By indicating that all policies, claims, agencies and experts at insurance companies should be viewable and analyzable in order to prevent insurance proud, Insurance Information and Monitoring Center (SBM) General Manager Aydın Satıcı who talked about their recent project said "Insurance Information and Monitoring Center is the only institution that could see this big picture. We expect to decrease insurance fraud in Turkey to a great extent".
What kind of benefits does Insurance Information and Monitoring Center (SBM) bring to the industry and the companies in the industry?
As Insurance Information and Monitoring Center, our main vision is to ensure growth in the sector and to find solutions to the issue of profitability which is one of the biggest challenges of the insurance industry in Turkey. Our duty is to develop the infrastructure that would bring technical growth and profitability to the sector. Apart from that, we're working on projects aimed at improving public confidence in the industry. One of these projects is integration with the e-devlet system. Beneficiaries can now access, via our website, all kinds of information such as policy information, claim information, accident reports and expert reports. We integrated all this information into the framework of e-devlet as well. There are around 15 million e-devlet users in Turkey. Now people use the worlds e-devlet and insurance in the same sentence and this way we're able to reflect the confidence evoked by the state to the insurance industry.
On the other hand, we have this goal of becoming a data hub for all insurance companies. Insurance companies access a great deal of information at public offices via us. SBM serves as a hub and all insurance companies can now access information via SBM without having to contact every public office separately. One of our main strategies will be to minimize the fraud in the insurance system. Prevention of fraud will directly influence profitability, public's confidence in the sector, insurance rate and prices.
What is your opinion about the progress that the industry has made in light of the results of year 2014? How do you think year 2015 will be for the industry?
Based on the results from the first 9 months of 2014, the industry has made a total net profit of over 1 billion TL. However on the growth side, we see that the industry hasn't grown much in 2014. Looking at the ratio of the size of the insurance industry to Gross Domestic Product, we see a ratio of around 1,5%. This ratio is 7% in Europe. As a developing country we have annual average growth rates around 3%. And we can say that the insurance industry grows parallel to that. Looking at the last 3 years we see that Europe's insurance industry ranks in top 3 in terms of growth rates.
The first thing that caught my attention when I first entered this sector was that the insurance company's advertising campaigns focused not on products but on brands. They were trying to bring to the forefront, their brand names instead of providing information about the products they sold. There was a constant pie and the companies were only trying to change their share in this pie. I believe that the sector would grow much faster if companies advertising campaigns focused more in products and increasing public awareness about the insurance concept. And as the pie grows, the shares of the companies in that pie would increase inevitably as well.
We closed year 2014 with a premium generation of 26 billion TL which was below our expectations. Total premium generation in Turkey should be around 100 billion TL. While the insurance premium rate per person is 110 USD, premium rates increasing to rates in thousands would bring Turkey to a better position. In order for Turkey's targets for 2023 to be realized, we need to take steps forward at all times. And I think the only argument that can ensure that is the insurance sector.
In order to prevent the growing economy and increased production from collapsing, individuals need to have insurance. For instance, products like receivables insurance ensures that we can collect our receivables from exports on a regular basis. Because of all these reasons, the government and the Undersecretariat of the Treasury gives great support to the insurance system.
With the increase in awareness about the insurance sector in 2015, growth rates would increase as well. The new generation can easily access all kinds of information instantly thanks to social media tools. With increased utilization of the social media tools, the industry can grow much faster. Insurance companies should continue to exist not only with brand and product advertisements but also with social media campaigns. In addition, I believe that there should be more mobile applications.
What kind of benefits do you think that the "Mobile Accident Report" application which is a novelty in the world developed by SBM and the SMS information service, bring to the beneficiaries and the companies?
SMS information service has great benefits for the public. This system also allows the users to make inquiries about the vehicle histories for used vehicles. Currently there are around 15 million claim inquiry requests. With this application, people are encouraged to drive their vehicles more carefully in order to keep their vehicles' background clean. This also decreases the number of filed claims and the amount of claim payments.
Mobile Accident Report (MKT) 's a very basic tool but is very beneficial in terms of the functions it provides. MKT brings a great deal of timesavings to beneficiaries. While it takes 100 minutes to fill an accident report and complete the process after an accident, this has come down to 10 minutes with MKT. With just a smart phone, after filling in the necessary information and taking pictures, the users sign on the screen and complete the process. While the process completion time was 14 days after submission of the documents in the old system, this period has come down to 4 days with MKT. Accidents entered in the MKT are instantly shared with the insurance companies and the users receive SMS messages with information about how to contact the relevant insurance companies. Together with the Direct Compensation System that will soon be commissioned, Mobile Accident Report (MKT) will become much more functional.
We are in a transition from reactive insurance business to proactive insurance business. With this application, the nature of insurance business is being transformed. With the accident and location information entered in the MKT system, a huge statistical database is being created. This allows for corrective action to be taken for locations where accidents happen most frequently. Also, if the user has previously created a profile in the application, he/she just needs to take a picture and sign the screen without having to enter all the information once again. The upcoming version of MKT application will allow the users to complete the process with just taking pictures and signing the screen and users will not have to enter the policy information thanks to the qr codes that will be printed by the insurance companies on the policies. In general, all the applications we develop bring great benefits to both the beneficiaries and the insurance companies. I think SBM fulfills a very important function for the Turkish insurance industry.
What would you like to tell us about your projects aimed at preventing insurance fraud which has become a major concern for the sector in recent years?
Insurance companies have their own systems to prevent insurance fraud. And the size of data varies depending on the size of the insurance company. Companies with limited data don't have the opportunity to detect insurance fraud effectively. Crucial point is to be able to see the big picture. I mean, it's not enough to see only a portion of the crime scene. You need to be able to see all policies, claims, agencies and experts in the insurance system. You should also be able to see all vehicles and damage information. You should be able to analyze relations between them. From this perspective, there's only one organization that can see the whole picture: Insurance Information Center.
I can say that we're the only organization that carries out projects for fraud prevention in the most effective way. We have numerous projects for this purpose and we provide different services to insurance companies. In 2014, we set up a system for risk scoring with the goal of preventing and tracking fraud. This smart system inherits certain analytical models. It comes up with a risk score by analyzing all this information and detecting trends for the relations between insurance stakeholders. This risk score can be based on vehicle, policy or claim file. We're able to create risk scores based on numerous factors. We have this whole picture of this network of relations in front of us. We've just commissioned a network called social network analysis. That application displays all those relationships. In fact every effort we make gives us signals about some thing. We also integrate into this system things we consider to be legally fraud. This system also browses similar fraud files that were confirmed in the past and displays them on the screen and increases their risk scores as well.
Currently we have a team at Turkish Insurance Association, called SISEB (Fraud Prevention Bureau). The duty of this team is to analyze social network analysis screens. There are 25 million claim files and the total number of liability insurance policies in a single year is 16 million. Relations between all this data should be detected to come up with a total picture. You don't have the luxury to go through every file to see if there's fraud. We believe we'd be able to prevent fraud thanks to this smart system. The system is currently ready and we're using it. Here\ we share risk scores with the insurance companies as well. As SBM we have own dedicated fraud prevention team. Currently, this team carries out certain analyses via the system and has already started sharing the results with insurance companies. With the completion of the setting up of this bureau in 2015, we expect to decrease insurance fraud rates to a great extent in Turkey.
Looking at the totals for the outstanding claims and claims paid, we see that the insurance companies have paid 5,5 billion TL just for liability insurance claims. Total payments for comprehensive coverage is almost the same. There are probably some fraud cases there as well. Comparing these to the benchmarks in Europe, we see a fraud rate of around 10-30%. And that corresponds to around 1,7 billion TL per year. It means that 1.7 billion TL of 11 billion TL is fraud. Turkish insurance industry has to come to these levels too. While the insurance companies can detect only 5% of this amount with their own efforts, as SBM, we're able to detect 25% of them on average. This project will benefit the insurance industry a lot. SBM's main focus is not individual fraud cases but organized crime that has turned fraud into a business. And these people use the gaps in the legislation. If we're able to detect at least some of these crime organizations, we'll be able to show to others with such intention that there's a system to prevent that.
What do you think about the non-insurance rate in the liability insurance category? What do you think are the major factors holding people back from having liability insurance?
Normally the total number of vehicles that should have liability insurance is 18 million and currently 16 million vehicles are insured. And majority of the vehicles without insurance are motorbikes and tractors. Non-insurance rate is around 20%. And this varies for different vehicle categories. For instance, insurance rate for automobiles is 96%. It is 94% for small trucks. Because truck owners are well aware that their material and immaterial costs would be very high in case of an accident. In my opinion, tractor and motorbike owners don't have a clear idea as to how much premium they should be paying. They compare it to the premium levels of automobile users. But theirs is very low.
There's an accident with material damage taking place every 37 seconds. With insurance you pay a certain amount of money to bring your self under coverage against accidents with possible injuries and casualties. With the advertising campaigns, the insurance companies should inform the public about this situation and tell them what they will be receiving in return. This way the tractor and motorbike owners would be willing to have insurance. These are not amounts to be paid by a single person and this awareness should be created.
We have one more project that is the first and one of its kind in the world and that is about reporting. And among those reports, especially the Dashboard project called "Kokpit" is very important. We compile data from the sector and present them to those who set the direction of the industry. We made the Dashboard application available to general managers, assistant general managers and relevant officials of the Undersecretariat of Treasury. With this application, for instance, if a policy or claim payment was created at 12 am last night, you can see it in that report this morning. Companies can carry out trend analyses and monitor the trends. They can even track their rates there and compare 3-year data and check out market shares. Because there's no need for real-time data, daily data is presented. You don't see monthly reports anywhere in the world, it's usually quarterly. Currently, as SBM, we collect daily or instant data in many branches. We collect data for policies of liability insurance and comprehensive coverage instantly. Our Dashboard application is one of its kind in the world. We will continue to add value to the sector in 2015 as well.
Copyright © 2013 Sigorta Bilgi ve Gözetim Merkezi