1 Temmuz 2015 Çarşamba

The New Face Of Insurance Business

Turkish folk have a tendency to consider different versions of insurance other than compulsory insurance only after they experience an incident...

The underlying reason for this is the assumption that insurance is a form of “tax” rather than a monthly bill.

Even though insurance is seen as essential and as and assurance, unfortunately there are a lot of negative biases against insurance companies.

This is because insurance companies are believed to never be transparent enough and to do whatever they can in order to avoid compensating the loss after the risk becomes actual. A consumer, who has been through a loss and has not been able to receive a payment in return – even though he thought his insurance covered all of it, he has discovered that it is indicated in the footnotes after the fact that the damages are indeed not compensated- painfully walks away from this notion.

The sure way to overcome these biases goes through increasing transparency even if it sounds very unorthodox and spartanly compared to the references of the category.

How does the perception differ when we look into insurance types?

Car insurance is the first one to come to mind and also the one that is considered to be the most important insurance type. The unreliability of the big city life makes car insurance perceived as a “compulsory” insurance. Moreover, since motor insurance is bought periodically it is observed that the consumer is sufficiently knowledgeable in terms of information.

Also, there is no sense of need for purchasing private health insurance and having SGK seems adequate. This makes having private insurance perceived as a luxury. In addition to that, insurance companies are criticized for their private health insurance practices.

Personal Retirement Insurance (BES) draws more attention from the women; women require a higher sense of assurance.

Retirement insurance is also used as an investment instrument. And lately it has become increasingly popular amongst youngsters.

Even though home insurance is seen as essential by most, the pre-requisite to have it is to own a house. Development of products catered for renters might be an opportunity to fill this gap.
When insurance products are reviewed, the fact that the products are being formulated according to the old system, stands out. In fact the needs, life style, product expectations of the consumer are well-shaped.

Therefore, with the concept of “Insurance 2.0”, simpler, one-step, and customizable products are going to be in demand.

For example the insurance companies that know their consumers and suggest products accordingly will be one step ahead. Brands, who know that isolation coverage for people that live in the city and for those that live on the coast will differ, and brands, who make transparent suggestions that are relevant to the individual as well as his/her family through consumer profiling, may break the biases.

Again another bias breaker, which is powered by ever-changing consumer needs and diversification, is to offer life cycle products. Besides the life cycles that come to one’s mind instantly like birth, childhood, adolescence, or stepping into young professionalism, more specific life cycle suggestions such as divorce, moving back to a rental, separation, moving in together, should be considered as well.

Another important point is the “umbrella policy”. This means packaging multiple products in a policy which will cover multiple family members with various needs. Different packages should be put together considering the different car insurance needs of the household head, his/her spouse’s, or his/her children’s.

What are the trends that shape Insurance Business?

1.   Transparency 
Sense of transparency should be directly reflected both on to the brand and the products for the sake of turning consumers into loyal customers. The consumer must not feel deceived and must be able to see the flaws immediately.

2.    Increased use of the Internet in Insurance product purchases
In relation to this, the use of social media as a distribution channel will increase.

3. Consumers expectation of “experience on all channels”
Not having a web or mobile presence is not an option anymore. Yes, Turkey is still dominated by the brokerage system... But research points internet as the place where the reference for a product’s price and content is driven. On the internet, brands should come up with solutions regarding behavior. This step, if formulated well, will provide a strong CRM muscle to its brand too.

4. The rising importance of telematics 
According to this usage-based pricing will become stronger.

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