Turkish Insurance Market Professional Insurance Intermediaries Mert YÜCESAN OCTOBER 2013

MARSH Broker’s Role.. Insurance broker’s role of submission of Subject matter to be insured “risk” Insurance broker’s role of interpreting risk by identification of most suitable coverage and cost Insurance broker’s role of long term satisfaction of client Reducing volatility of coverage and cost; –Long term success of client –Long term relation with client.

MARSH Helping Clients Marsh’s Role of risk improvement by –Engineering methods –Identification; Prevention and Protection. First Turkish Broker Engineering team since –Contract management –Enabling projects to become, insurable, bankable, deliverable. Case study...

MARSH Insurers Not Helping Themselves What made these efforts pointless in Turkish Market. Insurance market’s premium volume and market share fight. No value in improving risk Insurance markets profitability fight. No value in good risks Insurance markets client ownership fight. Bonding relations with clients at the cost of risk quality Insurance markets Corporate Sales fight. Accepting clients without screening.

MARSH Good Management Practices Well managed risks has certain characteristics. Well managed Company. Well managed Assets and Liabilities. Well managed Financials and Corporate Governance Well managed longevity of corporations Results in well managed risks and corporations with low volatility.

MARSH Good Management Continued... A corporate’s aim is to protect risks of Reputation, Profitability, Balance Sheet and Client Franchise. In other words a corporation has to protect Shareholder’s equity that results in protecting all of the above. Protecting assets and liabilities are a natural result of Shareholder’s Equity.

MARSH Why Insurance Brokers Why Insurance markets should Love Insurance brokers and intermediaries, Promoting good risk management, Promoting risk identifications, Promoting wider and more complex scope of coverage helping clients succeed, Promoting Insurance penetration and Promoting new clients at low cost of acquisition.

MARSH Relation Endangered.. Insurance Brokers and Intermediaries are not competitor of Insurance markets !! There is a need to explain this because –We find ourselves competing with insurers all the time. –Brokers cannot retain risks ! –Brokers will need insurers to exist –Brokers are equal to all markets –Brokers protect the rights of clients and not markets –Brokers are the first defense for bad exposures –Brokers has a role to convince not only markets but also clients.

MARSH Helping Both Sides To help Both Markets and Clients. –Brokers develop new products and markets capacity to help both side to succeed. –Brokers build facilities for specific products and solution for both side. –Brokers create the bond of trust on both side. –Brokers give selection of the risk and insurer of their choice to both side. –Brokers builds form and question to help understand each other. –Brokers builds magnetic forces for both side to attract each other. –Brokers manage the relation of both side for joint satisfaction.

MARSH Brazil Example.. Brazil is a country where GDP per person is equal that of Turkey Brazil has an insurance penetration of USD 414 compared to USD 145 of Turkey Brazil has a market where all insurances are handled by brokers and agents. Direct business between client and insurer is not forbidden however; In all direct business a part of premium equal to commission has to be paid to FUNENSEG FUNENSEG is the insurance foundation dedicated to education and certification of insurance brokers and professionals.

MARSH Brokers Help Markets to Grow The biggest insurance markets of the world has higher broker market share and older broker markets. US, Canada, UK, Netherlands, Switzerland, France, Germany, New Zealand and Australia and continued..

MARSH Markets & Brokers Relation Today Compared to years ago the intermediation in Turkey is changing positively. Corporate exposures becomes serviced by brokers. Multinational insurers supports the role of intermediation. Brokers are investing in distribution of services and products. Fewer but more effective Intermediation exist. Brokers plays a key role in changing market trend to explain volatility. New products and sophisticated products lands in the market requiring professional intermediation TC PI etc We should keep the momentum.