INSURANCE BROKERS & AGENCIES HOW DO THEY CARE ABOUT DATA PROTECTION?

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For insurance brokers and agencies the most valuable capital is their customer’s data. So they have to protect data for the risks of , theft, sabotage, breaching and loses

Due to their business, insurance intermediaries have to collect, use, keep and share various kind of personal  and private personal data. Therefore, they have to properly secure their data.

To keep the business sustainability, reputation to customers and stakeholders and to comply the regulations brokers and agencies should be able to analyse their current structure correctly and carefully. Then, they have to take the actions due to their needs.

Besides they must have and use the necessary documents as of P.D.P.A. obligations.

For more info you can visit our web site https://kvvk.panodanismanlik.com.tr/ or send an email to [email protected]

IMPORTANCE OF DATA SECURITY FOR INSURANCE AGENCIES AND BROKERS (1)

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An insurance intermediary’s most valuable asset is customer data. So the agents and brokers have to be very careful about data processing and protection.

Why is data security very important?

  • To keep the sustainability and profit of the business
  • To keep the reputation through customers / stakeholders and to prevent the possible data losing or breaching problems
  • Data owners have obligations according to law 6698 P.D.P.A. and some other regulations

Insurance intermediaries are collecting, working, sharing and keeping various general and private personal data as part of their business. Because of that they have some responsibilities.

Agencies and brokers must analyse their structure to maintain data safety for keeping their business sustainability and complying the obligations. Then according to the detections they should take necessity actions

Thus, they could exist their business without interruptions and protect themselves against the judicial / administrative penalties.

For further information please send an email to [email protected]

Rıza OYGUR

June 2022

AT THE END OF AUGUST 2021 TOTAL WRITTEN PREMIUMS INCREASED BY 104.8% AS OF AUGUST 2017, BUT AGENCIES GROWTH WAS 78.2% IN THE SAME PERIOD.

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Source; TSB

 

According to end of August between 2017 and 2021 non-life total premium growth was 104.8%.  Other, Direct and Brokers distribution channels succeeded to rise more than the total growth.

 

Total written premiums per distribution channels;

 

NON-LIFE PREMIUM END OF AUGUST* Direct Agency Bank Broker Other Total
2021 4.254.085 29.544.626 7.464.678 7.620.102 2.839.602 51.723.093
2017 1.379.935 16.582.894 3.832.046 3.046.294 411.674 25.252.843
* x 1000

 

So the market shares of distribution channels have changed in this period.

 

 

Agencies are still the biggest distribution channel, even they lost 8.6% from their market share last 5 years.

 

Rıza OYGUR

October 2021

OVER THE PAST YEARS, AGENCIES + BROKERS PREMIUM INCREASING RATIO WAS MORE THAN THE COST INCREASES

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Between 2017 and 2019 agencies/brokers performed well and grew 42.5% by premiums. In the same period, operating costs raised just 26.8%.

 

x 1000 2017 2018 2019
PRODUCTION*
 30.883.969 36.353.635 44.024.284
ANNUAL TOTAL COST*
 2.544.903 3.494.919 3.227.749
Cost of per 100 TL premium.
 8,24 9,61 7,33
AGENCIES+BROKERS
TUIK-TSB

 

In Spite of the rising costs between 2017 and 2019, the production costs decreased per 100 TL premium. Let’s analyse the changes of costs.

 

x 1000 2017 2018 2019
NUMBER OF EMPLOYEES*
 37.930 38.689 35.267
PERSONNEL COST* -GROSS-
 1.337.846 1.441.097 1.654.256
ANNUAL TOTAL COST*
 2.544.903 3.494.919 3.227.749
AGENCIES+BROKERS
TUIK

 

Despite the reduction in the number of  employees,  employee costs are rising.

 

x 1000 2017 2019 RATIO
NUMBER OF EMPLOYEES*
 37.930 35.267 -7,0%
PERSONNEL COST* -GROSS-
 1.337.846 1.654.256 23,7%
ANNUAL COST PER EMPLOYEE*
 35.271 46.907 33,0%
ANNUAL TOTAL COST*
 2.544.903 3.227.749 26,8%
AGENCIES+BROKERS
TUIK

 

Consequently between 2017-2019 the increase in total costs was 26.8%, but employee costs only raised 23.7%

 

Agencies and brokers are trying to control their costs by reducing all their expenses. So they have to continue their cost reduction processes by digitalization, creating new working models, relocation, etc.

 

RIZA OYGUR

August 2021

SUGGESTIONS TO INSURANCE AGENCIES FOR DIGITAL TRANSFORMATION – 3 (FINAL)

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Before to start, all preparations have been completed (targets, plans, expectations, new business structure, etc.) then the final phase can begin.

Foremost, a proper website should be set up by a professional in order to provide some services for current customers, to find new customers and strengthen the image of the agency.

2 significant features of an effective website;

  1. The user (customer) can access quickly to site and the screen is simple
  2. The user (customer) reaches the contents of interests easily

5 main characteristics of the effective website;

  1. Content; the site should be simple, convenient for purposes and shows features of the agency. So the site design is created with appropriate colors, texts, videos, etc.
  2. Customization; customers (current / potential) must encounter clear referrals in order to get the service easily that they want.
  3. Communication; A two-way communication structure should be set between agency and customer
  4. Links; the website be linked to the contents that interested by customers (striking offers by the agency, innovative developments about insurance, etc.)
  5. Security; the site must be prepared in according to the legislations. However, to ensure data security you must take the needed preventions. Besides, security precautions should not cause decelerations in website

The other issue is to adapt the current support programs to  new structure. As  we shared in the 1st and 2nd parts of our article, after the planning of new structure the compatibility of the current support program with the new process should be checked. Thereafter you could decide; to do necessary updates, to purchase the new version of the program or to find a new support program.

To take a right decision you must care to below items about the support program.

  1. Conformity to the agency’s plans and targets
  2. To be user-friendly, agile and fast
  3. Compliance to current technological developments
  4. Easily adapt to requests and developments
  5. To be compatible with the structures and expectations of stakeholders (companies, external sales group, etc.)
  6. Could be linked to the agency’s website
  7. Data security precautions (security, malfunctions, updating, etc.) must be sufficient
  8. The provider must have a good service and support capability

First of all you have to find who can provide suitable services  for these features and expectations, then start bargaining.

You must set a clear business plan and time schedule with IT groups for setting the website and development of support program and follow with precision. To solve the possible problems immediately, agency have to complete the works under his responsibility (controlling, correction, etc.) without time delay.

After the completion of all these processes successfully rising profit and portfolio, reduction of costs, forming multi-channel communications with the customers and other innovative developments mean a new era begins for the agency.

To succeed all these developments, agency owner have to take a solid decision for innovation and transformation then strictly does all steps of the progress

Suggestions here are not for only digitalization. This process will also realize for holistic transformation to change the business model and mentality. Therefore if an agency has mid or long term plans, he has to start the transformation process immediately and complete as soon as possible.

Rıza OYGUR

April 2021

SUGGESTIONS TO INSURANCE AGENCIES FOR DIGITAL TRANSFORMATION – 2

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If an agency is growing, programs in use are sufficient and satisfies the clients  expectations , why would he  change his current system? Why would he bother with additional costs and renewing system distress?

Who have plans for next 5 years or more it is inevitable to make digitalization. Digitalization is not  only  process that improves the ways of business, it also changes the  culture of the companies. In the first part of article, we shared what should be considered at the beginning of the process.

Now, let’s explicit  why changes are unavoidable:

1) SECURITY

Software and hardware protections are insufficient in most of the agencies. Rising the works done by softwares, cyber attacks, IT problems, laws and legislations, distance working, etc. digital security has become even more significant. (Recent some security breaches in  insurance industry; withdrawals from customer credit cards by malicious persons, data breaches by ex-employees, to hack the programs in use and demand ransom.) Digitalization also includes appropriate electronic security protection. If the agencies do not implement this process they will face penalties as well as data and reputation losses.

2) EFFICIENCY

Current situation analysis and creation of new business model should be completed before the process begins.( we reduced the reconciliation time of renewal lists 90% in one project). Then, according to the new structure, digitalization of operations and processes could be started. Agencies will be more agile and competitive by updating their business models and improving their efficiency.

3) MORE EFFECTIVE SERVICE TO CUSTOMERS

Communication with the customers takes much time of the agencies. Therefore agencies have to plan which part of communication (notification of premiums, payment collections, etc ) should be transferred to digital platforms. Thus, agencies have more time to react changing and diversifying customer needs and finding new customers.

4) TECHNICAL NECESSITIES

Service providers decrease supports to old generation softwares and divert the users to their more developed products. Furthermore some agency softwares are not  suitable to new programs of insurance companies. Hence, it is inevitable to improve and develop the current agency softwares

5) TO RISE THE SALES

Digital transformation can assist;  presenting new products to current customers,  analyzing the portfolio and  finding new customers. Thus, it would be easier to grow the portfolio with new products and customers. If the agencies think digital marketing, they have to make different and detailed plans.

6) MONITORING AND CONTROLLING OF THE BUSINESS

Receivables from customers and debts to companies should be followed accurately and up to date. Agency records must have conformity with the customer and insurance company records. Thus monitoring lists (new customers, commissions, lost renewals, etc.) be followed very closely. The agency will be able monitor and evaluate the situation and performance of himself and his employees.

7) WEBSITE & SOCIAL MEDIA

Website is the screen of the agency in digital world. So designing of website is very important. The site must point to agency features  and easy to access for agency services.

In the process of transformation, consider how to integrate social media platforms to your new business model.

Decision taken, budgets allocated, workflow analyzes completed, new business models created and reached the digitization stage. Hardwares, softwares, etc. there are too many options and all of them seem suitable.

What do you have to pay attention? How to make the right choice?

Rıza OYGUR

March 2021

SUGGESTIONS TO INSURANCE AGENCIES FOR DIGITAL TRANSFORMATION – 1

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Recent years rising trend digitalization, changes the structures of businesses in all sectors and ensures a great contribution to reduce the costs and set up more efficient systems. The pandemic also has fostered this process even more.

Most of the insurance companies perpetually improve and develop their software and hardware structures. They allocate big budgets for these purposes and if necessary re-organise their business models

In insurance intermediaries digitalization process is slower than companies because of the investment costs, adequate existing workflows, hesitance for the new problems that could be brought by innovations, etc.

Today, there are various IT programs used by all agencies regardless of their volume and concept. But, most of the programs have the old technologies and insufficient for today’s necessities

Web-based programs, digitalization, automation, AI applications, etc. are attracting the attention of the agencies, but the vast majority of them think their current  business model is sufficient  so innovations are unnecessary.

However, it is inevitable for the agency owners who have future plans. They must innovate their business processes. Digitalization is one of the important components, to ensure improvement and progress of businesses. It would be useful  thoroughly peruse the following items for the agencies who are considering to make innovation and transformation.

  1. Before to start, it is necessary to set expectations and goals clearly. Digitalization does not make a significant difference if there is no improvement and development in the structure and operations. (If you purchased a new program and keep the current structure, the benefit of change could be insufficient )
  2. Agency should plan the innovations according to defined targets. Consequently digital transformation programs should be suitable for the new operational and structural improvements. (if renewal communications planned automatically, you should buy a pursuant  software, etc.)
  3. An agency must complete and analyse the transformation plans then allocate necessary budget. After purchasing a new program with very good features, it is difficult to use on old computers/ hardware in the office. When you figure out the total cost, operating and hardware costs also should be considered.
  4. It is necessary to  prepare the employees for the innovations and transformation. The unwillingness of employees is usual if they hesitate to lose their jobs as a consequence of innovations and improvement. This concern is one of the major obstacles to progress.  To carry out a successful transformation it is very important to explain the benefits of  innovations to all employees.
  5. The agent owner must stand strictly against the problems that could appear during the transformation.  It is very critical to manage the reactions from employees and customers due to the possible hitches in the beginning of transformation. Therefore agency owners will need to allocate additional time to manage this process

The significant point of transformation is, agency owner has to believe the necessity of innovation and changes. You have to take this decision without hesitance. Thus, you can easily focus and solve possible problems and troubles.

Although all these efforts and costs, why do the agencies have to do these transformations and improvements ?

Rıza OYGUR

December 2020

 

APRIL 2020 CHANGES OF INSURANCE PREMIUMS PER DISTRIBUTION CHANNELS IN TR.

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SOURCE: TSB.

In April 2020, when the Covid 19 pandemic was felt intense, brokers and direct+other channel productions increased while the sales of agencies and banks decreased in comparison to April 2019. Total production rises 10.6% in this month

 

Total production branch based changes in April 2020

BRANCH APRIL 2020* APRIL 2019* CHANGE
CMTPL 1.269.899 1.491.181 -14,8%
M.O.D. 668.338 822.699 -18,8%
FIRE AND ALLIED PERILS 685.384 549.490 24,7%
MARINE GOODS ON TRANSIT 114.051 95.400 19,6%
HEALTH AND SICKNESS 789.839 690.664 14,4%
Agriculture Ins. Subsidised by Gov. 209.245 228.827 -8,6%
C.A.R.(**) 754.901 22.386 3272,2%
OTHER 746.691 836.067 -10,7%
NON-LIFE TOTAL 5.238.349 4.736.715 10,6%

 

*x1000 TRY Source TSB

While TR insurance industry grew in fire, marine goods on transit and health, shrinked in traffic, motor own damage and other branches in the table. Approximately 100 million dollars premium of a project policy (**) issued in the C.A.R. branch ,created a great growth effect in the total production of April 2020.

 

Per distribution channels branch based changes in April 2020;

BRANCH AGENCY* CHANGE BANK* CHANGE BROKER* CHANGE DIRECT+OTHER* CHANGE
CMTPL 998.353 -13,5% 21.199 -27,1% 64.224 -4,0% 186.123 -22,8%
M.O.D. 534.828 -16,5% 62.649 -21,3% 61.998 -36,1% 8.864 59,1%
FIRE AND ALLIED PERILS 253.388 11,1% 173.615 5,1% 182.882 66,1% 75.499 63,8%
MARINE GOODS ON TRANSIT 57.501 14,6% 6.167 60,1% 39.931 30,5% 10.452 -3,0%
HEALTH AND SICKNESS 378.235 7,2% 48.756 -18,5% 218.954 40,5% 143.895 17,7%
Agriculture Ins. Subsidised by Gov. -273.013 -494,5% 55.630 -26,1% 236 -58,1% 426.392 408,8%
C.A.R. 14.829 53,6% 1.853 -44,3% 6.166 -18,2% 732.053 39164,9%
OTHER 254.152 -21,1% 196.218 -24,0% 176.411 23,9% 119.911 5,6%
NON-LIFE TOTAL 2.218.272 -21,5% 566.088 -16,0% 750.801 22,9% 1.703.187 172,6%

*x1000 TRY, TSB

Agencies performed 42.3% of the total production in April. Fire, marine goods on transit and health production growth did not recover the losses in traffic, motor own damage and other branches.

Because of the cancellations in Agriculture Insurance Subsidised by Government production, agencies were the most shrinked channel in April. If we exclude the production of Agriculture Insurance Subsidised by Government, agencies total declined 9.7% in April 2020.

The banks increased the fire and marine goods on transit production, but they shrunk due to results of other branches.

Brokers achieved to rise their total production, even the reduction of CMTPL, motor own damage,

Agriculture Insurance Subsidised by Government and C.A.R. premiums.

Direct + Other channels succeeded good increases in all branches and in total, except CMTPL and marine goods on transit. Particularly, the growth rates are quite high in c.a.r and Agriculture Insurance Subsidised by Government

In april 2020 there were great contractions in many sectors like textile, construction, automotive, tourism, etc.. Even we evaluate the TR insurance industry except enormous c.a.r project policy, insurers performed better than many sectors in April 2020.

 

Rıza OYGUR

June 2020

TURKISH INSURANCE INTERMEDIARIES NUMBER OF EMPLOYEES ARE DECREASING BUT TOTAL COSTS ARE RISING – 2

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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

TURKISH INSURANCE INTERMEDIARIES NUMBER OF EMPLOYEES ARE DECREASING BUT TOTAL COSTS ARE RISING

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*Agencies + brokers

Source: TUIK

TURKISH INSURANCE INTERMEDIARIES NUMBER OF EMPLOYEES ARE DECREASING BUT TOTAL COSTS ARE RISING – 1

All commercial enterprises have to closely monitor their costs in order to maintain their profitability and  compete effectively. Recent years insurance intermediaries are struggling with tougher competition and harder market conditions and also trying to cope with the rising costs. Between 2014-2018 number of intermediaries, number and cost of their employees, annual general expenses are as follows:

 

  2014 2015 2016 2017 2018
Number of intermediaries* 14.748 14.007 14.723 14.211 14.683
Annual average number of employees 44.758 39.968 35.424 37.930 38.689
Personnel
cost** x 1000 ₺		 1.055.920 1.019.058 1.070.140 1.337.846 1.441.097
Purchase of
goods and services x 1000 ₺		 1.049.862 1.216.948 1.141.475 1.207.057 2.053.822
Total cost x 1000 ₺ 2.105.782 2.236.006 2.211.615 2.544.903 3.494.919

Source, TUIK

*Agencies + brokers

**Gross

 

Comparison between 2014 and 2018;

2014 2018 RATIO
Number of intermediaries* 14.748 14.683 -0,4%
Annual average number of employees 44.758 38.689 -13,6%
Personnel
cost x 1000 ₺		 1.055.920 1.441.097 36,5%
Purchase of
goods and services x 1000 ₺		 1.049.862 2.053.822 95,6%
Total cost x 1000 ₺ 2.105.782 3.494.919 66,0%
Annual total cost per intermediary x 1000 ₺ 143 238 66,7%

*Agencies + brokers

The number of intermediaries from 2014 to 2018 were almost the same. Total costs rised 36,5% despite the number of employees decreased by 13.6%. In this period expenses  also increased  66%.

So, quick and effective precautions have become  necessity to cope with rising costs. First of all, intermediaries have to review their methods and processes  thoroughly. For this purpose they should utilize  knowledge and experiences of their stakeholders and everyone who can assist. Consequently, created innovations should be implemented fast and effectively

Thus, the new structure will  reduce costs, rise the competitiveness and help them to grow.

Rıza Oygur

January 2020