BY BESTENIGAR KARA
The Japan-based insurance conglomerate Sompo Holdings has focused on developing the insurance industry and increasing insurance penetration in Turkiye. As part of this strategy, the holding company’s Turkiye subsidiary, Sompo Sigorta, has expanded its sales network, according to Fahri Ugur, General Manager of Sompo Sigorta. “Our network currently consists of 3,800 agencies. We included 1,000 agencies in our network last year. It will contain 4,000 agencies at the end of 2024. We plan to raise this figure to 5,000 next year,” Ugur said in a media roundtable.
Sompo Holdings operates in 46 countries and has over 80,000 employees. Its premium production hovers around USD 20bn. The holding company, which expanded into Turkiye in 2002, prepared its first insurance policy in 2003 in the country. Sompo Sigorta, which has around 2.0-2.5% share in Sompo Holdings’ global operation, foresees to end the year with a Premium of USD 1bn. “Technology, well data usage, and long-term perspective are the strongest muscles that differentiate us from our rivals in Turkiye,” Ugur noted. Sompo Sigorta grew its customer base by 16% while the number of its customers has reached 2.5 million. The company, which increased the number of employees from 700 to 824 in two years, hiked its market share from 4.2% to 4.7% in a year in Turkiye. “One of our primary objectives is product diversity. We have recently launched the cross-border health insurance product,” Ugur emphasized.
Sompo Sigorta has also focused on advanced Technologies such as artificial intelligence (AI) and data analytics. As part of this strategy, the company established its technology subsidiary, Sompo Teknoloji AS. The new affiliate aims to productize and export Sompo Holdings’ insurance know-how by combining it with emerging technologies. It currently employs 50 people. The new firm plans to primarily export its output to Sompo Holgins’s overseas subsidiaries.
Sompo Sigorta grew by 94% in January-September. The company will continue to invest in technology, increasing the number of customers, brand recognition, and insurance penetration. “We have a pioneering position in the vehicle insurance market in Turkiye. We aim for leadership in this business line in the country. We’ll also continue to raise our market share in 2025,” Ugur emphasized.
SECTOR EXPANDED BY 74%
The Turkish insurance industry’s premium production soared 73.8% to TRY 570.4bn in real and nominal terms in September, year-over-year, according to the Insurance Association of Turkiye (TSB). Predictability and financial stability have increased, and the volatility has decreased in 2024, positively affecting the sector. Ugur, who pointed to a single-digit hike in the number of non-life insurance policies, emphasized that a part of the sectoral growth in September consisted of a nominal surge caused by the inflationary environment and cost increases. To him, the majority of the profitability in the insurance industry comes from investment revenues.
REINSURANCE COSTS SKYROCKET
According to Ugur, the real cost hike has hit 600% in the reinsurance sector following the February 6 twin quakes in two years. The reinsurance capacity hovers around USD 400-500bn worldwide. It increases when interest rates decrease. “We also observed a reinsurance cost increase globally, in line with the monetary policy developments,” Ugur highlighted.
Sompo Sigorta Marketing President Onat Dalas accompanied Sompo Sigorta Genel Manager Fahri Ugur at the media roundtable.
Shift to the free market regime is a must
The economy will continue to be predictable in 2025. However, investment revenues will decrease in the insurance industry with the decline in inflation, according to Fahri Ugur, General Manager of Sompo Sigorta. To him, this development will lead to a challenging period in the sector. “Technical pricing and capital adequacy will be more critical and necessary for firms,” he said. Sompo Sigorta doesn’t anticipate a reinsurance capacity problem next year. Moreover, costs will moderately soften considering the decrease in uncertainties at home and interest rate developments abroad. Ugur emphasized that the free market regime is one of the most critical issues for the Turkish insurance industry. “The free market regime and tariffs are more beneficial. Sources are distributed more correctly with this implementation. I hope a shift to the free market regime next year,” he added.
