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Welcome to our Monthly Newsletter – November 2007

Talk Around the Bazaar

  • As bush fires rage through California, irritating some of the world’s best known celebrities, some carriers are looking at revising their policy wordings. Meanwhile the Insurance Council of Australia is reminding policyholders to check their policies (and pay their premiums…) in order to avoid uninsured losses as the Aussie bushfire season approaches
  • The European Commission has just agreed to drop a proposal which would have made it easier for people to transfer their private pension to a new employer. Now that would have made life just too easy, wouldn’t it?
  • Following announcements that Egypt is to restructure and privatise its state-owned insurance companies (Al Chark, Misr and Egypt Re will not look the same when this process is complete), there is a further development. The Egyptian Insurance Supervisory Authority has signed a Memo of Understanding with the National Association of Insurance Commissioners to work together on a number of issues relating to market performance. This extends the NAIC’s list of MOU’s which already includes Brazil, China, Hong Kong, Korea, Russia and Vietnam
  • Following developments in China and India, Pakistan is set to develop insurance products for farmers, low income earners and foreign businessmen travelling throughout the country. A review of insurance marketing and distribution is also to take place. Pakistan will do well to open up the market more to foreign carriers and to allow independent brokers a chance to help with insurance penetration  
  • Another sign of Vietnam’s move for more international integration is Vietnam National Reinsurance Corporation’s quest for foreign investors to develop expertise and funds for expanding their business   
  • Soon after the European Commission’s report on potential anti-competitive practices in parts of the insurance sector, FERMA comes up with a request for a review of the Insurance Mediation Directive. If FERMA, BIPAR and the carriers were to come up with a joint proposal the EU should be able to do something fairly quickly. The same applies to the up-coming discussions on coinsurance and reinsurance
  • In Germany, the merger of Gerling and HDI is now complete and HDI-Gerling Industrie Versicherungs A.G. is now the second largest non-life insurer in Germany and one of the largest in Europe. Their capacity and worldwide reach should be good news to brokers and their clients

  • Japan has taken a further step in liberalising the market by proposing that banks should be allowed to sell life and motor insurance products. It will be interesting to see how the big conglomerates handle this potential internal competition
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    We are currently discussing projects in the following markets and are regularly being asked to attend the annual conferences and meetings of the major networks:

  • Portugal
  • India
  • U.S.A.
  • Germany
  • Iran
  • Turkey
  • Slovenia
  • Romania
  • Italy
  • Australia
  • Canada
  • South Africa
  • United Kingdom
  • Ireland
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    We continue to work with a growing number of networks to improve and expand their international capabilities.  If you have not already spoken to us about expanding your international markets, as we head towards 2008, now might be the right time for us to conduct a feasibility study. For more information, please see the contact details below.

    What Clients Say

    ““The research work carried out by Worldwide Risk Solutions has been top notch”

    “Using their contacts to gather information enables us to make quick, well-balanced decisions”

    * * * * * * * * * *


    Worldwide Risk Solutions LLP
    20 Blunts Wood Road
    Haywards Heath
    West Sussex
    RH16 1NB, England

    Telephone: +44 (0)1444 450 919
    Mobile: +44 (0)7968 191 511


    Skype Name: georgeworsley

    Information appearing in WoRdS is checked for technical accuracy but is not intended to provide a basis of knowledge upon which advice can be given. Worldwide Risk Solutions accepts no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this newsletter.

    An Established and Successful Force in International Insurance

    Worldwide Risk Solutions is a U.K. based commercial organisation which has the sole objective of facilitating global business strategies and business development in the international insurance industry. For more information about us, please go to www.worldwiderisksolutions.com.

    Since Our Last Newsletter

    As we mentioned in our October edition of WoRdS, September really has been a month for conferences. Besides Rendez-vous de Septembre, Baden Baden, FERMA had its conference and exhibition and we attended this. We also took part in the conferences of two major networks of independent brokers. Amongst the issues discussed was the necessity for continually up-dating the knowledge and awareness of skills and expertise available throughout the networks and utilising these for the good of mutual clients. Having a good website for the network’s visibility is a must. Having an extranet to move vital information around the world and service international business will make a difference. As we pen this missive, a number of broker networks are taking stock of their ability to perform effectively. Interesting times are ahead as they tweak their structures and organisational mechanisms.
    If we can help or if you have any questions, please contact us and we can discuss how best to help you.

    In our SPOTLIGHT series we will help you understand the way different markets around the world operate so that those of you who do business there can feel more “at home abroad.” Different does not need to mean difficult but knowledge of the needs and characteristics of specific geographic markets is an advantage to those who are active in the global economy.  This helps avoid misunderstandings and unfulfilled expectations. We have now done articles on Brazil, Takaful, India and more; if you would like copies, please let us know.


    A Quick Glance at the Turkish Insurance Industry

    Positive economic developments, reforms accomplished during the EU harmonisation process and its young population make Turkey an attractive country for investment in the eyes of foreign investors. In an environment where international financial factors benefit from free movement, there has been a remarkable increase of foreign capital flowing into the Turkish insurance market, mostly as a result of mergers and acquisitions. The fact that foreign investors are at the same time insurers in their countries of origin will have a positive competitive impact in the Turkish market. A healthy competitive environment will be made possible by the formation and implementation of recent insurance legislation providing for free competition and at the same time regulating the financial structures of international companies. The long awaited Turkish Insurance Law has been discussed in the Turkish Parliament and was approved on 3rd June 2007, thereby filling the legal and regulatory gaps in the Turkish insurance sector - a very significant development.

    As of 31st December 2006 there are 53 insurance companies and two reinsurance companies registered with the Association. In addition to these companies Coface Sigorta A.S. has been also been established and, indeed, other international carriers are moving into the market.


    Premium Income

    In 2006, thanks to the improvement of the technology infrastructure, the service quality of insurance companies and to the increases in the number of trained employees, total Premium of the insurance companies operating in Turkey increased by 23.68 % when compared to 2005 and reached TRY 9.7 billion (US$ 6.8 billion).

    About 85% of this premium was generated in the non-life branches, with the remaining 15% being derived from life insurance.

    The amount of premium generated by the top ten companies in the Turkish insurance industry corresponds to around 64% of the market premium. Seven out of these ten companies are backed up with foreign capital.

    Branch-wise breakdown of premiums written in 2006 are presented below in comparison with 2005 figures.


    A year without major losses

    2006 can be described as a year without any major losses for the Turkish insurance industry. However, the non-technical price competition which has been ongoing for years prevented premium growth reaching its full potential, this also led insurance companies to sustain losses, particularly in motor own damage and health branches. Statistics currently being compiled for 2007 show little difference.


    Foreign capital investments

    Starting with 2005, the appetite of foreign direct investment for the Turkish insurance market showed a progressive trend during 2006 and 2007. During the course of 2006, majority of shares in Basak Sigorta and Basak Emeklilik were sold to Groupama and İhlâs Sigorta was acquired by HDI International, now known as HDI-Gerling.

    American-based Liberty Mutual Group acquired shares in Şeker Sigorta, whereas Ergo Group, the German primary carrier owned by Munich Re took over shares in İsviçre Sigorta and İsviçre Hayat. Coface Insurance backed up with French capital obtained authorisation to operate in credit insurance. Further developments in 2007 are: the Spanish group Mapfre has taken a stake in Genel Sigorta; Aviva and Aksigorta have merged their life and pensions units; Eureko is teaming up with Garanti Bank’s life and non-life subsidiaries; ING has bought into the banking sector by taking over Oyak Bank. 

    About 60% of the total market premiums in 2006 were generated by foreign companies or companies with foreign shareholders. Seven out of the top ten companies in terms of premium production are either foreign companies or companies with foreign shareholders. The increased volume of foreign capital in the market is a natural consequence of globalisation.

    In view of the fact that Turkey has a young population and an under-utilised insurance potential, it is expected that the interest of foreign capital in the Turkish insurance industry will continue in the years ahead.

    In preparing this Spotlight article we received invaluable assistance from the leading independent risk advisers Martin & Martin Insurance and Reinsurance Brokers Co Inc in Istanbul (www.mmsb.com.tr) for which we are grateful.

    If you would like Worldwide Risk Solutions to conduct an economic, business and insurance survey of any international markets please contact us – Details below.

    Worldwide Risk Solutions has access to a wide client base of internationally oriented organisations. Why not utilise this knowledge and experience? We can conduct a swift appraisal of your global activities or answer any questions you may have about international developments. Call +44 (0)1444 450 919 or send us an e-mail and we will respond immediately.

    In our next e-newsletter we will feature a Spotlight on Taxation Issues. In these days of Compliance, Financial Service Authorities, Transparency, Scapegoats, etc, Insurance Premium Tax is coming under scrutiny. Insurance companies usually handle this in the country where the premiums are paid. But, especially with non-admitted policies, it is no longer as easy as it used to be for a carrier to pass all responsibility onto clients. Progress is sketchy and we will update you on developments in our next edition of WoRdS.

    See our Contact Details

    George Worsley, Director
    Worldwide Risk Solutions
    Telephone +44 (0)1444 450 919
    E-mail info@worldwiderisksolutions.com

    © Worldwide Risk Solutions LLP 2007