AKSigorta Annual Report 2018
Management’s Assessment
During this new period, we achieved many firsts to take insurance “beyond” by looking through the eyes of the customer, instead of the insurer, and introducing different products and services that go beyond in meeting their needs.
34%
Return on equity
850,000
Transactions made with ADA
Esteemed Shareholders,
In 2018, the global economic agenda was very full as the world economy continued to lose momentum in line with the expectations of international financial institutions. Fears of trade war stoked by reports from the US and China somewhat eased after Trump and Xi reached a consensus in late November. While US President Trump repeatedly criticized the Federal Reserve for increasing interest rates, it is expected that the Fed will slow down interest rate hikes in 2019. Fluctuations in exchange rates and inflation, caused by global events in 2018, affected the Turkish economy. Input costs for the manufacturing industry rose as did service costs for the insurance industry. For example, rising inflation had a direct impact on the cost of spare parts, labor and assistance services in auto insurance; repair costs and assistance services in non-motor insurance products; and medical services and medicine costs in the health insurance segment. Meanwhile, the cost of automobile spare parts, medical services and reinsurance were directly affected by fluctuating exchange rates. Insurance premiums increased due to rising costs, causing the growth of the insurance sector to slow and profit margins to contract. On the other hand, insurance companies maintained a high level of liquidity, thanks to collected premiums and the technical provisions in their balance sheets; combined with higher interest rates, this had a positive effect on the sector’s financial income during the year. In the coming period, the decline in insurance income is expected to be balanced with the increase in financial income.
Technology is changing rapidly – in fact, it is evolving. In today’s world, many new advanced technologies – such as artificial intelligence, the Internet of Things, virtual reality, telematics, and blockchain – have already entered our lives. These new technologies are significantly changing the business models of many companies across a wide variety of industries. We can safely say that the insurance industry also has the potential for further development in terms of digitalization. As emerging technologies and changing customer needs push companies to improve their existing products and services, and formulate new strategies, the insurance industry has not remained indifferent to change. Insurance companies are starting to implement these new technologies, which are also evolving in line with people’s perceptions, in their own systems by feeding them with various applications and analytical data. As a result, sector players are establishing systems that can analyze individual consumer behavior and offer personalized experiences. During the reporting period, Aksigorta focused on advanced technology and innovation. We targeted our efforts on the Robot Transformation Project/Robotic Process Automation (RPA) and start-ups. At Aksigorta, artificial intelligence has been at the forefront of our technology and innovation drive. We focused on NLP, Machine Learning, Deep Learning, Image Recognition, and Speech to Text – all of which are technological elements of artificial intelligence. Aksigorta has increasingly invested in artificial intelligence technologies since 2016. Our new technology investments accounted for 25% of our investment budget in 2018, up from 7% in 2017.
In 2018, we launched ADA (Aksigorta Digital Assistant), the first-of-its-kind artificial intelligence application in the sector, in line with our digitalization strategy. Thanks to ADA, we reduced the response time to respond to agency requests from two hours to just two minutes, while also boosting labor productivity by saving on labor costs of 19 employees. Our project also inspired foreign companies. We provided support to Etiqa, an insurance company based in Southeast Asia, in their business processes by reducing their transaction time to three minutes, down from 20 minutes previously. We integrated ADA, which garnered awards from prestigious firms such as IDC and Gartner, with our website, enabling us to meet customer needs around the clock. We aim to execute 2 million transactions a year through ADA, which is currently being used for 30 different processes across six departments. Our Aksiyon application, which combines CRM, mobile and AI technologies, enables us to get a 360-degree view of our customers starting at the sales phase; understand them better; and contact them directly. As a result, we can deliver excellent service to our customers. Aksiyon mobile app – which is supported by data analytics and a CRM system – has state-of-the-art features such as instant notifications, MOD analysis, route planning to reduce the time spent in traffic, and navigation. Additionally, we developed a conceptual model aimed at lapsed MOD customers through the Initiative on the Discovery and Analysis of Big Data in Insurance. We launched this effort together with the Big Data Behavioral Analytics and Visualization Laboratory (BAVLAB). As a result, our success rate reached 83%. We firmly believe that Aksigorta will become the industry leader in big data analytics and the development of new forward-looking strategies.
We targeted our efforts on the Robot Transformation Project/Robotic Process Automation (RPA) and start-ups.
Considering recent developments at the Company, 2018 was a year of change for Aksigorta. During this reporting period, we focused attention on our customers and agencies more than the industry or the competition. We established PURA, an innovation platform, to further improve next-generation insurance services. One-hundred employees have already joined this groundbreaking platform. After providing training courses on innovative thinking to our employees, we asked them to go into the field and speak with both insurance customers, and also with non-customers. The objective was to get their thoughts and feedback, observe their physical gestures, and hear their voices as well as their silence. Understanding the perspective of non-customers, who make up a large segment, was very important for us. After collecting all the data, we put all the ideas, from the slogan to the benefits, to a vote in a democratic manner. Subsequently, we developed and launched Supplemental Traffic Packages – a first-of-its kind product in the industry that attracted the attention of non-customers. In just two months, we sold 15 thousand insurance policies of “Supplemental Traffic Packages” and generated TL 10 million in premiums. We aim to sell these policies to 1 million persons by end-2019. To this end, we held meetings with more than 1,500 agencies at 10 regional directorates. At these meetings, we introduced our new products and obtained suggestions and requests from our agencies. We repositioned the Aksigorta brand under the “Beyond” slogan. During the year, we achieved many firsts to take insurance “beyond” by looking through the eyes of the customer, instead of the insurer, and introducing different products and services that go beyond in meeting their needs. Our efforts yielded positive results.
Our efforts yielded positive results and Aksigorta outpaced the industry’s growth rate and increased the market share in 2018.
Aksigorta outpaced the industry’s growth rate and increased the market share in 2018. Aksigorta recorded premium production of TL 3.4 billion, up 30% compared to the same period last year. Our MTPL branch grew 94% while the marine and MOD branches expanded 56% and 66%, respectively. During the reporting period, Aksigorta stock that returned went up 21%, outperforming the BIST 100 index. With a market share of 7.7%, our company is the third largest player in the sector. While the overall industry grew 20%, Aksigorta achieved 30% growth. We continue to expand our product portfolio by taking a modular, customer-centric approach. At Aksigorta, we aim to boost our market share and further strengthening our market position in 2019. In the coming year, we will continue to invest in innovation, digitalization and data analytics. In line with our profitable growth target, we plan to keep our return on equity (ROE) above 30% and create more added-value for our shareholders.
During the reporting year, we expanded the boundaries of the insurance business. We accomplished this thanks to the committed efforts of our agencies and employees, whom we have always considered our most valuable assets throughout our Company’s long-standing history. We would like to extend our sincerest thanks to all our shareholders – especially our main shareholders Sabancı Holding and Ageas – for their continued support in 2018.
Respectfully yours,
Haluk Dinçer
Chairman of the Board of Directors
Uğur Gülen
Board Member and General Manager
