BY BESTENIGAR KARA
The UK-based Howden Group Holdings’ insurance and reinsurance brokering subsidiary Howden Turkey, will grow organically and inorganically in Turkey, according to Atinc Yilmaz, Howden Europe Regional CEO for Turkey and Central Asia and Howden Turkey Chairman. “We will continue organic growth in line with our market leadership strategy and inorganic growth by incorporating dynamic firms which comply with our growth targets such as company acquisitions, our entrepreneurial corporate culture and adopt the philosophy that prioritizes human and customer,” Yilmaz said in an exclusive interview with TR MONITOR.
Howden Group Holdings’ insurance brokering arm Howden, which hit a global premium production of USD 30bn last year, currently operates in over 100 countries. The British firm entered Turkey as the reinsurance broker in 2012 and the insurance broker in 2014. It was a boutique firm with reinsurance operations in Turkey previously. It incorporated the insurance firm ACP Sigorta 2018 in line with the strategy to invest in dynamic economies with high growth potential. This contributed to Howden Turkey being among the top three players in the insurance brokering market. Howden, which has operated an office in Istanbul since its penetration of the Turkish market, currently serves all provinces through its offices in Istanbul, Ankara, Bursa, and Izmir.
Howden Turkey accelerated operations after Atinc Yilmaz joined the Howden Family in 2017 when it was managed from Dubai. The team led by Yilmaz prepared a 5-year plan covering 2017-2022 to include Turkey, the Middle East, and Africa managed by him in that period. Howden Turkey has become a central base affiliated to Europe as of 2023 after the fully-completed plan paved the way for a 26% growth in that region, and Turkey, which took a 60% share in it, took the lion’s share. “Howden Turkey adds the experience from the global to the local operations. We offer long-term collaborations that bring creative solutions for our customers with a team of over 200 people,” Yilmaz said.
Howden Turkey operates with its Howden ACP brand in the insurance brokering business line and Howden RE brand in the reinsurance and special specific risks brokering business lines. The company is a stakeholder of Turkish firms, foreign-based companies in Turkey, and overseas expanded Turkish companies. Many firms among them are the largest in their sector of operation.
To Yilmaz, one of the most significant features distinguishing Howden Turkey from its rivals is the strength globally gained from Howden. Purchasing the correct and needed insurance branches in line with enterprises’ and institutions’ operation fields and designing the proper and sufficient insurance contracts specific to those enterprises and institutions in line with the need are the most critical factors in the sector. “To supply them with our team, which is the expert in its field, in the best way also distinguishes us. We also became prominent in the reinsurance brokering business line in terms of finding the capacity,” Yilmaz added.
TO GET A BIGGER SLICE OF THE INVESTMENT PIE
Regarding Howden’s mergers and acquisitions, the company, which maintained operations with its offices and representatives in the Howden One business partnership network in 2020, continued its investments despite the pandemic. It became a majority shareholder of the Greecebased MATRIX Insurance and Reinsurance Brokers (MATRIX), and Spanish Compensa Capital. It also bought the UK-based individual and corporate insurance broker A-Plan Group. Howden became the fourth largest global reinsurance broker after it acquired the U.S.-based TigerRisk in 2022. The company invested USD 5bn globally in the past two years.
Howden Turkey, on the other hand, became the full owner of MATRIX Turkey in 2021. Although the services mainly demanded by corporate customers are provided in the insurance market, brokers make up only 12% of the sector in Turkey. However, the figure hovers around 60-70% in the West. “Considering those numbers, we have a long way to go. Howden notices that growth potential in Turkey. The group positions Turkey as the base, and we chase to get a bigger slice of this investment cake.”
READY FOR TRANSFORMATION
Touching on the Turkish insurance sector, Atinc Yilmaz said it produced a TRY 213bn premium in 2022. As to this year, the premium production of the industry hit TRY 100bn in January-March, which points to a growth that highly exceeds inflation. The share of the insurance industry is 2% of the GDP in Turkey, but it hovers around 7% in the developed countries.
Apart from the February 6 twin quakes in Turkey, Hurricane Ian and flood disasters abroad paved the way for cost hikes in catastrophic risks in reinsurance security, according to Yilmaz. “We estimate the capacity problem to continue. In terms of pricing, the substantial hike in the security costs against catastrophic risks is expected in the upcoming reinsurance period,” he noted.
To him, all these factors require additional capacity purchases. Although their costs vary in line with the contents, they change between 25% and 40%. “In addition to European and American reinsurers supporting the Turkish insurance industry, we consider that new reinsurers from the Middle East, Asia, and Africa may provide additional capacity support.”
The reinsurance market will experience price hikes and assurance contractions in the upcoming period. As Yilmaz says, global brokering firms are needed more than ever under the challenging market conditions as in previous periods. “We observe that some insurance companies, which transfer the risk to the other insurers, have started to act with the awareness of that,” he said, stressing that the reinsurance market is in a transformation process in which they revise their strategies and expertise to comply with increasing risks and changing market dynamics. “As Howden Turkey, we can emphasize that we are ready for the reinsurance market transformation thanks to the power and experience from the global.”
Factors, including high inflation, FX rate fluctuations, and changes in precious metal, oil, and energy costs, can lead to underinsurance. That is why Howden Turkey recommends controlling insurance prices based on current prices or replacement value. “There will be the underinsurance implementation as a result of assessments at the time of the damage if there is no end state update or hike in insurance prices after that control, in line with the necessity,” Yilmaz noted. It will result in the short payment of the damage compensation.
Insurance holders can also act with the logic to save from premiums in their declarations. “Problems and victimization about the compensation of the damage are inevitable when the damage occurs if the insurance policies are prepared with that approach. In such a case, insurance firms also shoulder a big responsibility,” Yilmaz said. To him, the insurance companies should explain to insurance holders the legal basis of the underinsurance and overinsurance terms. Written consent should be taken from them if they insist on preference or demand for a price other than its actual value. “They must also be informed clearly and in black and white that the insurance prices in the policies can and should be updated following the economic changes.”
ALL RELEVANT INSTITUTIONS SHOULD ACT TO EXPAND INSURANCE AWARENESS
Howden Turkey worked to open files for each notice of claim before the insurance companies, appoint experts, and provide the necessary convenience for loss settlement included in the scope, following the needed determination after the February 6 twin quakes, and the company maintains the required coordination. Howden Europe Regional CEO for Turkey and Central Asia and Howden Turkey Chairman Atinc Yilmaz stated that all relevant institutions, including the government insurance institutions, insurance organizations of chambers of commerce, insurance firms, reinsurance companies, and insurance brokers, should jointly act to expand insurance awareness. “Our primary duty should be to create insurance policies at the prices which all citizens can buy, and with the scope to include the direct need,” Yilmaz said. He also emphasized the importance of the earthquake guarantee regardless of the region and the individual, corporate, employee, new investment, and other insurance branches. “The earthquake additional guarantee in all branches should be controlled in line with the preference while buying insurance. In addition to the hike in insurance in Turkey, it is also critical to prepare insurance with correct information,” Yilmaz added.
INSURANCE PENETRATION SHOULD RISE TO FIGHT AGAINST NATURAL DISASTERS
Howden Europe Regional CEO for Turkey and Central Asia and Howden Turkey Chairman Atinc Yilmaz said the insurance penetration was lower than expected in the quake-hit region. “We observed a rate of below 50% even in the compulsory earthquake insurance (DASK). The medium and large industrial enterprises have higher insurance penetration. We witnessed very low penetration in the small-sized industrial and commercial enterprises,” he noted. “Apart from insurance penetration, there was another problem, especially in DASK. Homes were shown in lower square meters than they were. It caused the transfer of a low part of the damage to the insurance system,” he added. To him, in line with the need, it is necessary to broaden the scope of compulsory insurance, ensure that the correct insurance securities are taken, and therefore widen the insurance further to the base. “It is necessary to prevent the burden on the government and citizens. The government will always take the necessary measures and support to prevent suffering. But there is no permanent solution in the fight against such natural disasters other than rising insurance penetration significantly.”
