TURKISH INSURANCE INTERMEDIARIES NUMBER OF EMPLOYEES ARE DECREASING BUT TOTAL COSTS ARE RISING – 2
The cost of 10,000 TRY premium production to intermediaries seems to decreased 17.3% between 2014 and 2018, but the cost rising have been prominently felt since 2016. Let’s continue to examine the changes of the costs, premiums and number of employees in agencies and brokers.
TÜİK
Agencies + brokers
There was a big decline in the number of employees between 2014 and 2016. Even though the number of employees in the period of 2016 – 2018 was rising again but it was still below 2014 and 2015. During this period number of intermediaries remained almost the same while the number of other related people (owners, share holders, salespeople, etc.) increased by 10%.
The total number of employees + others between 2014 and 2018:
Agencies + brokers
These intermediaries employee more than 50 thousand people and realized 67% of the premium production (total 54.6 billion TRY, agencies + brokers 36,4 billion TRY) in Turkish insurance market in 2018.
The premiums and costs of intermediaries (agencies + brokers) between 2014 and 2018;
| YEARS | PREMIUM* | TOTAL COST* | COST/PREMIUM |
| 2014 | 18.130.486 | 2.105.782 | 11,6% |
| 2015 | 21.772.401 | 2.236.006 | 10,3% |
| 2016 | 29.042.196 | 2.211.615 | 7,6% |
| 2017 | 30.883.971 | 2.544.903 | 8,2% |
| 2018 | 36.408.601 | 3.494.919 | 9,6% |
TÜİK, TSB
* x1000
Agencies + brokers
Consequently increased employee and sales costs, sharing commissions and increasing in general expenses are the main reasons of total cost rising.
In this period the rising rates of premiums and costs:
* Agencies + brokers
The Cost / Premium ratio has decreased compared to 2014 and 2015, but since 2017 the cost ratio increase of agencies and brokers has been more than twice the premium rising rates. As we shared at the beginning, cost change of 10.000 TRY production proportionally seems not bad over the years but the cost rising trend is conspicuous. Regardless of the position, directions of the both lines are giving ideas about the future of present situation.
(In our previous article we shared detailed information about the costs of intermediaries.)
Intermediaries who take correct and effective interventions would be able to continue their performance in the future. So the right decisions and implementations are important than ever under these circumstances.
The main goal is to reduce the costs and increase the revenues. So what needs to be done?
Rıza OYGUR
March 2020
