More than Compulsory

In which sectors of the Turkish economy do you perceive the greatest potential for Güneş Sigorta?

Every line of business has potential in Turkey because the economy continues to grow and, therefore, the insurance sector grows along with it. Furthermore, the Turkish insurance sector remains under-penetrated, which leaves much room for expansion. There are many large foreign players in Turkey today, all having recognized the country’s true potential. This makes for an environment of stiff competition. The motor insurance line is, of course, the main driver, meaning mainly third party motor liability, which, being compulsory, is easy to sell. This said, we’re actually decreasing our market share in that area due to the considerable loss it entails. It’s simply not a profitable line. Instead, we’re increasing our market share in lines such as fire, engineering, marine, bank insurance, and also health. There’s a lot of growth potential in those lines, and we’ve doubled our figures across the board.

As the market becomes more competitive, can you elaborate on the advantages Güneş Sigorta has over the newcomers?

Our private agency distribution channel is one of our key advantages. Also, our bancassurance channel remains underutilized. VakıfBank is one of the largest banks in Turkey, and Güneş Sigorta is one of the biggest insurance companies. In the past, we didn’t need to work together extensively as our private agency distribution channels were performing well. Yet today we recognize the advantage of cooperation with VakıfBank to expand our distribution and sales channels. We have integrated more and have many common projects. This has already resulted in 60pp growth in bancassurance, and we still see considerable room for more. VakıfBank has many retail customers, as do we, and so we can—and have—come together, and are now working on the customer relationship management (CRM) process. So by refocusing our main attention to bancassurance lines, we can take advantage of having a wide bank network to work with, thereby maintaining an advantage over newcomers. At the end of the day, all of the insurance companies essentially sell the same products, and mostly at the same prices. What differentiates one over another is the extent and quality of its distribution channel. If you have that and can manage it well, you have the advantage.

What regulatory or legal changes need to be made to further realize this potential?

I don’t think substantial changes are required. Being candidates for EU membership has already brought our regulatory framework in line with European and international standards. There are new laws regarding insurance, which are in place today. For example, the Treasury now audits the sector, and we have tougher regulations than even the EU. However, some problems remain in terms of claims management, and with the judicial system, but I believe that we’ll shortly have financial courts in place. The new law for that has been approved and is on its way. These financial courts will help significantly, especially in motor and third-party motor liability cases, which can drag on in the current court system. Spain has done this, and we will have a similar system. It is estimated to be implemented during 2014. Other than that, there’s no need for further regulations.