who wants to hedge against the related risks.

9 Many people in this country still perceive insurance as a tool financial institutions use to cheat them out of money. What needs to be done to change this perception?

Changing the perception ... of insurance is a long-term [process]. Every individual needs to realize that the state's abilities to solve particular problems will continue shrinking, so, if they want to have a guaranteed living standard, they need to take care of it themselves.

10 What would you most like to insure against?

Most of all, I'd like to get insurance against excessive paperwork related to any issue I'm dealing with.