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The Importance of Insurance Business and Risk Management Has been Discussed in ISO Assembly

24.04.2019
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Istanbul Chamber of Industry (ICI) April ordinary Assembly meeting was held on 24 April 2019 in Odakule with the main agenda of “The Importance of Insurance Business and Risk Management for our Industry and Economy”. Can Akın Çağlar, the Chairpoerson of Turkish Insurance Association participated as a guest in the Assembly meeting which was directed by Ayhan Yavrucu, the Depurty Chairperson of ICI Assembly.

By drawing attention that the industrialists face with risks related to the human factor in his speech which he made within the scope of the assembly agenda, Erdal Bahçıvan, the Chairperson of Board of Directors of Istanbul Chamber of Industry said that: “We hear of that the insurance companies abstain from insuring the factories by giving justification of the increase in fire. Our sole wish is that all risks of our industrialists take place under the roof of insurance.” and added that: “The key factor standing before the decision-taking mechanism of industrialists and business people is the uncertainties. We do not possess the right to cause another burden on our economy. We hope that this uncertainty period will disappear out of Türkiye’s agenda in the fastest way.”

ICI April ordinary Assembly meeting was opened by Ayhan Yavrucu, ICI Assembly Deputy Chairperson. Providing information regarding the Assembly agenda for the members and putting various matters to the votes of Assemble Members as required by the agenda, Yavrucu invited Erdal Bahçıvan, the Chairperson of ICI Board of Directors to realize his speech regarding the agenda title “The Importance of Insurance Business and Risk Management in our Industry and Economy” to the rostrum. Charperson of ICI started his speech by celebrating April 23 National Sovereignty and Children's Day, May 1st Labor and Solidarity Day to be celebrated in the next week and expressing his wishes that impending Ramadan will bring peace, plentifulness and soundness to our country and whole Islamic world.

While sharing his opinions on the agenda, Bahçıvan said that the nature of the insurance will change along with the proliferation of the digitalization in all business processes and more intense usage of the big data analyses methods and data. Accordingly, drawing attention to the fact that companies and institutions which have growth with the understanding and habits of the traditional insurance activities up today will have to undergo radical transformations because of the facts of this new world, Bahçıvan stated that minor but new actors launching their operations by embracing the technological trends even at the beginning will have more advantageous in this sense.

Expressing that the dynamic and robust financial structure of Insurance Business sector in our country continues to draw new actors and expand its product range through its qualified labor force and deeply rooted experience, Bahçıvan stated that Türkiye draws the attention of both domestic and international investors as an appealing market with its young population but low insurance rates. Reminding that total premium growth in our country is 1,5% of the gross national product of our country, Bahçıvan said that this figure is highly below the world averages.

Emphasizing that various applications, especially state-sanctioned Individual Retirement System, Agricultural Insurance Pool (TARSİM) and DASK have a significant impact on the expansion of business activity areas of the insurance business sector in our country lately, Bahçıvan stated that the industrialists not only face with risks born by raw materials, energy generation, but also various risks depending on the human factor. Bahçıvan underlined that they can minimize such risks by keeping them under control mostly but their biggest assurance is the insurance in case of the risks born by fire, flood and natural disasters.

Expressing that our firms, especially those in the SMA scale haven’t reached to the necessary awareness level in terms of insurance, they do not use insurance facilities at all or they use them as incomplete or improperly, Bahçıvan expressed that the insurance should be considered as not just an expense item born when there is not any risk in terms of real sector but a vital resource which can save an establishment from being vanished in case of risk.

Bahçıvan continued:

Our sole wish is that all risks of our industrialists take place under the roof of insurance. However, we cannot ignore that our industrialists face with important problems with companies and agencies when it comes to insuring against their risks. To illustrate, our insurance companies put forward very appalling conditions to be met for especially some sectors when the damages increase or they demand very high premiums. Some companies abstain from the sectors which are considered risky such as chemicals, dye, petrochemicals; and they avoid from providing assurance in some issues. We still hear of that the insurance companies abstain from issuing factories by showing the fire increases as reason.”

Bahçıvan told that the industrialists face with extra challenging conditions in a period when they already have difficulty in manufacturing in these days and therefore the development of insurance consciousness is hampered. Pointing out to the need for carrying out regulations for our all insurance institutions to be included within the scope of insurance regardless of the sector types and to be insured through reasonable risk premiums, Bahçıvan said that Turkish Reassurance Pool’s taking place within New Economy Program which will include the risks for which any assurance does not exists within this scope brings hope for themselves in overcoming such problems.

Expressing that indemnity insurance and credit insurance are coming to the forefront day by day when it comes to the world examples, Bahçıvan said that: “The assurances given in almost any field are replaced by indemnity insurances, credit insurances creates assurance in financial management of the creditors. Strengthening the financial structures by protection against the unforeseen collection problems of the companies, and therefore focusing on the actual activity fields are of great importance. In this regard, we think that launching the commercial creditor insurance which aims to insure the risk of non-payment of the liens born by the installment selling is of great value. With the aim of proliferation of the insurance function and increase in the awareness of the industrial firms in insurance, opening and operating the business facilities should depend on the condition of insuring and the firms which do not insurance should not be licensed.”

Türkiye Sigorta Birliği Yönetim Kurulu Başkanı Can Akın Çağlar

Can Akın Çağlar, Chairperson of the Board of Directors of Turkish Insurance Association who takes to the rostrum said that expressing themselves to the industrialists is of great importance as insurance business sector. Expressing that Türkiye has a long way to go in terms of insurance, Çağlar stated that the insurance is of vital importance in terms of protecting the national treasure. Drawing attention that the insurance should not be only considered as a friend in-need, Çağlar stated that insurance understanding also means the financial product diversification.

Stating that there are 62 insurance companies totally in Türkiye and active growth is 178 billion TL, Çağlar expressed that the sector produces premium for 54.7 billion TL and a resource has reached to 91 billion TL from Individual Retirement System (BES). Telling that one of the problems in Türkiye is that the savings are inadequate, Çağlar stated that BES is irreplaceable in the development of the economy. Stating that they have provided assurance for 107 trillion TL totally and this multiplies the national income for 35 times, Çağlar told that they have contributed to major projects such as 3rd Airport and Eurasia Tunnel. Emphasizing that major financing resources will not take place in any investment as long as they do not see any insurance assurance behind the projects, Çağlar underlined that the insurance is an irreplaceable factor for the investments to be vanished because of a single spark.

Stating that they have produced 64 millions of policy in Türkiye, Çağlar said that: “One of the two business facilities does not have fire insurance. While third of the four dwellings do not have property insurance, two of the third vehicles do not have comprehensive insurance. One of the two dwellings does not DASK insurance. However, Germany has not experienced any mining accident for 50 years. Because they put challenging conditions for the insurers. In return, they present very comprehensive control list to the miners.”

Çağlar said that they have the risk management experiences as insurance sector and they wish for other sectors to use this experience. Providing the information that insurance sector had paid for 28 billion TL in 2017 and this figure reached to 36 billion TL in 2018, Çağlar emphasized the importance of purchasing the insurance via an experienced intermediary or agency. Çağlar said that: “Insurance is not just another ordinary purchasing activity. As insdustrialist, you should use the risk management experiences of insurance sector absolutely.”

Telling that 72% of the insurance companies in Türkiye is foreign companies, Çağlar drew attention to that such firms reflect their international experiences to Türkiye. Stating that the risk of earthquake over 7 or more intensity until 2050 is more than 50%, Çağlar expressed that they went through 2001 crises since because the production capacity which has been lost during the 1999 Earthquake was not be able to be recovered. Çağlar added that this will have the same function with the KGF application which has supported the cash balance with the insurance application to be launched.

Following the speech by Çağlar, ICI Assembly Members took to the rostrum and shared their opinions. The questions directed by the Assembly Members were answered by Çağlar.