Fahri ALTINGOZ: It can be said with confidence that digitalization and analytics have played the biggest role in the evolution of AKSIGORTA in 2018 and 2019. Particularly the projects carried out in analytics have enabled our company to be more data-driven. An important example for the outcome of these projects is the customer segmentation based on the analytical background.
Additionally, thanks to our investments on technology, we utilize AI on the automated tasks, therefore, we can use the human resource on jobs where they can create additional value. Since the increasing number of automated tasks makes for decreasing expenses, we have been the best performing insurance company within the Turkish market in terms G&A ratio.
We decided to grow in MTPL in 2018 due to higher prices and interest rate. Besides, we differentiated ourselves by providing Political Violence coverage in 2018 and Cyber Risk coverage in 2019. Thanks to our growth in conventional business and more niche products, we have become the leader in terms of ROE, UWR, G&A ratio while enjoying the third place in terms of GWP.
XPRIMM: Which are the main challenges the Turkish insurance market is currently facing? Is profitability a challenge for the local market?
F.A.: The biggest challenge in the Turkish insurance market is low penetration. When we consider the demographic structure and the insurance penetration rate of the country, we can state that there is a huge growth potential in both motor and non-motor lines. In addition to conventional insurance lines, considering the evolving insurance needs, we can say that the insurance penetration rate can be increased through focus on Director's & Officer's Liability, Cyber/Comprehensive Crime, Professional Indemnity, Comprehensive General Liability and other lines as such. To grow in these specialty lines and to meet the changing needs of the market surely requires the market players to have the certain expertise and know-how. I believe diversification described above will bring about the sustainable profitability approach.
If we look into the lines of business where the market is not generating profit, we can say that there are limited lines namely Employer's Liability, Medical Malpractice, Motor TPL. For the remaining lines, we can say there is potential profit in different levels.
XPRIMM: How would you comment on the current status of the local motor insurance market?
F.A.: We can say that the business ceded to the MTPL Pool has a high ultimate loss ratio. However, the rest of the portfolio produces a positive margin, even at a very low level. As for Motor Own Damage, which has an insurance penetration rate of 30%, we can say that there is plenty of room to grow and increase profitability.
XPRIMM: How would you comment on the current level of the NatCat housing insurance coverage? How well are protected the Turkish citizens for extreme weather events, for example?
F.A.: We can say that the penetration is quite low in housing insurance. TCIP, despite the fact that it is compulsory, has a penetration rate of 50%. Penetration in the voluntary housing insurance is even lower, at around 20%. As for the level of coverage, the policies protect Turkish citizens for weather-related risks and other natural events as they are normally provided on an all-risk basis. Therefore, our priority should be on increasing the insurance penetration in housing, instead of the coverage.
XPRIMM: Which are lately the main trends observed on the Turkish insurance market? Is technology a significant "player" in the market evolution?
F.A.: I can say that the investment in and the use of technology in Turkish insurance market has increased dramatically within the last five years. We used to utilize technology to do the work and now we see technology as an integral part of the work. It has now become a necessity to ease the processes using the big data and to have the technology do the well-defined works. When we consider the customer behavior in terms of Innovation, Big Data, Internet of Things, Customer Journey Analysis and Customer Efficiency Scoring it can be said that the customer-centric approach leads the way.
We believe, the companies that can utilize the technology will have the competitive advantage, whereas those who cannot, will be off the game. As AKSIGORTA, we continue to have customer-centric approach with the emphasis we put on technology and customer behavior.
XPRIMM: How would you describe the competition on the local market?
F.A.: Competition is still intense in both motor and non-motor businesses. It is a fact that it should transform from a price-based to a service-based competition. Insurance companies (and their customers), who follow the service-based competition, will definitely be successful. Those who focus on the competitive pricing, on the other hand, will not be successful in the long run. Therefore, insurance companies' strategies, principles, roadmaps, missions and visions must provide a long-term direction and they should not make any concessions on the way. It is a must for the companies to satisfy the customers and shareholders while contributing to the growth in both local and global markets.
XPRIMM: In your opinion, which are the insurance lines that hold the most potential in the near future?
F.A.: I can easily say that Cyber Risks Insurance has the biggest potential in the near future. Directors and Officers Liability, Comprehensive Crime, Professional Liability and Credit Insurance will follow Cyber, I believe.
XPRIMM: Are there any regulatory changes needed to improve the market's framework?
F.A.: The Insurance and Private Pensions Regulation and Supervision Agency is being founded as we speak. This agency, being very similar to what we have for Banking, is expected to be non-bureaucratic and efficient in improving the market's framework.
XPRIMM: What are your expectations for the years to follow in the Turkish insurance sector?
F.A.: Turkish insurance market, with its huge potential, is one of the very few markets that are expected to grow in real terms in future. Looking from this point of view, we can say that both local and global players have an appetite for investing in this market and will continue to do so in the near future. And that is because the penetration is still very low, while the demand is quite high. When we consider the demographic figures of the country and see that half of the population is under the age of 30, we can figure how high is the demand potential. Turkish economy, as the 17th biggest in the world and 7th biggest in Europe, will have an event higher place considering the insurance sector`s potential.
Established in 1960, AKSIGORTA renders service to retail and corporate customers all over Turkey with its 700 employees, 16 regional headquarters, over 2.000 independent agencies, 990 Akbank branches, 69 brokers and 3.600 contracted institutions. After the partnership started in 2011 by Sabancı Holding with Belgian global giant Ageas, both Sabancı Holding and Ageas have 36 % stake each in Aksigorta. And the remaining 28% is traded at the Istanbul Stock Exchange national market.
In 2018, AKSIGORTA ranked 3rd in the overall market ranking, with GWP worth TRY 3.41 billion, 29.7% up y-o-y and a market share of 6.25%.