Having stated his concern about lower commission rates, “Insurance companies must compensate agencies fully,” said Ceyhan Hancioglu, General Manager of HDI Insurance.
“I believe it is a mistake to lower the commissions paid to the agencies,” said Ceyhan Hancioglu, General Manager of HDI Insurance.
“Better agency income and the opportunity to invest in their business will carry both the sector and the companies involved into the future.
We will be maintaining our stance about this subject as much as possible,” said Hancioglu and stated that agencies are entitled for full compensation of their services. Ceyhan Hancioglu, General Manager of HDI Insurance, answered the questions of SIGORTACIM Magazine, as follows:
What is the agency type favored by insurance companies?
A good agency, from the viewpoint of insurance companies, must first be an agency dedicated to this occupation. The agency must be able to deliver a certain annual volume of contracts to the company it is working with and must be able to produce in other fields than traffic, vehicle insurance and automotive in general, depending on the region they are operating in.
Agency must be dedicated to the insurance company as much as it requires the dedication of the insurance company, must consider the companies it is working with in all the consumer and product groups as its business partners and must recommend them to its customers.
AGENCIES MUST PLACE REQUESTS FOR TRAINING
Agency training programs are no longer as they were before. What do you think is the reason behind it?
Agencies need to work with multiple insurance companies as a result of rate requirements and the specialization of different companies on different products. Coupled with the increased rate competition, companies are avoiding training activities due to the aim to reduce costs and the fact that the know-how gained from the training provided to the agency will also be used for that company’s competitors. However, in my opinion the most important reason is the lack of such demand from the agencies for training. For example, looking back at the year 2016, it is clear that the most important expectation of the agencies from insurance companies was competitive prices. If agencies were interested in the other products and they have made efforts to sell these products, then, insurance agencies would organize training programs eagerly. As HDI Insurance, we are taking the necessary attention into this subject and we can see that there is room for further contribution.
We are currently planning training programs, especially designed to improve the sales capability of our agencies in fields other than automotive.
OUR PURPOSE IN DIGITALIZATION IS TO REDUCE THE OPERATIONAL BURDEN
What are your opinions and efforts regarding the digitalization of agencies?
When it comes to digitalization, it does not represent a new alternative distribution network. Agencies account for 70% of the contract production in the Turkish insurance market and it is not expected that this situation will significantly change in the short-term. Thus, we believe that digitalization is a tool in the service of agencies in order to reduce agency’s operational burden, to make more time for sales, and to assist the agency in finding new customers. Our efforts on Facebook aimed at finding new customers and agency management are based on this strategy. Our investment and progress in this subject will continue also in 2017 gaining momentum.
ALL THE STAKEHOLDER ARE COMPLAINING ABOUT ‘TRAFFIC’
Traffic insurance is still an issue for the sector. Can you please let us know about your solution recommendations and expectations about this issue?
I have been mentioning this in all the platforms I have taken part in. Issues such as excessive increase in prices due to decision-makers, decrease in the commission rates and volumes of work of agencies, inability of insurance companies to make profits are governing the traffic insurance. It can be said that all the stakeholders are complaining. What we have to do is to make efforts to find solutions to this issue with all the stakeholders.
WE ARE GOING TO ENABLE NEW PRACTICES IN ORDER TO INCREASE AGENCY REVENUES
We have a number of plans and practices designed for our agencies to make cross-sales and top sales. For example, our agencies are capable of offering their clients additional guarantees for many products we have introduced at a lower rate, which in return increases the guarantees while introducing new guarantees to the clients. Nevertheless, we are planning to introduce new practices about this subject in the close future.
AGENCIES MUST BE DEDICATED TO THE INSURANCE COMPANY AS MUCH AS IT REQUIRES THE DEDICATION OF THE INSURANCE COMPANY AND MUST CONSIDER THE INSURANCE COMPANY AS ITS BUSINESS PARTNER.
I BELIEVE REDUCTION IN COMMISSION RATES IS A MISTAKE
What is your stance in terms of reductions in agency commission rates?
I believe reduction in commission rates is a mistake.
Better agency income and the opportunity to invest in their business will carry both the sector and the companies involved into the future. However most of our competitors are making adjustments in their commission rates, we are still trying to maintain them as they are as much as possible. We will maintain our attitude towards this subject as much as possible.
When almost all the sector prefers reductions, our chance to withstand is also diminished. I hope the sector will consider positive adjustments on this subject.
AGENCIES ARE INDISPENSIBLE FOR THE SECTOR
What kind of support and efforts are you making in terms of institutionalization of agencies?
We are currently assessing our options to contribute and listening to recommendations. Agencies are indispensible distribution channels for our sector. Any investment in this channel will certainly pay off.
AGENCIES WILL TAKE THE MOST IMPORTANT ROLE
What is your opinion about the fact that agencies are the most important actors in creating insurance awareness?
An important factor in the growth of the insurance market is compulsory insurance. Government manages the regulations about compulsory insurance. However, as agencies have the most important influence on the clients, they take the most important role in presenting the practices and products of companies and in their contribution to the growth of the sector. We need to support agencies both with developing new products and practices while agencies are unrelentingly presenting them to current and prospective customers. Of course, as insurance companies we have to offer the full compensation of this service.