June-July 2019 Issue: 09A PUBLICATION BY NART INSURANCE & REINSURANCE BROKERAGE INC..

Lloyd’s License will open new doors to NART on its global journey

Denise Nart, Executive Board Member

Risk management is crucial inpharmaceutical andchemicals industry

Axa is going to make adifference thanks toits innovativeproducts

Fear of cyber risksboosted up

We are aiming ahealthy growth inmarine products

NART’s signatureunder TANAP(TANNP), Europe’slargest energy project

years

Licensee and director in charge

In the name of NART Insurance and Reinsurance Brokerage INC.

Levent NART

CEO & President

NART Head QuartersOrhan Veli Kanık Cad. Ruhi Esmer Sok.NART Plaza No: 1 Kavacık-Beykoz İstanbul

www.nart.com

Santral: +90 (850) 724 63 00 (NART) Fax: +90 (0216) 693 14 35 - 36 Call Center: +90 (212) 296 81 59 Prepared to Publication by:Adress : Soğanlık Orta Mah.

Genç Osman Cad No:33-1 Kartal-İstanbulTelefon : 0216 326 83 20 (Pbx)Mail : info@sigortamedia.comWeb : www.sigortamedya.com.tr

Risk&Life is issued every3 months by NARTInsurance & ReinsuranceBrokerage Inc.. None ofthe articles andphotographs published inRisk& Life can be issuedpartially or completelywithout the permission ofthe publisher.

January-February 2019 Issue: 09

A PUBLICATION BY NART INSURANCE & REINSUR

ANCE BROKERAGE INC..

Lloyd’s License will open new doors to NART

on its global journey

Denise Nart, Executive Board Member

Risk management is crucial inpharmaceutical andchemicals industry

Axa is going to make a

difference thanks toits innovativeproducts

Fear of cyber risksboosted up

We are aiming ahealthy growth inmarine products

NART’s signatureunder TANAP(TANNP), Europe’slargest energy project

years

NART GREW MORE THAN 70 PERCENT IN BURSA Customer satisfaction and highquality services of NARTInsurance and ReinsuranceBrokerage, one of the firstbrokerage firms in Bursa, arerising rapidly.

12

FEAR OF CYBER RISKSBOOSTED UP WORLDWIDE The issues of worldwide increase indigitalization and cyber risks werebrougth to the table during the 19thmeeting Advisory Board of NARTInsurance and ReinsuranceBrokerage.

10

THE IMPORTANCE OFRISK MANAGEMENT INPHARMACEUTICAL ANDCHEMICALS INDUSTRYIS INCREASING

04

THE LLOYD'S LICENSE WILL OPEN NEWDOORS TO NART ON ITS GLOBAL JOURNEYEmphasizing that they are one of the first companies to have acquired Lloyd’sLicense in Turkey Denise NART, Executive Board Member , says “This license willenable us to provide more creative products to our customers”

SURETY BOND HASREPLACED LETTERS OF GUARANTEE

16

CONTENTS

23

02 June-July 2019

WE WILL MAKE ADIFFERENCE IN THE INSURANCESECTORTHANKS TO OURINNOVATIVE PRODUCTS

08

Message from the President

NART Insurance & ReinsuranceBrokerage Inc..

CEO & President

LEVENTNART

Dear FriendsAs NART Insurance & ReinsuranceBrokerage Inc. we embarked on ajourney exactly 20 years ago … Eversince, we strived to forge ahead bymaking it our utmost priority toenhance ourselves, to provide highquality services and products, toelevate the sector while developingthe most accurate and efficientsolutions for our business partners.

Our 20th anniversary, which we,the largest insurance broker of Turkeywith 100% Turkish capital, arepreparing to celebrate later in 2019,has become even more enshrinedthanks to a wonderful news wereceived recently.

NART Insurance & ReinsuranceBrokerage Inc. became the first evercompany in Turkey to receive theLloyd’s license, an achievement, towhich only 293 out of 300 thousandinsurance brokers were entitled so far.We are proud to be a licensed brokerof Lloyd’s, the oldest insurance marketof the world thanks to its 300 yearslong history. Receiving this license hasby no means been an easy endeavor.It was the end product of a 2.5 yearslong preparation process and hardwork of an entire team from technicalto finance departments.

I owe a heartfelt thank you to theNART team who made great effort tobecome a licensed broker of Lloyd’s,which has a very strict selectionprocess with austere rules where theygo over every applicant with a veryfine comb.

I wish that the license we receivedfrom Lloyd’s, world’s oldest insurancemarket with a £33,5 billions premiumvolume, will bring nothing but fortuneboth to our company and theinsurance sector in general. Thanks tothis important achievement, which,we believe, will accelerate our globaljourney, we intend to enrich our

reinsurance activities by providingdifferent means of solutions to ourclients while continuing retailbrokerage not only in Turkish but alsoin foreign markets.

This license will enable us toprovide more creative products to ourclients. And it is what the recentdevelopments in world economy andall existing sectors require us to do.

I would like to emphasize that as acompany that is entitled to operate inworld’s largest insurance market weare on the verge to initiate significantbreakthroughs regarding especiallythe digital sphere.

The world is getting more and moremobile by the day. Thesetechnological developments are rapidlychanging the ways how business isdone by endowing all sectors, as amatter of fact the economy in general,with a new dimension. Cloudtechnologies, automation technologiesetc. are acquiring increasingly morespace in our lives. All thesetechnologies bring along not onlyefficiency in production but also newlydefined risks.

Cyber risks are but one of suchrisks. They have become one of themost feared of risks in the entireworld. We, NART Insurance &Reinsurance Brokerage Inc.., arestriving to follow all the recentdevelopments as closely as we can sothat we can provide our clients withspecial solutions regarding thosecyber risks.

In this newest issue of Risk & Lifewe brought issues like NART’sLloyd’sadventure, developments andchanges in the insurance sector, risksof a digital world as well as solutionsto those risks, and the forums whichintend to bring the insurance sectortogether in light of thosedevelopments to the table.

03 June-July 2019

RİSK&LİFE

The 13th NART Risk Management Forum, one of the mostconsequential international organizations in the risk management and

insurance sector, took place with 300 participants from 12 countries .The issue of “Risk Management in the Pharmaceutical and Chemicals

İndustry” was the main topic discussed in the Forum.

News from NART

The importance of risk management in THEpharmaceutical andchemical industries

04 June-July 2019

The issue of risk management in thepharmaceutical and chemicals industriy was

brought the table in the 13th NART RiskManagement Forum organized by the leading

brokerage firm NART Insurance &Reinsurance Brokerage Inc.. 300 participants

from 12 countries took part in the Forum,which took place in Hilton Istanbul

Bosphorus Hotel, on September 10, 2018. Atthe panels and seminars during the Forum it

was emphasized that issues like risk aversion,risk reduction and risk management are

acquiring increasing significance now thatinvestments in the pharmaceutical and

chemicals industries are accelerating bothlocally and globally. Experts have informed

the entrepreneurs, industrialists and thoseactive in the service sector about how they

are supposed to adopt to the changingconditions in the insurance sector.

05 June-July 2019

Pharmaceutical ManufacturersAssociation of Turkey (PMAT, İEİS),Association of Research-basedPharmaceutical Companies (AİFD),Pharmaceutical Industry Associationof Turkey (TİSD), Foundation ofPharmaceutical, Pharmacy, HealthSciences and Technologies (FPPHT,İVEK), Association of Pharmacy andPharmaceuticals (APP, EİD), TurkishSyndicate of Chemicals, Oil, Rubber,Plastic Industries’ Employers(CEORA,KİPLAS), Turkish ChemicalManufacturers Association (TCMA;TKSD), Association of PharmaceuticalWarehousemen (APW, EDD), Republicof Turkey Ministry of Treasury andFinance, Republic of Turkey Ministry ofHealth, The German-Turkish Chamberof Industry and Commerce (AHK), TheTurkish-French CommerceAssociation, Turkish Industry andBusiness Association (TUSIAD),Istanbul Chamber of Commerce (ICC,ISO), Insurance Association of Turkey(IAT, TSB), Turkish Capital MarketsAssociation (TCMA,TSPB), YoungBusinessmen Association of Turkey(TUGIAD), Association of YoungExecutives and Businessmen (GYIAD),Representatives of Risk ManagementCompanies as well as InsuranceSector, and all the other institutionsserving in this sector.

Levent Nart, CEO & President NARTInsurance & Reinsurance Brokerage Inc..,pointed out that the pharmaceutical andchemicals industry will play a crucial role

in the development of Turkeyemphasizing that Turkey ranks 16th in the

pharmaceutical sector which has a $ 1.1trillion trading size. After highlighting that

there is a worldwide trading volumeworth of $4 billion in the chemicals

industry Nart said “The USA, China andJapan are the countries with the largesttrading volumes in the pharmaceuticalindustry. In the chemicals industry the

rank order starts with China followed bythe USA and Germany. Only 10 years ago

the USA was the leading country. Wehave a current deficit in both of these

industries. Hence, any progress in thisarea will a have major impact on thedevelopment of Turkey”. Nart drew

attention to the fact that since in bothsectors, which have an intense direct

impact on consumers and are extremelyopen to further development, production

and marketing are getting morecomplicated than ever; the management

of coordination risk is gaining significancecontinuously.

Levent Nart: The pharmaceutical and

chemicals industriesare growing rapidly

Who took partin the Forum?

DENİSE NART

LEVENT NART

06 June-July 2019

Can Akın Çağlar, President of the Insurance Association of Turkey, and ZeynepNecipoğlu, President of The Turkish-French Commerce Association wereamong the keynote speakers of the forum which was supported by numerouscivil society organizations as well as risk management companies. ThePresident of IAT (TSB), Çağlar, said that the insurance sector created a TL 130billion fund in 2017 while realizing TL 28 billion damage compensation inexchange for a TL 46 billion premium generation. He emphasized that theinsurance sector provided a total surety/cover that is worth 35 times more thanthe GNP endowing national and individual assets with protection. Çağlarargued that, when compared with developed countries in terms of penetrationand per capita premium generation, the Turkish insurance sector has still a longdistance to cover. He added that, within this framework, the insurance sectorwill accrue great benefits by adding more innovative products like cyber riskinsurances, credit insurances, etc. to the existing range of premium generation,which by the time being is heavily dominated by products like traffic andautomobile insurance. On the other hand Zeynep Necipoğlu, President of TheTurkish-French Trade Association, explained that 20% of the French investmentsin Turkey are executed in the pharmaceutical and chemicals industry. Can AkınÇağlar, President of the Insurance Association of Turkey, pointed out that giventhat it is currently generating savings worth of TL 130 billion the insurancesector needs to develop further as rapidly as possible.

We still have a long distance to cover

CAN AKIN ÇAĞLAR

ZEYNEP NECİPOĞLU

Levent Nart, CEO& President ofNART Insurance &ReinsuranceBrokerage Inc..,stated that theywere targeting tobecome a regionalpower that helpsits clients tomanage the risksthreatening theprofit goals of boththe Turkish andforeign companiesin Eastern Europe,Central Asia,Middle East andBalkans.

07 June-July 2019

The identificationand reasons of risks

have been scrutinizedIn the first panel of the Forum, which consistedof two panels in total, Cengiz Celayir, Presidentof Pharmaceutical Manufacturers Association

of Turkey; Andreas Berger, Member of Board OfDirectors and Regional CEO for Central and

Eastern Europe of Allianz Corporate Speciality;Süha Taşpolatoğlu, CEO of Abdi İbrahim

Pharmaceutical Industry and Trade INC.; MeteHüsemoğlu, General Manager of Abbvie Turkey

and Selim Taşo, CEO of Alliance Heath Caretook part as speakers. In this panel, the

identification and reasons of the risks havebeen scrutinized. In the second panel Yavuz

Ölken, CEO of Axa Insurance; Feridun Uzunyol,Head of Board of Directors of Kiplas; Haluk

Erceber, President of Turkish ChemicalManufacturers Association; Jürgen Bruckner,Director of Munich RE Turkey; Jamie Bouloux,CEO of Emerjin Risk took part as speakers. Inthis panel questions like how the risks can be

averted and insured were touched upon.Possible solutions to these questions were

proposed.

INTERVIEW

08 June-July 2019

Axa Insurancepushed the buttonof a massiveprocess to

transform itself from “the companythat compensates damages to apartner that proposes solutions”.This process is led by Yavuz Ölkenwho was assigned as the CEO inApril, 2018 and played a major rolein the transformation of thecompany within the last 3 years.Ölken emphasizes that they haveput great effort in each departmentof the company to transform AxaInsurance from “the company thatcompensates damages to a partnerthat proposes solutions” and adds“the feedbacks we received so farprove that the clients are very happywith this transformation.

A

WE WILL MAKE A DIFFERENCE IN THE

INSURANCE SECTORTHANKS TO INNOVATIVE

PRODUCTS

RİSK&LİFE

Axa Insurance is about to leapforward on its way to becoming acompany which makes life easierand comes up with solutionspromptly. With the slogan “FromCompensator to Solution Partner”Axa Insurance pushed the button ofa massive transformation process,intending to make a difference withnew applications, innovativeproducts, solutions as well aspartnerships.

Of course, you can see that we havetook our services to a whole new levelwith regard to damage compensationas well. In order to accomplish ourtransformation from compensator to asolution partner, not only existingchannels, but even the Executive Boardpays attention to client demands. Webegan to develop new services,products and process maps based onthese demands coming from ourclients.”

Ölken points out that technology istheir main leverage in this process andclarifies that the concept of solutionpartnership is of interest not only totheir clients but also to their distributionchannels and employees. He says: “Weprioritize technological changes. Weemphasize Industry 4.0 and Insurance4.0, which is Industry 4.0 compliant.Products like car insurance withtelematics and parametric insurance,which have attracted immenseattention and made a significantdifference, are really important in thatsense. Our new mobile application,Axa Fit, intends to add value to ourclients’ everyday life as an indispensabledigital platform. On the other hand,artificial intelligence became the coreelement in our damage compensationtransactions. We are going to make adifference with new applications,innovative products, solutions andcollaborations.

We focused on profitable growth

While explaining that they focusedon a sustainable and profitable growthYavuz Ölken, CEO of Axa, says “Wefocused on a powerful and competitivegrowth in corporation with our goals,values and vision. Of course, wecontinue valuing the human and ouremployees. We allow them to usemost of company’s amenities so thatthey can plan on their competencesand futures. We believe that happyemployers will bring along happyagencies and happy distributionchannels, which altogether willtranslate into happy clients. Ölkenunderlines the fact that Axa grew abovethe sector’s average during the first halfof 2018 and clarifies that they went

beyond expectations especially incommercial and corporate insurancesas well as in the area of complementaryhealth. Ölken foresees a growth ratiowithin the range of 15-16%.

The exchange rate increasehad an impact on the sector

Ölken argues that the increase in thedollar rate and the volatility in thefinancial markets had an impact on theinsurance sector, as well. Afterarticulating that the increase in theexchange rate had a direct impact onthe cost of damages, as clearlyexemplified in the 35-40% increase ofthe cost of damages in the carinsurances, Ölken maintains: “It isobvious that the increase in the costsendangers the profitability of thesector. The increase in costs in all thebranches should not be ignored. Thepremiums we receive from bonds sold1 year ago are not adequate andtherefore, the pricing policies need tochange. Otherwise, I predict that therewill be serious trouble regarding theexpected technical and accountingprofits of insurance companies.Insurance companies need to developlong-term strategies with higherpredictability power instead of day-to-day short term strategies”.

Yavuz Ökten clarifies thatTurkey is a vital investmentspot for Axa Group. Heemphasizes that AxaInsurance is among the 33countries in the the AxaGroup International andEmerging Markets regionand has realized 15% ofthe total turnover of thesaid region which is equalto the 23% of the totalrevenues.

Turkey is vital forTHE Axa Group

09 June-July 2019

Yavuz Ölken, CEO of AxaInsurance, states that the first

half 2018 has been verycompetitive causing sectoral

growth to remain ratherlimited .

he 19th Meeting of theAdvisory Board of NARTInsurance & ReinsuranceBrokerage Inc.. took place at

Ritz Carlton Hotel, Istanbul. The Boardconducted the panel called “The Futureof the Reviving yet Fragile Turkish andWorld Economies—Turkey and theWorld, digitalization, Cyber Security andCryptocurrencies” under thepresidency of Yavuz Canevi, TEB Headof Board of Directors. Ahmet Usta, thefounding partner of Mercek Tech. andHalil Öztürkçi, the founding partner ofAdeo were the participants of the panelsession which was chaired by MuratÜçer, the founding partner of TürkiyeData Monitor.

In his opening speech, Levent Nart,CEO & President of NART Insurance &Reinsurance Brokerage Inc.., touchedupon the risks that threaten theinsurance sector and the insured, withan emphasize on development of thesector and predictions about itsgrowth. After pointing out the factthat the answers given to the questionof “What is the one risk that you fearthe most”, a question that the heads ofthe most significant companies in the

world are asked every year, show thatcyber risks boosted up on the list ofthe most feared risks, taking up thethird place. Nart said “Businessinterruption, natural disasters andcyber risks are the top three of themost feared risks”. While talking aboutthe innovative products put on themarket by NART Insurance &Reinsurance Brokerage Inc.. in 2017,Nart stated “Hydroelectric powerplantsagainst rapid changes in weather,“parametric” insurances preventingloss of income in the tourism sector,the “loss of attraction” insuranceinsuring the indirect loss of turnover asa result of terror and public unrest inthe region where a company is activeas well as the “loss of attraction”insurance that targets the risks arisingfrom the inability to achieve thenecessary flow rate and heat ingeothermal projects, which in generalaim to insure against the risksrendering investments void are someof the products we developedrecently”.

NEWS FROM NART

10 June-July 2019

The issue of risingworldwide digitalizationand cyber risks werebrought to the table at the19th Board Meetingof NART Insurance &Reinsurance Brokerage Inc..

T

Fear of cyber risksboosted up globally

We have made adifference in the sectorwith innovative products

RİSK&LİFE

We need to focus onreforms and our

vulnerabilities

A whole new world order is almost thereCyber attackinsurances canreduce the risk

Murat Üçer, the founding partner of Türkiye DataMonitor, who presided over the panel sessionpointed out that in 2017 Turkey grew by 7%; a

growth rate, which was dependent on externalfinancing and credits while at the same time was

triggered by the construction industry. Üçer said:“At the moment Turkey has a three-digit inflationrate, twice more than the set target rate whereasthe current deficit is 5.5% of the national income.

These are globally high rates that are not welcomeby international investors. However, we have to

reattract not only continuous external financing butalso long-term investment. After the elections, we

need to focus on reforms and our vulnerabilities in atotal political and social harmony”.

Ahmet Usta, the founding partner ofMercek Tech., emphasized that thehumanity has been recording the datamaking up information using differenttools and methods throughout its entirehistory. Usta explained that the need ofgrowing populations to accumulateknowledge in order tospecify social rules wasamong the mainreasons of thissituation. He wenton explicating thathumans establishedorganizations whichthey agreed upon in aconsensus in order tokeep a record of theaccumulated information.They then granted these organizationswith central surveillance authority. Ustaadded “In 2008 Satoshi Nakamato,whose real identity is still a secret,issued an article named “Bitcoin: APeer-to-Peer Electronic Cash System”where he proposed to establish atrustable data recording system without

the need of a central surveillancemechanism through “the electroniccurrency application Bitcoin”. AlthoughNakamato never used the termBlockchain in his article, themathematical and technologicalapplication he proposed did record the

data in ordered blocks. Thereforeit was named Blockchain.

Conventionally, theBlockchain was associatedwith cryptocurrencies.However, the fusion offactors like the idea ofrecording data without

the surveillance of anycentral institution, the

transparency of these recordsand artificial intelligence via “Smart

Contracts” that are displayed overBlockchain has opened new horizons tohumanity. These new horizons havetaken us to a whole new world whereeven democracy is redefined even if it isideologically utopic but neverthelesstechnically quite possible”.

Halil Öztürkci who talkedabout how difficult it is forcorporations and companiesto defend themselves againstcyber attacks on their own,underlined the scarcity ofexperts on cyber security.Öztürkçi added “The ability ofglobally known cyber securityservices to respond tocorporations’ and companies’needs is a vital issue. Cyberattack insurances are one ofthe measures that can betaken against cyber attacks.In the case of a cyber attackor data theft corporationsand companies can minimizetheir own as well ascustomers’ losses with thehelp of cyber insurances”.

11 June-July 2019

he Bursa District Office ofNART Insurance &Reinsurance BrokerageInc.., keeps on growing in

Bursa, one of the locomotive cities ofthe Turkish economy, thanks to itsconsequential services. Whileemphasizing that NART Insurance &Reinsurance Brokerage Inc.. is one ofthe most important solution partnersin Bursa, where the industry is rapidlygrowing, Boran İşletme, RegionalManager says “We are advancingthanks our experiences as one of thefirst brokers in Bursa. While wecertainly bear the formal institutionalcharacter of a broker firm in ourunderstanding of insurance we try tomaintain the closeness of an agency inour bilateral interaction with ourclients. As the NART Bursa Districtoffice we are constantly developingour relationship with our clients whileproviding them with the advantages ofour on the spot services”. İşletmepoints out that the growth rate ofNART Insurance & ReinsuranceBrokerage Inc.. reaches a skyrocketing rate of 70% in Bursa asopposed to an overall sectoral growthrate of 23%.

What are the factors that helpNART Insurance and Reinsurance Brokerage INC.Bursa District Office to distinguishitself from its competitors?Our business models are among theforemost factors that make usdifferent. In addition to that, the factthat we are serving with consistent

and experienced young employeeshelps us to expel among ourcompetitors. We are advancingthanks our experiences as one of thefirst brokers in Bursa. Given that Bursais very close to Istanbul, many brokersfrom Istanbul and exclusive agents didnot feel the need to open branches inBursa with the hope that doing longdistance business would be moreeconomical. We as NART Insurance &Reinsurance Brokerage Inc.. BursaDistrict office certainly bear the formalinstitutional character of a broker firmin while we try to maintain thecloseness of an agency in our bilateral

interaction with our customers. NARTInsurance takes its experiences to awhole another level by processing allthe information we gather from theentire sector in a common poolthanks to its ever-expanding globalnetwork, customer mass and districtoffices. We are one of the fewbrokerage firms that can use thisaccumulation of knowledge in themost accurate manner.

Can you evaluate the insurancepotential of Bursa, one of theregional locomotives of theTurkish economy?

NEWS FROM NART

NART Insurance & ReinsuranceBrokerage Inc.., one of thepioneer brokerage firms of

Bursa, is growing rapidly thanksto high levels of customer

satisfaction and the high-qualityservices it provides.

12 June-July 2019

T

RİSK&LİFE

NART GREW MORETHAN 70% IN BURSA

Pointing out that the talented andhard-working damage departmentis the most significant treasure ofNART Insurance, Boran İşletmemaintains “Unlike many otherbrokers, we inspect and follow upthe damage department with greatprecision within the framework ofour internal performanceevaluation process. Our speed andconsulting abilities with regard todamages increase our clients’loyalty. In addition to that, it hasvital impact on our attempts toacquire new clients”. İşletmeunderlines that they are accessible7/24 thanks to their call center thatis one of the few call centersoperated by a brokerage firm.

Our speed in damagecompensation and ourprecision are the mainfactors that distinguish us

13 June-July 2019

With its population approximatingalmost 3 millions Bursa is one of thefew cities where the labor force-population ratio is close to the level ofmaximum efficiency. In Bursa, the export rate is twice asmuch as the import rate. This amountof growth and globalization hasinevitably called forth a variety ofdemands for insurance as well as theneed for the service capabilities thatare inherent in the constitution of abrokerage firm. The economic developments andinvestments in the region are, at thesame time, enriching the populationof Bursa, which indirectly has apositive impact on individual insurancedemands. With newly openedhospitals, harbors opened due to itsgeographical advantage, warehouses,13 actively functioning industrialestates, wellness centers and aconstruction sector that is functioningconsistently while responding toactual demands; Bursa is adding up onits value each day. Bursa ranks first onthe list of average per capita insurancepremiums. It will continue to remainone of the main profit centers forinsurance companies and brokers

where the potential for insurance willgrow exponentially both today andtomorrow.

Customer satisfaction is crucial inyour sector. What does customersatisfaction mean to you? Whatdo you do to increase customersatisfaction?In addition the more conventionalmethods to increase customersatisfaction, we have to adaptourselves to the demands comingfrom the Y and Z generations.Nowadays, where the Y generation(those born in 1980 being the oldest)is increasingly having more say incorporate administration, newmethods to secure customersatisfaction are acquiringsignificance. The most popular onesof these methods are the privilegesyou will grant your clients viainformation systems anddigitalization. The telephone andweb applications we developed forour individual clients have beenactivated as of the first half of 2018.On the other hand, the automationsystem for the management of thecorporate insurances will be put into

operation very shortly. At themoment, our clients are able tocontrol their damage documents,bonds or their payments over theapplications while at the same timethey can report new damages or buyany other product, henceconducting all their transactions witha minimal time cost. In our countrywhere the Y and Z generations makeup the majority of the population,these and similar services willcertainly provide immenseadvantages to brokers and lead todistinguished service provision.

What are your expectations from 2019?We are planning to enlarge our Bursateam in 2019. Together with ourteam who are striving to developtheir skills and our public recognitionlevels in Bursa district, we areplanning on increasing ourrecognition levels in citiesneighboring Bursa like Bilecik,Adapazarı, İzmit, Yalova, Eskişehir,Bursa, Kütahya, Balıkesir whilerealizing new business developmentmethods in order to vitalize thepotential in those cities.

INTERVIEW

14 June-July 2019

We intend a healthy growthin the marine sector

NART Insurance and Brokerage plans onbeing the number one actor in the market

after making a leap forward in terms ofgrowth in the marine sector

he NART Insurance andBrokerage INC. made aleap forward in marine

sector. NART, which is active in 7 regions in Turkey and in 136 different countries through its partners, made the decision to broaden its services it provides in the marine sector. As a first step, a new department to operate in marine sector was opened.We discussed NART Insurance and Brokerage’s services and goals regarding marine sector with Management

T

RİSK&LİFE

NART Insurance just launched a newdepartment regarding marine sector.Why did you think that you neededthis department?

A corporation like NART Insurance,which holds the Lloyd’s license and henceis substantial for the insurance sector, hadgot to be seriously active in the marinesector. This was a given. This was themain reason why that department waslaunched.

What exactly are the plans to boostNART’s effectiveness in that area?

The marine market is probably thesingle most market where the sense ofbelonginess of the clients is the strongestand where the level of conservativeness isthe highest. Whereas in other areas, pricedifferences like TL 3-5 thousand cause thecustomers to change their insurancepreferences, in the area of marineinsurance much larger prices differencesprove to be not effective at all. Therefore,when it comes to marine insurance youneed to have a very serious and strongdamage team. In addition to that, marineinsurance requires a robust culturalbackground as well as a deep-rootedknowledge accumulation. Thanks to ourlong-lasting experience we can assure toour customers that we are in a position toprovide them with the best service possiblewhere we can compensate for their lossesinstantly without interrupting their liquidity.

What are your local and global goals in that area?

Our primary goal is to become thenumber one actor in the market. However,to achieve our goal we need to be patient.We will make progress steadily in order tomaintain a healthy growth. As aLloyd’sbroker we have some responsibilities

that we need to take into account in thisregard. We will grow steadily while we takethese responsibilities into consideration.

What does marine insurance include?Of course, the first thing that comes to

mind is the freight that is transported withships and planes. Then the second thingthat comes to mind are the ships andairplanes themselves. If we make a list,those are the items that need insurance…Cargo and passenger ships, yachts, fishingboats, seaplanes, passenger planes,helicopters, private plane. All kinds offreight that will be transported via sea andair. Port risk, marina operators’ liability,boatyard liability, P and I insurance, airplaneliability, loss of pilot’s licence…

What kind of a competition is awaitingNART Insurance? How do you plan ondistinguishing yourself?

A very harsh competition is awaiting us.There are a number of insurancecompanies in Turkey that have expertise inthese issues. On the other hand, we seemore brokerage firms than insurance firms.Therefore, inevitably one leans towardsinternational alternatives. Prices are alreadyvery affordable. Under these conditions, ithas to be the quality of the service that youare going to provide which is going to makethe real difference. You need to provideinstant and satisfying service, especially indamages. When it comes to damages, nomatter where on the world they are, andwithout any time constraint; you need to beable to act in line with your client. You haveto have a robust knowledge accumulation,you need to be able to respond to any kindof demand coming from your client andyou have to be able to lead your client tothe right direction. NART’s expert team iscapable to do all of these.

15 June-July 2019

How do the marine sector, andin relation with that, the marineinsurance, develop both inTurkey and worldwide?The marine sector develops parallelto the freight market. When theincome from freight increases, sodoes the income of shipowners.For the time being, we can arguethat the income from the freight isadequate. Seamen need to befinancially strong. The marketconditions are set by national andinternational factors. Veryunexpectedly, you can find yourselfin a position where you need tospend money. You can find yourvessel in a position where it needsto fulfill numerous not anticipatedrequirements. These requirementscan force you to spend a highamount of money. Therefore,companies will develop only thenwhen they invest their income onthe marine sector. Insurancerequires a different genre ofknowledge accumulation,experience and culturalbackground. To achieve this, youneed long term evaluations withoutfocusing on short term outcomes.The team that deals with theseissues has to have a high level ofexperience and compatibility. Theinsurance sector will develop onlythen when the company has faith inthe sector and the employeesconstantly rejuvenate themselvesby acquiring additional newknowledge constantly. Capacity isthe foremost requirement of thisdevelopment process. Insurancecompanies ought to increase theircapacity constantly and convertthemselves to a decision making,risk estimating institutions which, atthe end of this process, accept risksinstead of remaining as entities thatbuy and sell products in order toearn commission.

The marineinsurance policiesrequire a peculiartype of experienceand culture.

PRODUCT

Surety bonds which replace letters of guaranteeissued by banks and hence acquire a vital role inresponding to the surety demands of the privatesector are empowering private companiesespecially during public bidding processes.

SURETY BONDHAS REPLACEDLETTERS OFGUARANTEE

16 June-July 2019

RİSK&LİFE

urety bonds are slowlyreplacing letters ofguarantee issued by banksand have, hence, turned

into vital actors that empowercompanies especially duringbiddings. The demand for suretybonds, which provide guaranteeagainst the situation where thedebtor does not fulfill their liabilityvis a vis the creditor, is rapidlyincreasing. This demand risesintensely from companies operatingin the construction, production andenergy sectors and that take part inpublic biddings because the natureof surety bonds visibly came closerto letters of guarantee issued bybanks following the issuance of therelated Law published by the OfficialGazette in 2017. This allows thecompanies to respond to theirdemands by means of insurance, torelax their credit limits and empowertheir cash financing capabilities.

It was ordered by lawThe amendment made to the

Public Bidding Law 4734 that waspublished in the Official Gazette onDecember 5, 2017, allows thecompanies to submit surety bondsissued within the scope of suretyinsurance instead of letters ofguarantee issued by banks duringbiddings. So, a new epoch wherecompanies can submit surety bondsissued within the framework of asurety insurance prepared byinsurance companies that operate inTurkey instead of letters ofguarantee issued by banks is taskingoff. And hence, surety bonds cameto forefront as a new and additionalmeans to respond to the suretydemands of the private sector in aperiod where credit limits becamemore important than ever.

It does not effect the creditlimits

In addition to being an alternativeto the letters of guarantee issued bybanks, the surety insurance does noteffect the debtor’s credit limit inbanks. With the surety insurance,the insurance company becomesthe “guarantor” of the insured, i.e.

the bidder or the debtor, providinginsurance against the beneficiary, i.e.the creditor, in case the debtorcannot fulfill their liability as definedon the surety bond. The suretyinsurance agreement, i.e. the bond,is made between the insured andthe insurer. The document that isgiven to the beneficiary after theagreement is made is called thesurety bond instead of policy.Surety bonds are used like lettersof guarantee in many countries ofthe world, whereas the total of

the demand for letters ofguaranteed in the US market ismet by insurance companies.This ratio is 95% in South America,50% in Asia Pacific, and 25% inEurope. Whereas Surety Bondsare predominantly used inconstruction, production,construction-repair, energy andinfrastructure sectors, demandfrom all sorts of sectors is on therise. In our country they can beused in all kinds of publicbiddings.

17 June-July 2019

S n First of all, the company thatintends to take out a suretybond prepares the companydocuments like bankstatements, balance sheets,etc. It submits thosedocuments to the insurancecompany from which it intendsto take out the surety bond.

n After financial examinations,the insurance company makesfurther requests from theapplicant company whenneeded. Then, it prepares thenecessary agreements andbonds.

n The insurance companyissues a surety bond to begiven to the beneficiary afterthe request for suretyinsurance is approved.

HOW TO GET ASURETY BOND:

Levent Nart, CEO & President of NARTBoard of Directors explained that suretyinsurances, known as “Surety bond” or“Bonding”, provide assurance against therisk where the debtor fails to fulfill theirliability vis a vis the creditor. Nart wenton saying that in many countries of theworld surety bonds are used in a fashionsimilar to letters of guarantee issued bybanks. Nart stated “Following theamendment made last year, this

insurance began to be used instead of letters of guarantee issued by banks since it was granted a structure similar to the letters of guarantee. In the case where creditors from abroad demand a letter of guarantee from the debtor in Turkey, letters of guarantee submitted by surety insurers with high credit ratings are accepted automatically. Together with our global business partners, we, NART, are able to submit such letters of

18 June-July 2019

guarantee to business holders in case anyTurkish company needs them. Thisprovides corporations in Turkey with aninstant solution to their surety demands.Corporations can meet their needs viainsurance and hence relax their bankingcredit limits and enhance their financingcapacities in cash. And with specialclauses they can include in the insuranceagreement they can preempt any unjustfuture compensation demands.

n Creditors/employers fromabroad can ask for a letter ofguarantee from the debtorcorporation in Turkey. In case aninvestor is expected to have arate of credit rating that provesthat it is investible, letters ofguarantee issued by SuretyInsurers the credit ratings ofwhich prove to be compatiblewith national prerequisites will beautomatically accepted by thecreditor/employer from abroad.

n Thanks to the widespreadcorresponded banking networkof its global business partners,NART is able to submit the letterof guarantee directly to thecreditor/employer in its ownright without the need to resortto any other outside broker. Thisallows the corporations in Turkeyto meet their surety needsinstantly within the framework ofa competitive cost.

n Corporations can relax theirbanking credit limits and henceenhance their financingcapacities in cash. In addition tothat, they can preempt any futureclaim for compensation byincorporating the transactionand compensation clausesspecific to the insuranceagreement into the letter ofguarantee.

Advantages ofNART Surety Bonds

Companies are enhancing their financing capacities in cash thanks to surety insurance

n addition to conventionalwage management the age ofpersonalized solutions specificto each individual has began in

order to motivate belongingness andloyalty and increase motivation. In aninstitution where the school tuition of anemployee’s child is paid as a side benefit,the gym expenses of another employeewithout a child will be covered as analternative side benefit.

Individual annuity insurance, healthand life insurances are taking the lead

Side benefits are described as material ornon-material opportunities granted to the

employees in order to motivatebelongingness and loyalty and increasemotivation parallel conventional wagemanagement. ‘The employee side benefitsolutions’ which are the most obviousproof of the value given to the employeesendows companies with added value.

Side benefits provided to the employeeswho are the most valuable founding stonesof the corporate culture play aconsequential role in factors like long termemployee circulation, growth and profitrates. And they increase employee loyalty.

Employee side benefits can differ fromcompany to company. The factors thatcause these differences are factors like thegeneral expectations and needs ofemployees, sectoral applications, whetherthe company in question is local ormultinational and the budget of thecompany…

In Turkey employees are offered a varietyof side benefits like life insurance, personalaccident insurance, invalidity insurance,health insurance, critical illness insurance,company vehicle, gas money, carinsurance, lunch allowance, awards relatedto length of service, holiday allowance, clubmembership, day care allowance, individualannuity insurance, rent allowance, stock

THE NEW WORLDWIDE TREND,PERSONALIZED SIDE

BENEFITS FOR EMPLOYEES

Personalized solutionsspecific to each individualare the new trend both in

Turkey and worldwide inrelation to side benefits for

employees. While anemployee who has a childcan ask for the fee of their

childs daycare, anotheremployee who does not havea child can demand for their

gym expenses to be covered.

TREND

RİSK&LİFE

19 June-July 2019

I

partnership, allowance to learn aforeign language, daily commuteallowance, clothing allowance.

Pharmaceutical, fast movingconsumer goods and automobileindustries take the lead

NART Insurance and ReinsuranceBrokerage, which constructs sidebenefit packages that will maximizeemployee benefits by making analyseswith an emphasis on not strainingprofitability goals is a vital partner ofcompanies in that regard…

According to the data provided byNART Department of Side BenefitSolutions for Employees, healthinsurance, individual annuity insuranceand life insurance are among the topemployee side benefits Turkishcompanies offers their employees.

When it comes to the question ofwhich sectors take the lead in offeringside benefits, we see those sectorswhere international structures, humanresources quality and sustainability are apriority take the lead in offering sidebenefits.

Pharmaceutical, fast movingconsumer goods (FMCG) andautomobile sectors are the leadingsectors that offer side benefits to theiremployees.

Preferences vary according to age,sex and marital status

NART Department of Side BenefitSolutions for Employees drawsattention to the fact that currentlypersonalized side benefits foremployees are on the rise. Forexample, since in a corporation wherethe school tuitions of employee’s kidsare paid as a side benefit an employeewith no child cannot benefit from sucha side benefit, their gym expenses arecovered instead. On the other hand,benefits are being distributed notaccording to the employee’s rank butaccording to the value the employee inquestion adds to the company as wellas to their performance. According toNART Department of Side BenefitSolutions for Employees, more flexibleapproaches and applications that targetfamilies are increasingly gainingpredominance in the Turkish businessworld.

Employee’s age, rank, sex and maritalstatus are the major factors determiningthe nature of the flexible side benefitpackage. While single employees prefercheck-ups, holiday and gym allowancesover health and life insurances, marriedemployees prefer individual annuityinsurance, life insurance for the spouseand gym allowance.

Side benefits thatcompanies inTurkey offerLife InsuranceInvalidity InsurancePersonal Accident InsuranceHealth InsuranceEyeDentalCheck-upCritical Illnesses InsuranceTravel InsuranceCompany vehicleGas AllowanceCar InsuranceCellphonePaid VacationFuneral ExpensesLunch AllowanceAwards related to length ofserviceCompany ProductsDiscount in companyproductsSchool tuition allowanceHoliday allowanceExtra circular activityallowanceClub MembershipDay Care AllowanceNew Years allowanceStock partnershipIndividual Annuity InsuranceRent allowanceStore creditsProfessional periodicalsubscriptionProfessional clubmembershipHome internet subscriptionAllowance to learn a foreignlanguageHome-Office shuttleClothing allowanceExtra curricular activitycourse feeReligious holiday feeHeating allowanceCommute expenses

20 June-July 2019

Müjgan Kocabaşoğlu, DeputyGeneral Manager for SideBenefit Solutions forEmployees, explains thathealth insurance, individualannuity insurance and lifeinsurance rank among the topside benefits that companies inTurkey offer.

he buildingcompletion insurancethat was put intoaction by the Ministry

of Commerce, to prevent thepotential agony of those whoprepaid for an incompleteresidence before its constructionbegan, nearly three years ago, willsoon be compulsory. The buildingcompletion insurance that was putinto action with the new ConsumerLaw in 2015 but was not welcomeby the construction industry is onthe agenda again… The

Environmental Law and The LawProposal pertaining to AmendCertain Laws that is currently beingdiscussed in the Parliament aregoing to make insurance inconstructions compulsory. In casethe proposal is accepted by theParliament, contractors will belegally asked to take outconstruction insurance before theyare granted construction permit.

The era of agonized home-buyers comes to an end

The building completioninsurance, which is a kind of surety

insurance, is defined as a guaranteecontact that insures the installmentspre-paid by the home-buyers, apayment method that is generallyknown as “house sale from themodel”. The building completioninsurance was first discussed in2014. The Ministry of Commercepushed the button for a buildingcompletion insurance in May 2014as a result of the increase in theamount of agonized home-buyersgiven the rise in the number ofconstruction companies that wentbankrupt. After the Undersecretary

BUILDING COMPLETION

INSURANCE WILLBE COMPULSORY

The BuildingCompletionInsurance thatwas put intoaction in May2015 in order toprevent the agonyof home buyersbut was notwelcome by theconstructionindustry will soonbe compulsory

HOUSING

RİSK&LİFE

21 June-July 2019

T

of Treasury specified the general conditionsso that the insurance could be applied, theLaw was put into action in May 2015.

Insurance prior to Construction Licensewill be compulsory

The Parliament began to discuss TheEnvironmental Law and The Law Proposalpertaining to Amend Certain Laws to bring anew dimension to the building completioninsurance. There are amendments in the LawProposal which intend to make the buildingcompletion insurance compulsory. In casethe proposal is accepted, contractors will takeout a building completion insurance beforeapplying for a construction license, whichhopefully will prevent the potential agony ofhome-buyers. According to theEnvironmental Law and The Law Proposalpertaining to Amend Certain Laws “Theminimum level of job experience, technicalendowment, and financial status of thebuilding constructors who are responsible forthe conduct of the construction of thebuildings on the risky and reservedconstruction sites will be preset by theMinistry in order to prevent the agony causedby constructors. It will be made compulsoryfor the constructors to take out a buildingcompletion insurance and make sure that thewarranties and conditions preset by theMinistry are met before the constructorsapply for a construction license”.

What kind of advantages does theBuilding Completion Insurance Provide?The Building Completion Insurance has many different properties as opposed to itsalternatives like letters of guarantee issued by banks, the progress billing system, andany other alternative system accepted by the Ministry.

The fact that no warranty is demanded against the liabilities, lowers the costs and itgives additional time to the constructor. These are several of the main factors thatmake the Construction Completion Insurance different than letters of guaranteeissued by banks.

That the entire revenue from the prepaid home sale is available to the constructorconstitutes the main difference between the Building Completion Insurance and theprogress billing system.

Given that, like any other kind of Surety Bond, the Building Completion Insurance isnot among the passive (debts) items on the balance sheet it makes the balance sheetof the constructors stronger.

As far as the consumers are concerned, it provides a significant advantage since, inaddition to taking the payments of the consumers under guarantee, it delivers a non-cash resource to the national economy.

The insurance premiums arepaid by the constructioncompaniesAccording to the conditions set by the Undersecretary ofTreasury, the construction companies prepare a policy for theprepaid housing project and specify a surety corresponding tothe amount that is subject to prepaid sale. The insurancepremiums are paid by the construction companies.

Insurance companies prepare a policy after scrutinizing thefinancial structure of the construction firms and their pastperformances within the scope of the building completioninsurance. The insurance company can issue the insurancedirectly or ask for additional collaterals in case it finds theconstruction company to be risky or unable to complete theproject. By the same token, if the construction company failsto fulfill its liabilities against the insurer or engages in actionsthat can potentially jeopardize its existing financial status; theinsurance company has the right to end the contract andinform the Ministry about the situation. This way, theinsurance companies act as a surveillant during the periodfrom the beginning until the end of the construction process.

The insurance becomes effective when the constructioncompany goes bankrupt or fails to turn in the residencesduring the 12 months following the termination date of theproject as laid out in the contract. The insurance companypays the down payment as well as all the installments paid bythe consumer up until that date, as well as all the accruedamount of interest back to the consumer.

tt

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22 June-July 2019

INTERVIEW

RİSK&LİFE

23 June-July 2019

The Lloyd’s license willopen new doors to NART

on its global journeyNART Insurance and Reinsurance Brokerage made a first stepinto Lloyd’s, world’s oldest insurance market, which has a long

waiting line of numerous insurance and reinsurance brokersworldwide.. worldwide that are expecting to be a member of

Lloyd’s. While pointing out that they are the first Turkishcompany to receive the Lloyd’s license, Denise Nart, ExecutiveBoard Member , says “This license will enable us to offer our

customers more creative products”.

he English Lloyd’s isthe oldest insurancemarket of the worldthat dates back to1688. Currently it has a

premium volume close to GBP 33.5billion.

This market which a lot of brokerfirms aspire to be a member of has anew member: NART Insurance andReinsurance Brokerage…

NART, the biggest insurancebroker with 100 % Turkish capital thatis about the celebrate its 20thanniversary, is the pioneer companyin Turkey to receive the Lloyd’sLicense. Denise Nart, Executive BoardMember and NART, says “There are justabove 300 thousand brokersworldwide and only 293 of them haveLloyd’s license. And NART is one ofthem”, after emphasizing that receivinga license from Lloyd’swhich is the moststrict insurance markets of the worldthat has very demanding requirementsof acceptance is going to boost theirgrowth.

Denise Nart talked about the valuesthat Lloyd’s going to add their companyon their global journey, their futuregoals and the changes in the sector toRisk&Life

What exactly is Lloyd’s and why is it so vital?

Lloyd’s is a unique and peculiarinsurance institution. It is not aninsurance company. It is more like anassociation or a union of companiesthat issue insurance guarantee. At thesame time, it is a center for navalintelligence. What distinguishes Lloyd’sis the fact that all the members bearliability with all of their assets whereasthey do not have direct contact withthe insured parties since the interactionis realized via individuals or companiesthat are called “Brokers”. With a GBP33.5 billion premium volume and 99Syndicate members Lloyd’s is theoldest, most widely known and mostinnovative A category insurance marketof the world where only 293 firms candirectly register transactions.

Who can receive the Lloyd’slicense? How do you apply for it?

In order to qualify for the Lloyd’slicense you need to go through a

number of auditionprocedures. You have to fulfill a varietyof prerequisites for adjustment to beable to be a member of an institutionwith the world’s most strict surveillancemechanism. NART’s local andworldwide reputation helped us toopen the doors to Lloyd’s. You areevaluated based on many criteria fromthe way you conduct business to thetechnical compatibility of youremployees, let alone criteria like yourfinancial knowledge, your professionalliability limits and the annual turnoveryou target.

How many worldwide and Turkishbrokers with a Lloyd’s license arethere?

There are approximately more than250 thousand brokers worldwide andonly 293 of them have a Lloyd’s license.In Turkey there are only 2 brokers,including NART, that posses a Lloyd’slicense.

With what kind of an added value

does the Lloyd’s license provideNART?

The Lloyd’s license can open a lot ofnew doors to us. Thanks to this newqualification that we have recentlyacquired we are planning to enrich ourreinsurance transactions in addition to ourretail brokerage as well as to offerdifferent solutions to our clients. We alsointend to realize our internationalbusiness plans that we have on our longterm curriculum. NART is serving itsclients in 130 countries with 120insurance and reinsurance companies.This license is going to help us to offermore creative solutions to our clients. Inaddition to big industrial firms and specialclients, NART is going to assist insurancecompanies both in Turkey and otherdeveloping countries as a ReinsuranceBroker. Establishing facility with thesyndicates that bear the risks and offeringspecial and instant solutions to our clientsand business partners among ourforemost goals.

24 June-July 2019

What isLloyd’s?Lloyd’s has a uniq

ue structure

that goes beyond an insurance

firm and is defined as a market

constituted by individuals and

firms that issue insurance

guarantee. This giant market,

which is active in a variety of

insurance branches, dates back

to 1688. The coffee house that

was owned by Londoner

Edward Llyod was not only a

meeting point for ship owners

and businessmen but also a

spot where marine trade was

conducted. The tradesmen

used to issue insurance for the trad

e ships and their freight. After Edw

ard Llyod

passed away, these men founded

an association among themselves a

nd they

named this association Lloyd’s. Fo

llowing a law that passed by the Br

itish

Parliament in 1871, Lloyd’sbecame

a union and a market. Whereas in

its initial

years it was only active in marine in

surance with time Lloyd’sexpanded

its scope to

include land insurances as well. It g

radually evolved into an institution

where all

kinds of insurance can be issued.

T

As the second generation of NART, can you talk about your future goals?

Ever since the first generation of NART our primary goalhas been to increase our customer satisfaction, reputationand profitability. There are some major issues which I havespecifically specified as our target. These issues aredigitalization, high customer satisfaction and increasing ourgrowth rate by strengthening our reinsurance transactions. Asthe management of the company, we are very muchinterested in digitalization. With the help of various digitalplatforms, mobile applications we will decrease our costs andboost of efficiency by providing us with tools that will simplifyand hence speed up our internal operations. In addition tothat, developing different insurance products by expandingour reinsurance team is also among our main goals. The factthat we are the biggest Turkish company that has the right tooperate in the largest insurance market of the world is a firststep taken on our way to realize those goals.

How do you asses the progress of insurance and brokerage sectors in Turkey?

When we take the demographical constitution,geographical location and the population of Turkey intoconsideration, we see that we have an enormous potential ininsurance. Considering the size of the insurance companies,their profitability, the reinsurance opportunities and theexisting 80% presence of international players in the market, itcan be argued that we are making significant progress.However, when we make a comparison with other countries itbecomes obvious that the insurance penetration in Turkey israther low. The per capita insurance generation in Europe,

Technological transformation

will lead to competitive

advantage

Denise Nart, who points out t

hat technological

developments open a new pa

ge in insurance

sector, says that the digitalizat

ion process is

speeding up. After explaining

that time is

increasingly becoming more p

recious in a world

where everybody’s workload i

s so heavy, Nart goes

on saying “It became quintess

ential for our clients

as well as for us to be able to

save time in such a

busy world. We are all going

through a massive

transformation now that the u

se of digital means is

more widespread than ever an

d our clients’

expectations has changed dra

stically.” Emphasizing

the fact that technology has t

o be an indispensable

component of insurance firm

s, Nart argues the

correct usage of technology in

long term is going

to lead to competitive advant

age for brokers and

insurance firms. Nart goes on

saying “It is more

vital than ever that insurance

companies and

brokers adapt the products an

d services they offer

to new technologies in a very

dynamic fashion.

Take for example the issue of B

lockchain…

Blockchain is a data registratio

n system that makes

following the encrypted trans

actions possible. It

enables the recruitment of mo

stly everything from

tangible assets to electronica

l currencies. We

believe that, in the long run, B

lockchain is going to

increase the quality of data in

insurance market,

decrease the operational and

transactional costs,

turning into a platform that is

100% transparent

where fraud and cyber attacks

are going to be

nearly impossible. 25 June-July 2019

which is $1620, falls down to$164 in Turkey.

One of the leading causesbehind this is Turkish people’scultural approach to insurance,the fact that societal awarenessis yet to embed itself entirely,lack of trust towards insurancecompanies and the lateapplication of compulsoryinsurances. Nevertheless, thereis no need to be pessimisticbecause of these low numbers.Because low insurancepenetration means that Turkeyhas still a long way to go in theinsurance sector. There is hugegrowing potential in the Turkishinsurance sector and as Turkeyitself grows the insurance sectorwill grow more rapidly.

When compared to worldmarkets how does Turkeyappear?

When we compare the insurancesector in other countries to theTurkish insurance sector we see thatthere are obvious differences in thedistribution between the life non-lifeinsurance. The 85% of the TL 46.5million worth of gross premiums in2017 is made up by non-life insurances.Among non-life insurances brancheslike compulsory traffic insurance, carinsurance, fire and natural disastersinsurance, health insurance and generaldamages insurance come to forefrontwith 26, 20, 17, 12 and 12 % respectively.Life and health insurances correspondto the 15% of the total premium volumeof the insurance sector. In Europe thedistribution between the life and non-life insurances is in a range of 60 vis avis 40% respectively.

How did the recent fluctuations inthe Turkish economy impact theinsurance sector?

Insurance companies set their policyprices and conditions at the beginningof each term. Since the inflation rateturned out higher than expectedinsurance companies are now at a loss.Why exactly? Because damagesbecame more costly than expectedgiven the high exchange and inflationrates, which, in turn, leads to technicalloss. The volatility in exchange rateshas a variety of additional effects on the

insurance sector. The rise in theexchange and inflation rates might leadto an eventual decrease in thepenetration rate. The shrinkage in thepurchasing power of the consumerslead them to not buy insurance. Forexample, the decline in consumercredits causes a decline in the sale ofcars, commodities and realty which inturn leads to a real reduction in car andlife insurances. The fact that a lot ofcompanies go bankrupt and make anofficial demand for a debt paymentarrangement has an indirect effect onthe insurance sector. For instance, carsales are rapidly dropping causing astagnation in the sale of car insurances.Nevertheless, instead of feelingpessimistic we need to focus on whatwe can learn from thesedevelopments.

In future robots will conduct thepricing New risks are emergingworldwide. What are some risks thatwe will be discussing in near future?

The world is getting mobile. Theinteraction between human beings andmachines bring new dimensions to theway data are used. Right at themoment 6 billion intelligent devices are

connected to each other via cloudtechnology. This number isexpected to rise to 20 billion in 2020.The automation technologies thatmake up the industrial revolution 4.0interact with each other via cloudtechnologies. All systems likepersonal computers, servers,telephones, communication andglobal positioning systems,production lines, stock exchangemarkets, banks, insurancecompanies, credit institutions,electrics and natural gas networksetc. that can interact with eachother do so by using the samecloud technology. This bringsalong a never seen beforeefficiency as well as some risks.Therefore, we are giving asecond thought to our old waysof doing business and our oldsecurity systems. Recently wehave been confronting thenotion of cyber attacks a lot.Insurance sector as well is very

much interested in cyber risksas, according to recent research

results, cyber risks are rapidlyincreasing on the list of the most vitalrisks. In order to prevent the threadsand the costs of data abuse companiesare increasing their security spending.Therefore, I believe that in the coming5 years the fastest growth in premiumswill be in the cyber insurance products.

What will be some factors yet toemerge in the insurance sectorthat will expand the market?

We are approaching an era whererobots are going to accomplish thetransactions regarding insurancesspecific to individuals as well as pricing.Artificial intelligence will be widely usedboth in product development andpricing. During my Underwriter jobwith Allianz Global Corporate Specialtyin Munich, I realized that artificialintelligence played a larger role thanhumans in pricing. On the other hand,we will see that multicultural humanresources will be more intensely usedin the insurance and brokerage world.I think, especially the sale of insuranceslike liability, professional liability,creditor risks, stem cell therapyinsurances will increase.

Global warming made

us to take radical

decisions in relation to

the insurance sector

While explaining the fact that,

environmental factors had an

impact on

the insurance sector as well,

Denise Nart

draws attention to how the A

greement

that was signed in Paris to de

crease the

global warming below 2°C in

fluences the

insurance sector. Nart says “A

s a result of

this agreement, The Swiss Re

, one of

world’s largest insurance com

panies in

terms of stock value, has ann

ounced that

they are not going to work wi

th any of

the more than 30 firms doing

thermal

coal business. In addition to

that, the

French insurance company S

cor Re and

the German conglomerate Al

lianz have

made it clear that they no lon

ger will

work with thermic coal mine

s”.

26 June-July 2019

NEWS FROM NART

RİSK&LİFE

27 June-July 2019

Mr.Gokhan has significant experience in various fields of insurance industry,handling local and international insurance programs,Developing Business,Sales and Marketing,Management of Claims Operations etc.

This November, the employees of NART Insurance &Reinsurance Brokerage Inc.. ran for charity within the scope ofthe 40th Vodafone Istanbul Marathon. The volunteeremployees of NART Insurance participated in the 40th IstanbulMarathon in order to create awareness for kids with autism inthe name of Tohum Autism Foundation. The volunteers fromNART have hence made an important sacrifice to take part in afundraising campaign to raise money to cover the schooltuition of a kid with autism for a year. They have contributed tothe Tohum Autism Foundation with their high level of energy,intentness and a positive attitude. The school tuition of astudent for the year of 2019 who was not even able to speakthe day they started to attend Tohum will be covered with themoney raised thanks to efforts and contributions of NARTemployees. NART and Tohum Autism Foundation will surveilthe progress of this student through periodic progress reportsthat Tohum Autism Foundation is going to submit to NARTInsurance.

NART ran for charity

Executive take over in the NART ClaimsDepartment

NART Insurance & Reinsurance Brokerage Inc.. which is active in all 7 regions of Turkey and 136 countries worldwide increased its stakes in the competition in Marine Insurance. Mr.Gokhan Ozakinci, has been actively working in the insurance ındustry for 31 years was promoted to the management of the Claims-Private & Commercial Solutions as Assistant General Manager.

At the briefing organized by IstanbulChamber of Industry the issue of “The RealEconomy and Insurable Risks” were broughtto table. At the meeting which was chairedby Levent Nart, CEO & President, Aslı YeniceÜnalsın and Murat Işıklı, our Deputy GeneralManagers, who each are experts in their ownfield, took part as speakers, issues andsolutions related to insurance as well asthose other not so relevant issues werediscussed. Information on issues likeCorporate Risk Management in RealEconomy, The Definition of Heavy, Mediumand Light Risks, Fire, Business Interruptionand Liability Risks, Cyber Risks and CreditRisks, Transportation Risks and things thatneed to be done in the case of a damageswas shared.

The issue of insurable risks were brought to table at ISO

28 June-July 2019

Brokers havediscussed worldeconomy andinsurance in China

NART Insurance and Reinsurance Brokerage, thebiggest insurance company in Turkey with 100%local capital, will celebrate its 20th anniversary in2019. Getting ready for its 20th anniversary,NART Insurance and Reinsurance Brokerage isenjoying 2 happy news at the same time. NARTInsurance and Reinsurance Brokerage becameone of the pioneer companies in Turkey that wasgranted with a Lloyd’s license, a license only 275of more than 300 thousand brokers posses.After pointing out that they are proud to receivethe Lloyd’s license, which is granted by the world’soldest insurance market with a 300 year old history,that selects its members very carefully and has verydemanding prerequisites for acceptance; Levent Nart,CEO & President of NART Insurance and ReinsuranceBrokerage, said “We feel that we owe special thanks toour technical team, financial team and to all ourExecutives and employees; especially to Denise Nartwho has maintained our coordination with the Lloyd’s

headquarters with great devotion throughout the entireperiod beginning with the decision we took 2 and ahalf years ago to this day where we received theprivilege to be granted with the Lloyd’s license. Wehope that being the Licensed Broker of Lloyd’s, world’slargest center for special insurance solutions with apremium volume of GBP 33.5 billion where only 287brokers can directly register transactions will bringnothing but fortune not only to us and to the sector ingeneral”.

Denise Nart, Executive Board Member ofNART Insurance and Reinsurance Brokerageand Erdem Altın, Director of CorporateSolutions participated at Shareholding’sMeeting organized by one the shareholders,Brokersling AG, that took place in Hong-Kong on September 11-12, 2018. In theorganization where 160 experts from 60different countries took part topics like theChinese economy, changing risks, insurtechand customer experiences were touchedupon.

Savaş Yıldız became the new Director of the Antalya District Office of NARTInsurance and Reinsurance, INC. Yıldız, who worked as an executive in variousother parts of the Mediterranean Region as well as in Antalya for many years, willbe responsible for the company’s growth in the region.

Savaş Yıldız was promoted toAntalya NART Regional Office

NART is a proud Lloyd’s license owner

The 13th ContemporaryIstanbul Art Fair welcomed itsvisitors with the ‘insurance support’of NART Insurance andReinsurance Brokerage. NARTInsurance and ReinsuranceBrokerage, INC. providedinsurance support for this giantorganization, which took part onSeptember 9-23, 2018, where,thanks to the participation of 83galleries, approximately 2000pieces of art work by 650 artistsout of which 200 were from othercountries were displayed. Duringthe fair, visited by 74 thousandpeople within 5 days,representatives from NARTInsurance enjoyed the intenseinterest for “Art Insurance” andresponded to questions ofcollectors, gallery owners andartists.

Although their actual area ofexpertise is risk management,emphasizing that everybody atNART Insurance and ReinsuranceBrokerage prefers to define life viaits beauties, Levent Nart, CEO &President of NART Insurance andReinsurance Brokerage, said “We

enjoy supporting art because,thanks to its unifying power thatbrings the members of thebusiness world closer, itcontributes to the developmentsof economic relations while at thesame time contributing to thereputation and brand value of bothour country and Istanbul. Withinthis framework we decided to be apart of Contemporary Istanbul,which grows each year by addingup to its number of visitors andhence is the most important artevent in its region once more in2019 in order to support thegrowing art environment of Turkey.

After pointing out that theyinsured this giant organization,visited by 74 thousand people in 5days, against any potential risk aswell Nart explained “Besidesanswering questions relating to ArtInsurance on our own standlocated in a very busy spot of theFair, we had a lot of fun and madevaluable memories together withthe artists thanks to the interactiveenvironment we created. We wantto thank to all the artists whovisited our stand”

29 June-July 2019

Insurance support from NART for art and artists

Insurance and Reinsurancefirms met in Dubai

NART Insurance and Reinsurance Brokerage hascompleted its strategy meetings. In the spring termof the biannual strategy meetings in addition tobudget plans topics like company procedures werediscussed.

In those meetings employees receiveeducational support via parallel workshopsintending to contribute to their professional andpersonal development.

While the first one of these biannual meetingstook place at NART Business Center, the secondone was realized in a holiday resort close toIstanbul. Employees from the headquarters as wellas from districts participated together in thosemeetings. The strategy meetings which bare greatimportance since they consolidate family andcorporate culture while the same time creating afoundation on which employee relations are built.

Insurance and reinsurance firms as well as the brokerageworld came together in Dubai. The Dubai World InsuranceCongress organized in Dubai on February 27-28, 2018,brought world’s leading insurance and reinsurance firms

together. Aslı YeniceÜnalsın ,NART’sDeputy GeneralManager forCorporate Solutions;Denise NART,Executive BoardMember and EdaOkur, Director ofCorporate Solutionsalso participated in theCongress. During thecourse of theCongress they tookpart in meetings withthe intention to get toknow the reinsurancemarket of Dubaicloser; to developnetworks in order tooffer better services

regarding reinsurance both to our clients and to insurancecompanies; to make potential job interviews and to familiarizeourselves with new markets.

At the Congress, where 700 participants took part, theparticipants had the opportunity to meet companies like SwissRe, Munich Re, Partner Re, AGCS in addition to Asia basedreinsurance firms like Samsung Re, Korean Re as well asLloyd’smember firms from Dubai.

NART Insurance and Reinsurance Brokerageconducted its Budget Meeting at the NARTBusiness Center with the participation of theExecutives in order to discuss the 5 year longbudget plans of all departments. In the meetingthe vision to become the leading brokerage andconsulting group preferred by both

international andlocal players notonly in Turkey butalso in proximatecountries wasonce moreunderlined. Afterpresenting theSWOT analyses ofall departments aplan as to howtake strongersteps as acorporation wasmade. In addition

to that, Denise Nart, Member of ExecutiveBoard shared significant information about theLloyd’s membership. Exchange of ideas wascontinued in the aftermath of the meetingduring the consultation dinner where DistrictManagers and Members of Board of Directorstook part as well.

The 5 year strategic plansof departments are ready

NART Employees completedthe strategy meetings

30 June-July 2019

NART Insurance andReinsurance Brokeragebecame the insurancesolutions partner ofTANAP, Europe’s biggestenergy project. NART isabout to imprintadditional prestigiousprojects in the comingterm.

NART Insurance and ReinsuranceBrokerage is putting its signatureunder worldwide significantprojects. TANAP, Turkey’s andEurope’s biggest energy project, isone of them… TANAP which isbeing constructed by Turkey andAzerbaijan since 3 years to transmitthe Azeri natural gas to Europe viaTurkey is insured by NART Insuranceand Reinsurance Brokerage.

We will put our signature underadditional projects

The Trans Anatolian Natural GasPipeline Project, i.e. TANAP, waslaunched on June 12, 2018 with aceremony where Recep TayyipErdoğan, President of Turkey;Mustafa Akıncı, President of theRepublic of Northern Cyprus(KKTC); İlham Aliyev, President ofAzerbaijan; Vucic, President ofSerbia and Petro Poroşenko,President of Ukraine participated.TANAP will meet nearly 12% ofTurkey’s entire natural gas demandby itself, thanks to its 16 billion m³transmission capacity and 1850 km

length. Representatives of NARTInsurance and ReinsuranceBrokerage, who draw attention tothe fact that Turkey is increasinglygetting more crucial since itconstitutes an energy conduitthrough which the energyresources on the eastern side ofTurkey are transmitted to Turkey’swestern neighbors, explain “Inrecent years a significant amount offoreign direct investment inelectrics, gas and water sectors hasbeen realized which in all likelihoodbe continued”. NARTrepresentatives point out thatTurkish engineers have achieved aperformance volume close to $ 335billion in 8 830 projects over 113countries and say that Turkeybecame the second on the list ofWorld’s Biggest 250 Engineers in2016, and they expect the rise ofthe Turkish investors to continue.They also emphasize the fact that

NART will continue to imprint manymore prestigious projects.

Energy Investments will continue to grow

NART representatives whoemphasize that the recent growthin energy investments are providingthe insurance sector with crucialopportunities explain: “The installedelectricity power in our countryincreased from 78 599 MW in 2016to 82 312 MW as of October 31,2017. In 2018 the focus shifted topotential local energy investments.These investments will play a crucialrole for the insurance sector as theyare going to enlarge the existingpie. At the moment, the risks ofinvestors are varying given thechanging economic conditions andthe developing economy.Currently, the investors areconsidering insurance products likethe Surety Bond, which replaces theletters of guarantee issued by banks,and Cyber Insurance in addition tothe insurances to warranty thefacilities against existing risks. Atthis stage, the role of the brokercomes to forefront to be able toaccess the right product. Thanks toits expert team and widespreadpartner network, NART willcontinue to be in the service ofinvestors as the most pertinentsolutions partner”.

NEWS FROM NART

RİSK&LİFE

31 June-July 2019

NART’s signature on Europe’sbiggest energy project, TANAP

The insurance sectorcontinues to provide theTurkish economy withguarantee. According tothe numbers of the thirdquarter of 2018 the sectortook on TL 25.9 billioncompensation.

nsurance Association ofTurkey (IAT,TSB) announcedthe technical and financialnumbers pertaining to the

third quarter of 2018. According to thenumbers gathered from the membercompanies, the insurance sectorcontinued to provide the economy withguarantee thanks to the TL 25.9 billionworth of warranty, which increased by26.5% in comparison to the same termof the previous year, it took on as of theend of the third quarter of 2018.

When compared to the same term ofthe previous year, we can see that thepremium generation increased by 19.8%in non-life branches and by 8.5% in lifeinsurance which corresponds to a 18.1%increase on average. This means thatpremium generation in non-lifebranches equals to TL 34.1 billionwhereas it is TL 5.4 billion in lifeinsurance which means a total premiumgeneration worth TL 39.5 billion. It wasobserved that the stabilization of thecredit volume that used to have apositive impact on higher growth ratesof life insurance in previous terms had alimiting impact on the growth of lifeinsurance.

TL 1.5 billion worth of premium wasgenerated in participation insurance

According to the numbers announced

by TSB the total premium generation roseto TL 1.5 billion whereas the share of the 7companies that are active in participationinsurance in the total premium generationrose to 3.8%. The size of assets of theinsurance, reinsurance and pensioncompanies increased by TL 175 billion i.e.a 21.7% increase in comparison to thesame term of the previous year whichcorresponds to an increase to TL 22.5billlion.

The numbers announced by TSBdisplayed the latest situation in IndividualAnnuity Insurance as well. Accordingly,the number of participants in the

Individual Annuity Insurance Systemrose to 6.9 million as of December 14,2018; and the size of the bond(including the government subsidy) toTL 86.7 billion. It was observed that, asof November 21, 2018, the contracts ofthe 5 million participants out of the 14.1employees who joined the System as aconsequence of the automaticenrollment that started in 2017 are still inforce, whereas the ratio of those wholeft the system turned out to be 66%.The fond size of those participantswhose contracts are still in forcemounted to TL 3.8 billion.

NEWS

RİSK&LİFE

Insurance companies adopted TL25.9 billion worth of compensationduring a period of 9 months

32 June-July 2019

Name of the Branch Total Generation (TL) Market Share % Change(%)

Aircraftf 62.593.376 0,15% 65,01%General Liability 1.224.520.638 2,92% 41,02%Credit 229.347.303 0,55% 39,65%Naval Vehicles 272.193.391 0,65% 37,36%Transportation 743.145.820 1,77% 29,39%Aircraft Liability 71.293.286 0,17% 25,79%Traffic-including Green Card 13.707.919.721 32,73% 23,73%Illness-Health 5.365.804.425 12,81% 23,71%Land Vehicles Liability 14.202.907.932 33,91% 22,64%General Damages 4.760.478.093 11,37% 21,01%Fire and Natural Disasters 5.999.807.706 14,33% 20,96%Naval Vehicles Liability 30.973.958 0,07% 19,19%Land Vehicles 6.819.086.618 16,28% 11,83%Car Insurance 6.819.086.618 16,28% 11,83%Accident 1.623.823.971 3,88% 6,98%Surety 48.267.375 0,12% 2,29%Rail Vehicles 0 0,00% 0,00%Financial Loss 282.193.494 0,67% -0,07%Legal Protection 145.433.945 0,35% -31,17%Support 137.350 0,00% -89,58%Non-Life Total 41.882.008.681 86,8% 20,0%Life Total 6.379.541.429 13,2% 2,2%Grand Total 48.261.550.110 100,0% 17,3%N u m b e r s u p u n t i l N o v e m b e r 2 0 1 8

I

While evaluating the numbers theyannounced and as well as the mostrecent developments Mehmet AkifEroğlu, Secretary General of TSB,pointed out that insurance sector isthe second largest of the financialmarkets following banking and said“The insurance sector is strategic forthe Turkish economy in terms of thecritical functions it performs”.

Drawing attention to the fact thatby granting a guarantee worth of TL107.2 trillion, which 35 times morethan the GNP in 2017, the insurancesector continued to play a key role inallowing investments to be made andsustained, Eroğlu maintained: “Withthe revival that started as of the endof 2016 the Turkish economy, thanksto a 7.4% rate of growth thast wasbeyond expectations, turned out asthe fastest growing economy of G20in 2017. Whereas the increase ininsurance premiums progressedparallel to the national economy, thetrajectory of the sector was shapedby specific sectoral developments likethe pool of risky insureds as part ofthe fees and the compulsory highway

financial liability being that was putinto effect last year”.

There was a shrinkage in thesecond half of 2018

Eroğlu emphasizes that thepremium generation reached TL 46.6billion with a 2.7% real growth rate asof the end of 2017 and adds “In thefirst half of 2018 our sector continuedto grow in line with the nationaleconomy which was growing with a5.2% rate. However, the second halfof 2018 witnessed a real recession inthe insurance sector given theshrinkage of economic activities andcredit volume in relation with theincrease felt in the exchange andinterest rates. Leaving aside theindirect generation that result fromreinsurances, we see that the sizenon-life insurances is falls down to TL31.1 billion with a 7.3% real decreaserate whereas the size of lifeinsurances falls down to TL 5.4 billionwith a 12.8% real decrease rate as ofthe first 9 months of 2018. The grandtotal of premium production of non-life and life insurances, aside from theindirect productions, turned out to be

TL 36.5 billion with a 8.1 % decline”.

We provide 200 000 jobsincluding sub-sectors

Eroğlu draws attention to the factthat the insurance sector contributesto the sustainability of economicactivities and the protection ofindividuals by paying compensationfor the risks it takes under warrantyand argues “As of the 6th month of2018, our sector took on an amountof compesation worth TL25.8 billion.In addition to that, thanks toapplications like DASK (NaturalDisasters Insurance) and TARSİM(Pool of Agricultural Insurances) itshares government’s burden,disciplines economic initiatives byproviding effective risk managementand offering 200 000 jobs togetherwith sub-sectors. It supports growthenabling new investments to bemade due to the TL 142 billion fond itcreates including the IndividualAnnuity Insurances. Therefore, itshould not come as a surprise thatcountries with strong nationaleconomies also have stronginsurance companies”.

33 January-February 2019

Insurance is asector that isstrategic forthe Turkisheconomy

FROM THE SECTOR

RİSK&LİFE

34 June-July 2019

The Actuaries Associationbecame a member of AAEThe Actuaries Association was accepted tothe Actuarial Association of Europe (AAE) as afull member. Taylan Matkap, President of theActuaries Association, made a statement onthe issue and said that on the 41st GeneralAssembly of the Actuarial Association ofEurope that took place in Utrecht, Hollandon September 21, 2018 the decision to voteelectronically to decide on full membershipswas taken. Matkap explained that theActuaries Association was accepted as a fullmember to the Actuarial Association ofEurope following the electronic voting.Taylan Matkap added that ActuarialAssociation of Europe (AAE) was founded in1978 to represent the actuarial professionalorganizations active in the European Unionmember states and to consult variousinstitutions of the European Union onactuarial issues within the framework of theEU legislation and that the associationcurrently represents 36 professionalorganizations, 35 European countries andapproximately 25 000 actuaries.

The Pool of AgriculturalInsurances (TARSİM) hasfocused on technologicalapplications in order toincrease the satisfact