MARINA AVDEYEVA: On Points of Stability Amid Chaos
Marina Avdeyeva / Photo from personal archive
SHORT PROFILE
Name: Marina Avdeyeva
Date of Birth: April 24, 1978
Profession: Ukrainian entrepreneur, co-owner of the company Arsenal Insurance and founder of the startup Easy Peasy Insurtech
Marina Avdeyeva, co-owner of one of Ukraine’s largest insurance companies, IC “Arsenal Insurance”, speaks about the insurance industry without abstractions or illusions. Risk management is not about “insuring yourself against everything”, but about precise calculation and the sober acceptance of what you are capable of controlling in life — and what you are not. Our conversation will revolve around war risks, digital transformation, artificial intelligence, the philosophy of Stoicism, and the search for points of support in a world where risks and uncertainty are becoming the new normal.
INSURANCE AS THE MATHEMATICS OF PROBABILITY
Y
ou can insure yourself only against risks that we are unable to foresee. This is the fundamental principle of insurance. At the same time, everything that is predictably inevitable — and therefore opens up wide opportunities for speculation — makes no sense to insure. That is why, for example, financial and entrepreneurial risks are not insured. I will not drift into pseudo-philosophical banalities, but we cannot insure our lives against many things — dishonest partners or friends, unhappy marriages, or bad weather. Nevertheless, in some cases, the insurance business can help protect you from unpredictability. It is a constant search for balance between intuition and calculation.
Intuition is always about entrepreneurship, about how you develop your business — in this case, an insurance business. But the business itself, its operational core, is a precise calculation. We know almost everything about loss ratios and risks — down to the third and fourth decimal place. For example, we know that out of 50,000 cars, 100 are red, and 2 of them, driven by men aged 30–35 with 10–15 years of driving experience, will get into an accident. The only problem is that we cannot predict which exact two of those 100 red cars will be involved in a crash. But the driver does not know that, either when purchasing insurance from us, whether it will happen to them or to someone else.
INTUITION AS A “FEEL FOR THE MARKET”
In any case, out of 100% of insured vehicles, there will be 50% accident claims for which we will make payouts. Only unpredictability whose statistical probability can be calculated is insurable. Only a risk that can be quantified, supported by convincing historical statistics, and has a clear forecast for the future, can be insured. So where, then, is the place for intuition in the insurance business? It is indispensable in what can be called a “feel for the market”. It is important to anticipate, to sense development trends, and to be prepared to respond to them appropriately. For example, we see that young people are increasingly choosing car-sharing services, buying cars less often, and, accordingly, purchasing separate insurance policies less frequently. This means that my insurance service will most likely become part of someone else’s service ecosystem, because in the future, my client will no longer need it as a standalone product. However, it is possible that when a young person grows older, their insurance needs will also change. In general, much of the development of the insurance business is shaped by behavioral economics. And intuition helps anticipate the trends of that development.
THE UKRAINIAN INSURANCE MARKET AND GLOBAL TRENDS
The specificity of the Ukrainian insurance business is that it inevitably lags about 10 years behind global trends. This is easy to verify. I have a habit of studying analytics in the United States market. I noticed long ago that everything new that emerges there appears in Europe roughly five years later, and another five years after that, here in Ukraine. Why are we so far behind? When the Soviet Union collapsed, people had more urgent concerns than insurance. In general, during any crisis, insurance is among the first areas to face budget cuts. As a result, the insurance business itself remained discredited for a long time, even at the level of the idea. It was only in the early 2000s that the Ukrainian insurance industry gradually began transitioning toward the state typical of the civilized world.
Those were not easy 25 years. Back then, people doubted that an insurance company would actually pay out. Today, such concerns no longer exist — everyone understands that it will pay. Moreover, competition among insurance companies today revolves around who can do it faster and with better quality. The gap between insurance in Ukraine and, for example, in America does not lie in payment guarantees at all. It is particularly noticeable in the level of digitalization — in how well insurance products are adapted to online platforms, smartphones, and the internet. Whether they can become part of other services, for example, integrated into a banking application.
WHY NOBODY LIKES INSURANCE AGENTS
Although when speaking about the discrediting of the insurance industry, this is far from being solely a Ukrainian phenomenon. Perhaps, while watching Hollywood films, you never noticed one particular detail: if there is a loser character in the movie — abandoned by a spouse, fired from work, and unable to get people to hand over their business cards — that character will almost certainly be an insurance agent. Take a closer look: this Hollywood rule practically knows no exceptions. Why does this happen? Because insurance is, in many ways, a “mandatory” industry. Take health insurance, for example — you are required to pay for it regardless of whether you want to or not. In people’s perception, it is money paid for thin air. Their thinking is highly situational; it exists mainly in the “here and now”. In their view, they are paying today for something that might happen the day after tomorrow — or may never happen at all.
THE PERCEPTION OF RISK IS CHANGING
We see that both globally and in Ukraine, the perception of risk itself is gradually changing. Today, people no longer want to strain themselves; they want to live comfortably, without risks or inconveniences. One could say this is a side effect of growing prosperity and rising expectations. Any university graduate today demands a higher salary than a specialist who has worked for me for 20 years. Under the influence of this trend, the global insurance industry is shifting toward prevention. What is prevention? Insurance used to protect your wallet — if something happened to you, the insurance company compensated the damage. Today, insurance is moving increasingly toward prevention — toward prophylaxis, preventing risks from occurring, or minimizing them.
The younger generation is willing to pay for this. This trend is already clearly visible in health insurance. Our clients who are now 25–30 years old do not want treatment only after they become ill. The first thing they do after the organization they work for purchases a policy for them is come to the insurance company and ask: when is the check-up? And we pay for preventive care, so that a person can identify what is wrong before a disease manifests itself. The paradox is that this trend is accompanied by a reduction in the cost of insurance. Because if you invest in prevention, you minimize the risk, and it genuinely becomes less expensive.
THE SPECIFICS OF INSURING RISKS DURING WARTIME
The war in Ukraine has significantly affected both the perception of risk and approaches to insurance. Let me give a simple example. What did our clients previously insure their cars against? Theft, traffic accidents, falling ice or tree branches on the roof, and so on. In other words, there was a specific list of risks. Beginning in mid-2022, people’s understanding of what could threaten their vehicles changed. When they asked whether it was possible to insure a car, they increasingly meant protection against falling missile and drone debris. As a result, the top five companies on the insurance market almost instantly introduced a new product — insurance for vehicles against war-related risks. Later, similar insurance products for apartments and houses began to appear.
Today, you can easily insure not only a car, but also a small office valued at up to 10 million hryvnias, as well as window glass separately in homes or offices. However, when it comes to large facilities — such as manufacturing sites, warehouses, or retail and office centers — the situation becomes far more complicated. Without foreign reinsurance, it is practically impossible to satisfy demand in this segment. Reinsurers do not want to assume risks in a country at war. They are guided by the very principle we discussed at the very beginning. You can insure a house against fire because you do not know whether a fire will occur. But in a wartime situation, one could say the fire has already started. There are, of course, isolated large-scale facilities that we managed to reinsure. We brought a major British insurance syndicate into partnership, but the cost of insurance in such cases could reach as much as 10% of the property’s value.
A UNIQUE UKRAINIAN EXPERIENCE
War is certainly not the kind of “training ground” on which one would want to sharpen professional skills. Nevertheless, our partners say that in Ukraine, we are now gaining a unique experience for the global insurance market in the professional assessment, analysis, and management of war-related risks. On the other hand, we ourselves are working under conditions that could be described as close to combat conditions. For obvious reasons, one of our major problems has become a shortage of personnel. In particular, we are in acute need of underwriters — specialists engaged in risk analysis and assessment. We have been forced to look beyond Ukraine and search for professionals in Eastern European countries. And, surprisingly enough, these people are eager to cooperate with us. Why? Precisely because of the unique experience they can gain here. And such experience, unfortunately, may become highly востребованным in the modern world. More and more so, judging by the way the situation is developing.
AI HAS PROVEN TO BE A BETTER DOCTOR
Another challenge for the insurance business is digital technology. Artificial intelligence, which makes it possible to assess risks more effectively through the processing of vast amounts of data, is expected to give a tremendous boost to the development of the insurance industry. However, the implementation of AI will inevitably lead to workforce reductions. I can give the example of one of our units — medical assistance services. The essence of this service is that 50,000 people covered by our health insurance can call and receive high-quality consultative support. Previously, this assistance was provided around the clock by approximately 120 doctors, but now their number has been reduced to 40.
Two years ago, we introduced medical AI — a special module in the mobile application that does exactly the same thing, but without human involvement. It asks the same guiding questions that an assistant doctor used to ask and provides a reliable preliminary diagnosis in 87% of cases. One could, of course, object: why not 100%? But only if one does not know that, in reality, human involvement in the diagnostic process reduces accuracy by several percentage points. In other words, AI performs this task both better and faster than humans. Moreover, people found it psychologically easier to share intimate details in an application than to make a coming out live over the phone.
ARTIFICIAL INTELLIGENCE RESTORES FAIRNESS
Another example comes from the practice of automobile insurance. As we know, all drivers behave differently on the road and get into accidents in different ways. Some drive recklessly, run red lights, or may even drink while driving. Others behave in a civilized manner, follow traffic rules, and do not exceed speed limits. But since insurance cost the same for both groups, good drivers effectively paid for bad ones. This happened because there was no mechanism capable of analyzing and taking into account all the nuances of how our clients used their vehicles. But now artificial intelligence does this with the help of a telemetry device installed in the car. Based on the collected data, we can see how a driver behaves on the road. As a result, good drivers now pay less, while bad drivers pay more. So, in this case, AI is also about fairness.
HOW TO FIND A POINT OF STABILITY IN A WORLD OF CHAOS
We all watch with anxiety as risks and uncertainty continue to grow both in our country and around the world. That is why it is important to find a certain stability in life as well as in business. It may sound paradoxical, but in order to remain stable, you must move at the speed of the changes taking place in this world and avoid the illusion that some fixed and final point of support exists somewhere. Be flexible. “Grow or die”, as Travis Kalanick, the founder of Uber, once said. You must grow and change together with the world, remaining prepared for any risks. Because they will definitely exist, and their number will definitely continue to increase.
If we are to speak about any kind of support, then the recipe is rather classical: it is best sought in eternal things — in art and culture. I, for example, collect contemporary Ukrainian painting. I do so so passionately that, as collectors like to say, I no longer know where my walls end and my floor begins. This undoubtedly provides a certain emotional point of support. Because you draw energy from an eternal source that will never run dry. I know that works of art have historically been a good investment and one of the most reliable ways to preserve capital. However, I have never viewed collecting as a form of asset diversification or as a tool for insuring against risks.
INVESTING IN MEMORIES, HUMAN CONNECTIONS, AND EMOTIONS
February 24, 2022, demonstrated that situations may arise in which you are forced to leave everything behind — your home, paintings, furniture. You can easily lose the largest and most valuable possessions you have. For example, I own a painting by Oleksandr Roitburd that covers half a wall. Or one by Vlada Ralko of the same size. These are not things you can simply tuck under your arm and quickly evacuate somewhere. Perhaps only one small work by Anatolii Kryvolap, who is also represented in my collection. If the collection were located in Switzerland, Austria, or some other island of stability, perhaps it could be considered a form of investment and asset diversification. But here in Ukraine, that model simply does not work. Practically all the works were purchased directly from artists’ studios, during personal conversations with the artists themselves, which is why every painting for me is inseparable from my impressions of its creator’s personality. With some of them — for example, Oleksandr Klymenko — we have developed friendships lasting many years. Therefore, memories of communication with extraordinary people, emotional experiences from what I have heard and seen — these are the true investments, and they do not directly correlate with the market value of the paintings in the collection.
NUMISMATIC MEDITATION
Another point of support is a hobby that, let us say, was passed down to me by inheritance. It is a rather unusual occupation for a woman numismatics. It so happened that I am a third-generation collector. The coin collection came to me from my father, and to him from my grandfather. My father believed that a collection should never be divided — it must remain whole and pass to the person with whom it will “continue to live”. Because a collection requires constant replenishment, care, living interest, and love. I was willing to continue expanding it by investing in rare pieces. That is why it came to me. A numismatic collection must be thoroughly understood, because it is always deeply connected with history. One must constantly search for new information, read extensively, and analyze.
It is such a fascinating pursuit that sometimes business itself seems somewhat dull by comparison. Perhaps you know that coins are valued according to the amount of time they have spent in circulation. There are coins in the rarest possible condition, known as Uncirculated — meaning they never entered circulation after being minted. Collectors truly hunt for such coins. I have examples of them in my own collection. Some can be admired endlessly. For example, hoard coins that, after spending long periods hidden away from human eyes, developed a distinctive and remarkably beautiful patina. Numismatics is not only about a collector’s excitement, but also something akin to meditation — an escape from everyday bustle into another dimension.
BEAUTY AGAINST CHAOS
The collection was assembled according to the museum principle — meaning you follow a catalog and collect everything that was ever issued within it. It is impossible to complete all the positions within the lifetime of a single generation. I never place checkmarks next to completed entries in a computer program. When I find another specimen, I take out the same paper sheet and make notes exactly where my father’s and grandfather’s hands once made them. All of this carries the shade of generational continuity, an island of stability in a changing world. The more time passes, the deeper the collection recedes into history, the greater its value becomes. And not only its material value.
Although I know that after the full-scale invasion, some magnificent collections were irretrievably lost, which increased the value of those that survived. In the end, I decided not to take risks and arranged for the coins to be stored abroad. In general, it seems to me that in order to resist destruction and chaos, a person must make certain creative efforts that help preserve beauty in their life. I am convinced that beauty will save the world, although there are those who place greater hope in love. I do not think there is much contradiction here, because beauty, in essence, is always an expression of love.
INSURANCE STRATEGIES AND HEDGING STRATEGIES
If we return from the idea of a point of support to the topic of minimizing risks, I would first advise identifying them. One should first understand what risks exist in one’s life and then select the appropriate instruments. Insurance may be one of them. Where insurance tools do not work, hedging strategies may prove effective. One can invest in high-yield startups while at the same time making low-yield investments in highly stable securities, thereby managing risk. If the high return investment succeeds, it compensates for what was not gained from the low-yield investments. And if it fails, you still preserve the guaranteed return of the securities. Investments can also be planned not only from the perspective of profitability, but from the perspective of geography. That is, investing not merely in different countries, but on different continents. In any case, risks should be hedged.
If you invest in real estate, there is no need to buy apartments in the same building. Invest in different types of assets: some in securities, some in startups, some in real estate, some in investment funds. However, if we are speaking about risks connected not with capital management, but with our ordinary everyday lives, then insurance mechanisms work extremely well here. Insurance covers virtually all the risks a person may encounter. It is understandable why people are psychologically inclined to believe that “death is something that happens to others”. However, risk management and minimizing risks in one’s life begin with recognizing the fact that life is structured in such a way that no one is automatically protected from war, floods, fires, car accidents, and other unpleasant surprises. Therefore, insuring risks is one of the signs of a conscious and responsible attitude toward one’s own life.
WHAT THE STOICS CAN TEACH US
It seems to me that for entrepreneurs — and for modern people in general — the philosophy of Stoicism may be especially relevant today. On the one hand, one should not become obsessed with control — it is important to acknowledge that there are many things in life you simply cannot control. On the other hand, you must take responsibility for your own life, because there are still certain things you can control. That is what you should focus on. Many people here enjoy talking about how bad the Ukrainian state is. That it provides too little support for all of us — entrepreneurs, pensioners, women… But why not finally focus on something else? At least, in accordance with the “theory of small deeds”, paint a fence. Replace a light bulb in the stairwell. Renovate your apartment, modernize your production facilities. Simply do what is within your power.
Even if these are the smallest possible steps, they are still forms of activity you can control. Probably even before becoming acquainted with Stoicism, I learned these lessons from my own personal story. Nobody helped me. I was forced to take responsibility for myself and for my own life, and now I have a team of a thousand people whose well-being depends on whether I succeed in what I set out to do. That is why, as Mother Teresa once said, if you want to do something good for the whole world, begin by simply loving your family. The Stoics spoke about much the same thing. Control what you can control — your actions, your goals, and your values. But when it comes to your body, your property, the weather, the schemes of enemies, the past, the global economy, and ultimately death, that approach simply will not work. So just let go of what you cannot influence.
When copying materials, please place an active link to www.huxley.media
Select the text and press Ctrl + Enter
