Transcript ING - xprimm.com

INTERMEDIATION in the TURKISH
LIFE INSURANCE and PENSION
MARKET
Jetse Frederik de Vries
CEO
ING INSURANCE-SNAPSHOT
ING INSURANCE has an attractive mix of mature
businesses and strong positions in growth markets
#3 in US
Retirement
Services
#1 life insurer
in the
Netherlands
•
7 years of experience in the pensions business
•
Expanded product range:
Personal Accident Products
Credit Life, Term Life and Pensions
•
More than 300.000 customers
• 6th in pensions investment funds
• Distribution through bank and independent
property&casualty agent channel.
#2 Pensions
company in
Latin America
#1 Life &
Pensions
provider in
Central
Europe
#3 foreign
life insurer
in Asia
TURKEY- SNAPSHOT
78.785.548
29.2 (2010)
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TURKEY- ECONOMIC OUTLOOK
remarkable performance with a steady growth over the last six
years
•USD 83 billion of FDI
•15th most attractive FDI destination for 2008-2010
(UNCTAD).
•16th largest economy in the world
•Robust economic growth over the last seven years with an
average annual real GDP growth of approximately 4.3
percent.
2010: a sound economic recovery
a faster decrease in the
unemployment rate in the post-crisis
period.
Remarkable resilience of the Turkish economy and
financial system against the crisis and prudent
macroeconomic policies enabled Turkey to decouple
favorably from most of the developed and developing
countries
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TURKEY- POLITICAL OUTLOOK
• The AKP government remains generally popular, particularly in
the face of generally weak opposition parties.
• However, prospects for EU accession remain a long-term goal
despite significant efforts by the Turkish government.
The secular elite in the army and courts remain staunch
opponents of the
AKP and its perceived Islamist agenda.
Political Violence: Kurdish separatists, Islamist extremists and
ultranationalists.
The Turkish government is strongly committed to improving
the business climate for the insurance industry.
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TURKEY- PEOPLE & MENTALITY
POPULATION
78,785,548 (July 2011 est.)
Age Structure
0-14 years: 26.6% (male
10,707,793/female 10,226,999)
15-64 years: 67.1% (male
26,741,332/female 26,162,757)
65 years and over: 6.3% (male
2,259,422/female 2,687,245) (2011
est.)
Population Growth Rate
1.235 % (2011 est.)
Major Cities and Population
Istanbul 10.378 million;
Ankara (capital) 3.846 million;
Izmir 2.679 million;
Bursa 1.559 million;
Adana 1.339 million (2009)
Collectivism
Uncertainty avoidance
Power distance
Masculinity
friendship & business relations
high social networking
Building trust is the key to building
close and strong relationships with
customers.
young demographics
Turkish people are “emotional
“buyers
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: high
: high
: high
: middle
LIFE INSURANCE in TURKEY
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LIFE INSURANCE in TURKEY
The Turkish insurance industry is so
young and penetration as yet so
underdeveloped
Banking - Investments - Life Insurance - Retirement Services
Turkey has more than 78 million citizens, with an average age of 29.
The potential to sell life assurance, savings and pension products and
employer products is significant.
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LIFE INSURANCE in TURKEY
• Total gross premium generation in Turkey reached TRY 12,436 million in 2009.
• Negative growth of 7.3 percent marked the first quarter of 2009.
• Decrease in insurance demand and price competition reduced premium income growth rates in 2009.
• Before the crisis, total insurance premium production had grown by a CAGR of 13.4 percent from 2004 to 2009
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LIFE INSURANCE in TURKEY: An Overview
Demand in Life Insurance products is increasing as of 2009, after the crisis;
Turkey gross life insurance premium registered a healthy increase of 16.2% during the period from 2001-2010.
The gross premium for life insurance increased from USD 375 million in 2001 to USD 1,447 million in 2010.
PREMIUM GENERATION by PRODUCT(%)
PREMIUM GENERATION (1.000 TL)
Annuity Insurance
Long-Term Life
Insurance
One-Year Term
Life Insurance
Mixed Insurance
Life Coverage Only
Personal
Insurance
Group
Insurance
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LIFE INSURANCE in TURKEY: DISTRIBUTION CHANNELS
BROKER and AGENCY are commonly confused terms in the intermediation terminology in Turkey:
Brokers in Turkey are usually the so-called alpha-houses (Marsh, Mercer, Aon...etc.)
Agencies are in a closer, sometimes tied relationship with the insurer/pension provider and they observe the
interests of the insurer and they sell non-life insurance mainly
Direct individual sales teams, typically tied agents, sometimes self-employed, sell exclusively for one
company.
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LIFE INSURANCE in TURKEY: DISTRIBUTION emerging as
a competitive differentiator
The agency channel has declined.
At the same time, the bancassurance channel has increased from 42% to 55% in life in the last three years.
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LIFE INSURANCE in TURKEY: DISTRIBUTION 2009&2010
Bankassurance is growing, agencies are going down.
The broker model has a slight share.
There are also a number of new and competing distribution channels such as direct marketing, telemarketing
and internet marketing.
PREMIUM GENERATION by DISTRIBUTION
CHANNEL
ALTERNATIVE
CHANNELS
HO & DIRECT SALES
AGENCY & BROKER
BANK
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PENSIONS in TURKEY
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PENSIONs in TURKEY: an OVERVIEW
• HOW DID PENSIONS START in TURKEY?
inefficiency of the social security system.
• However the legal and institutional framework of the Turkish Private Pension System was completed in 2002. Implementation
of the private pension system is a major milestone in the improvement of the public social security system.
•The first pension policies have been issued on October 27, 2003
Funds under Management (1.000 TL)
Number of Participants
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PENSIONs in TURKEY: an OVERVIEW
The Turkish private pension system is a voluntary, defined contribution system intended to be a complementary scheme to
the mandatory social security scheme, which provides retirement earnings to participants on a pay-as-you-go (PAYG) basis.
The penetration of pensions is low. There are exclusive tax advantages, but only %58 of the customers are aware.
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PENSIONs in TURKEY: How much do Turkish People Save
for their future?
PUTTING THE BES SYSTEM INTO THE CONTEXT OF FORMAL SAVINGS IN TURKEY:
Pension Funds Under Management represents only 1,5% of the total savings market.
The full breakdown is as follows:
47% Bank deposits in TL
23% Bank deposits in foreign currency
10% Government bonds
6,5% Stock Market
5% Mutual Funds
4% Term deposits
1,5% PENSIONS
3%
Various other items
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PENSIONs in TURKEY: DISTRIBUTION CHANNELS
THE SAME DISTRIBUTION CHANNELS AS IN LIFE
INSURANCE
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PENSIONs in TURKEY: DISTRIBUTION CHANNELS
Agencies and banks don’t display a remarkable performance in sales of pension plans mainly due to the fact that they focus on
non-life insurance sales.
The potential these two branches isn’t applied yet to the sales of pension products.
Contracts acc. to Sales Channel
Corporate Sales
Direct Individual Sales
Agency
Bank
-Tied agencies,
-Individuals
who are not
permanent staff
at a bank or
agency, but
works on a
fixed pay +
premium model
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Others
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Proportions by distribution channels given out of
a sum of 2.203.886 contracts in force as of 2009
year-end. “Other” covers “Call Center” and
“Broker”
WHO WILL BE THE WINNERS?
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WHO ARE IN THE CONTEST?
BROKERS
2010 Share in Total Written
Premiums (Life): %0.81
2010 Share in Total Written
Premiums (Pensions): %<1
10 years old in Turkey
around 70 in number
independent,
Relatively low share of
business in the life
insurance and pensions
compared to their high
interest in industrial
insurance branches
AGENCIES
2010 Share in Total Written
Premiums (Life): %18
2010 Share in Total Written
Premiums (Pensions):
%10.3
closer partnership with the
insurance/pension company
also close relationship with
the client
Banking - Investments - Life Insurance - Retirement Services
BANKS
DIRECT SALES
2010 Share in Total Written
Premiums (Life): %69.54
2010 Share in Total Written
Premiums (Pensions):
%16.9
expansive network
already acquired clients
integrated financial service
stronger in life ins. sales
Bancassurance penetration
approx.%50
2010 Share in Total Written
Premiums (Life): %11
2010 Share in Total Written
Premiums (Pensions):
%64.7
-Corporate Sales Teams
-Direct Individual Sales
Teams
-Call Center - Telesales
-Internet Marketing
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WHO WILL WIN?
Those who listen to the customer.
Finance
Customers
have a low FQ
They want
closer and more
frequent
communication
Respond
pro-actively to
customer needs
and follow their
preferences
Net Promoter Score
Agents have much more
success in terms of client
retention and average premium
than other channels
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WHO WILL WIN?
Those who watch for cross&up-sell opportunities
Offer different
products to the
same customer.
Act as
savings&protection
consultant to the
client, follow key
dates in the life
cycle, e.g.
renewals
Agents are most efficient in
cross-selling and upselling
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Offer products with
wider coverage:
Upsell
WHO WILL WIN?
Those who get the proper support from the
insurance/pension company
Not only
operational, but
also in customer
communication,
e-services...etc.
Lead Generation
Sales incentives,
campaigns,
conventions
Joint-venture type
of agreements
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WHO WILL WIN?
Those who focus on long term high quality growth rather
than commission-driven sales
Collaborate for
achievement in
the long run
Analyze your
business results
with the
insurance
/pension
company
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Take joint-action
to acquire &
retain customers
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LESSONS - TURKEY:
Close after-sales communication with the
client is on of the keys to success.
P&C Agencies: Pensions and life is the
catalyst to grow their business
Build up a strong and sustainable
infrastructure: financial, training, sales
tools, cooperation models, segmentation
Agents need companies to work with, who
are committed to them.
Adjust a customer-centric sales strategy
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