Professionals and specialists from the Turkish and the global insurance and reinsurance markets gathered between the 5th and the 6th of October in Turkey, at the 9th International Istanbul Insurance Conference.

The event brought into debate parametric insurance and other innovative solutions needed to reduce the protection gap, as well as new technological solutions and business models on the local and international insurance markets.

Fahri ALTINGOZ, STD President

• This year, the conference focuses on a very important trend: parametric insurance
• Parametric insurance products have become an important need; they are not a conventional solution
• Climate change is generating more and more natural disasters, in Turkey as well as all over the world; moreover, the intensity of these natural disasters and the damage produced are also increasing, so we need new risk models

Mehmet Akif Eroglu, Secretary General of The Insurance Assosciation of Turkey

• 63 companies activating on the insurance market in Turkey
• 31.9% of the premiums underwritten on the Turkish insurance market was represented by MTPL
• The Turkish insurance industry grew twice as fast as the Turkish economy in the past years
• MTPL is a hot topic on the Turkish insurance market
• Loss on MTPL: since 2006, the total amount of loss reached 7.3 billion TL
• The impact of the latest changes in the Turkish insurance market (introduction of the ceiling tariffs on MTPL) brought advantages, but it was not sufficient, so we, as an association, continue to develop an action plan for the MTPL market
• The association is working towards reducing the number of traffic accidents in Turkey - country which is struggling with a high number of road accidents and road deaths - this is something we need to do for the good of the people as well
• For example, we propose that drivers with a high frequency of accidents should have their permits first restrained and then canceled
• Another dimension of the MTPL action plan focuses on the cooperation with the Court System- we are working towards insuring that all court decisions are taken in compliance with the current regulation
• Malpractice is another hot topic for the Turkish insurance market: loss ratio is 240% in 2016, the tariffs levels haven't changed since 2012
• As far as the pension system is concerned, we have now reached 3.3 million participants at the auto enrollment pension system and a total of 1.2 billion TL
• The insurance sector is important for the Turkish economy - we need to focus on lobbying and communication in order to further develop our insurance industry; the private industry must work better, because the state cannot pay for everything (for example, in the case of crops destroyed by extreme meteorological phenomena, such as hailstorms)
• In 2016, the economy of Turkey was the 17th in the world
• We need to improve the image of the insurance industry and we need to increase the penetration rate; this is a transformation process, we cannot change everything over night; we need to make the next generation, the young digital generation, believe in insurance

Emrah Gokmen, Willis Towers Watson

• Big Data can have multiple applications for the insurance industry
• You use machine learning to process these unstructured data and turn it into usable data
• Machine learning: field of study which gives computers the ability to learn without being specifically programmed
• Content based recommendations and collaborative filtering - among the current applications of machine learning, as well as speech recognition, handwriting recognition, face and emotion recognition, discovering fraud, filtering emails
• In insurance: in health insurance, the patient could be assisted on which hospital to go
• When choosing a model, one must take into consideration various factors
• Ex. Generalized linear models (GML) are good when it comes to predictive power, they are easy to understand and interpret, they are stable and have a high execution speed. However, they require lengthy analytical time and significant effort
• How can we improve GLM? By using various risks, such as spatial smoothing
• We believe companies should focus on introducing machine learning in insurance

Tom Johansmeyer, PCS Strategy and Development

• The protection gap is the space between people in need and helping them solve a very real problem
• In insurance, we try to convince people to pay us now so that we'll pay them later, which is hard to believe
• The insurance products must be relevant to people's needs
• There are two types of protection gap: the one affecting individuals and the one affecting businesses
• When you are developing a product to close the protection gap, keep the client in mind all the time
• Barriers to closing the protection gap include: distribution issues, lack of solutions that do not make sense
• Compulsory insurance products come with a lot of "ifs": if it's going to work, it has to be rally compulsory, if it's going to stick, you need to build in a monitoring mechanism, if it's going to be effective, you'll still have to invest in financial education, if it's going to be compulsory, it still has to be affordable
• Microinsurance is a classic insurance solution for the protection gap. 4 billion people worldwide could benefit from this solution
• 3 lessons from Turkey for the world: 1) TCIP - turning compulsory insurance into a voluntary renewal, 2) Incentive distribution (how a telecoms provider delivered terror protection), 3) Missing hail (the impact of an unexpected peril causing a large industry loss)
• PAID Romania - 20% penetration, no real monitoring, needs more government support -, TCIP - nearly 50% penetration, proof of insurance required up front
• TCIP is more successful because the product is easy to understand, the coverage is directly relevant to consumers' needs, constant efforts for increasing financial education have been made
• Unexpected perils represent a worldwide problem (ex. Terror attacks and hail for Turkey, Ft McMurray in Canada, Texas hail, Equifax - cyber loss of 125 million US dollars): the general reaction is "nobody expected this"
• There are protection gaps all over the place. There are opportunities in every region to develop new insurance products

Yavuz Olken, AXA Sigorta

• Climate change means higher volatility for the economy
• Parametric insurance is a new approach, very simple
• Cement producers and sellers have experienced huge losses as a result of the extreme meteorological conditions (the cold and snow at the end of the winter which affected the construction industry)
• Enormous losses for the food and beverage industries when the warm season is colder than usual
• Airline companies suffered losses as a result of weather conditions
• In conclusion, there are industries heavily affected by climate change
• Parametric insurance uses indexes and the payment is calculated per day
• We expect that in several sectors, especially in agriculture, until 2020, parametric insurance will cannibalize other insurance products
• We should create awareness regarding parametric insurance - we need to create the products and inform the potential clients. Hopefully, we will see the launch these products in the future

Michael CANE, Lockton Re

• The insurtech community makes a big deal of putting the client in the center of their business
• The insurance industry has a very low trust from its policy holders
• Dealing with the insurance industry, dealing with the insurers, with the claims evaluators feels painful, you feel like a criminal because you have to justify everything
• Thus, these new insurtech companies want to avoid this and appeal to the younger population
• Young people expect everything to happen super fast, and this is slowly starting to show in our industry as well
• In the UK, telematics and black boxes tend to be tied to young drivers at the moment
• The feeling is that in the following 5-10 years, all the new cars will have telematic systems
• Another insurance company created a light bulb which was Bluetooth enabled, WiFi enabled, it would text you when your kids arrived at home, it could learn your habits of turning the lights on/off and then mimic this behavior when you are away from home
• In the present, insurers and syndicates are buying cross class reinsurance programmes; contracts increasingly have aggregate and franchise features; new reinsurance products are being created, performance is evaluated on group results
• Parametric insurance is a type of insurance that does not indemnify the pure loss, but ex ante agrees to make a payment upon the occurence of a triggering event
• Parametric solutions are starting to evolve in the non catastrophe space and I believe that they will continue to do so

• In Istanbul, the infrastructure does not keep up the pace with climate change: urban floods are a thing now, not only in here, but worldwide as well
• Hail is increasingly common in Turkey- we have to reduce emissions
• In US the municipality establishes the plinth level and the insurance policy is priced according to your compliance to municipality's regulation regarding plinth levels
• The climate changes, everyone needs to change. Let's not wait much longer.
• My recommendation is: let's manage the risks, not the damages these risks produce
• If all the insurers combine their data, you can create a huge database that can be extremely useful

• Startershub is not directly related to the insurance industry. We invest in technological startups and we help them incubate and develop in a short time
• The insurance industry is massive, but is growing very slowly in a highly regulated market
• Peer to peer insurance is the new form of capital provision
• Wearables, smart homes, mobile phones, social networks represent new sources of data. They can help reduce fraud and possibly improve underwriting
• Sharing economy has enterd our lives and it is prospering. Companies such as Uber are looking for insurance solutions more compatible with their business models
• Smartphone insurance and cyber risk insurance are the hot topics. Self driving car insurance will be the hot topic in the near future
• The investments in Insuretech have increased significantly in the past year

Metin Demirel, Aksigorta

• Placing technology at the heart of the business: this is becoming our reality
• Amazon simply puts a terrible pressure on its competitors
• As an insurance industry, how do we survive? We are still talking about MTPL, premiums etc. We do not talk about the customers' needs. If people could be visually shown what could happen in their homes in case of an emergency, this would create high levels of awareness
• When we develop mobile applications, we have to know how they are used, we need to collect all information details available about the customer
• We have been using robots and robots process automation: 3 robots produce the work of 12 people
• Chatbots platforms are currently very popular; however, Turkish language is hard to be understood through such algorithms

Salih Tasyon, Insurance Fraud Bureau Turkey

• Over 21 Million vehicles are currently in traffic in Turkey. Antalya is the 5th city as far as the number of road accidents is concerned. The most accidents here take place at Monday, around 8:00 in the morning
• We in the insurance industry are not actively using existent technologies