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INTERMEDIATION in the TURKISH LIFE INSURANCE and PENSION MARKET

Jetse Frederik de Vries CEO. INTERMEDIATION in the TURKISH LIFE INSURANCE and PENSION MARKET. e. ING INSURANC E-SNAPSHOT. ING INSURANCE has an attractive mix of mature businesses and strong positions in growth markets. 7 years of experience in the pensions business

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INTERMEDIATION in the TURKISH LIFE INSURANCE and PENSION MARKET

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  1. Jetse Frederik de Vries CEO INTERMEDIATION in the TURKISH LIFE INSURANCE and PENSION MARKET

  2. e ING INSURANCE-SNAPSHOT ING INSURANCE has an attractive mix of mature businesses and strong positions in growth markets • 7 years of experience in the pensions business • Expanded product range: • Personal Accident Products • Credit Life, Term Life and Pensions • More than 300.000 customers • 6th in pensions investment funds • Distribution through bank and independent property&casualty agent channel. #3 in US Retirement Services #1 life insurer in the Netherlands #2 Pensions company in Latin America #1 Life & Pensions provider in Central Europe #3 foreign life insurer in Asia

  3. TURKEY- SNAPSHOT 78.785.548 29.2 (2010) PLENTY of SCOPE for FURTHER GROWTH Banking - Investments - Life Insurance - Retirement Services

  4. TURKEY- ECONOMIC OUTLOOK remarkable performance with a steady growth over the last six years • USD 83 billion of FDI • 15th most attractive FDI destination for 2008-2010 (UNCTAD). • 16th largest economy in the world • Robust economic growth over the last seven years with an average annual real GDP growth of approximately 4.3 percent. 2010: a sound economic recovery a faster decrease in the unemployment rate in the post-crisis period. Remarkable resilience of the Turkish economy and financial system against the crisis and prudent macroeconomic policies enabled Turkey to decouple favorably from most of the developed and developing countries Banking - Investments - Life Insurance - Retirement Services

  5. TURKEY- POLITICAL OUTLOOK • The AKP government remains generally popular, particularly in the face of generally weakopposition parties. • However, prospects for EU accession remain a long-term goal despite significant efforts by the Turkish government. The secular elite in the army and courts remain staunch opponents of the AKP and its perceived Islamist agenda. Political Violence: Kurdish separatists, Islamist extremists and ultranationalists. The Turkish government is strongly committed to improving the business climate for the insurance industry. Banking - Investments - Life Insurance - Retirement Services

  6. TURKEY- PEOPLE & MENTALITY Collectivism : high Uncertainty avoidance : high Power distance : high Masculinity : middle friendship& business relations Building trust is the key to building close and strong relationships with customers. Turkish people are “emotional “buyers high social networking young demographics Banking - Investments - Life Insurance - Retirement Services

  7. LIFE INSURANCE in TURKEY Banking - Investments - Life Insurance - Retirement Services

  8. LIFE INSURANCE in TURKEY Turkey has more than 78 million citizens, with an average age of29. The potential to sell life assurance,savings and pension products and employer products is significant. The Turkish insurance industry is so young and penetration as yet so underdeveloped Banking - Investments - Life Insurance - Retirement Services

  9. LIFE INSURANCE in TURKEY • Total gross premium generation in Turkey reached TRY 12,436 million in 2009. • Negativegrowth of 7.3 percent marked the first quarter of 2009. • Decreasein insurance demand and price competition reduced premium income growth rates in 2009. • Beforethe crisis, total insurance premium production had grown by a CAGR of 13.4 percent from 2004 to 2009 Banking - Investments - Life Insurance - Retirement Services

  10. LIFE INSURANCE in TURKEY: An Overview Demand in Life Insurance products is increasingas of 2009, after the crisis; Turkeygross life insurance premium registered a healthy increase of 16.2% during the period from 2001-2010. The gross premium for life insurance increased from USD 375 million in 2001 to USD 1,447 million in 2010. PREMIUM GENERATION by PRODUCT(%) PREMIUM GENERATION (1.000 TL) Annuity Insurance Long-Term Life Insurance One-Year Term Life Insurance Mixed Insurance Life Coverage Only Personal Insurance Group Insurance Banking - Investments - Life Insurance - Retirement Services

  11. LIFE INSURANCE in TURKEY: DISTRIBUTION CHANNELS BROKER and AGENCY are commonly confused terms in the intermediation terminology in Turkey: Brokers in Turkey are usually the so-called alpha-houses (Marsh, Mercer, Aon...etc.) Agencies are in a closer, sometimes tied relationship with the insurer/pension provider and they observe the interests of the insurer and they sell non-life insurance mainly Direct individual sales teams, typically tied agents, sometimes self-employed, sell exclusively for one company. Banking - Investments - Life Insurance - Retirement Services

  12. LIFE INSURANCE in TURKEY: DISTRIBUTION emerging as a competitive differentiator The agency channel has declined. At the same time, the bancassurance channel has increased from 42% to 55% in life in the last three years. Banking - Investments - Life Insurance - Retirement Services

  13. LIFE INSURANCE in TURKEY: DISTRIBUTION 2009&2010 Bankassuranceis growing, agencies are going down. The broker model has a slight share. There are also a number of newand competing distribution channels such as directmarketing,telemarketing and internetmarketing. PREMIUM GENERATION by DISTRIBUTION CHANNEL ALTERNATIVE CHANNELS HO & DIRECT SALES AGENCY & BROKER BANK Banking - Investments - Life Insurance - Retirement Services

  14. PENSIONS in TURKEY Banking - Investments - Life Insurance - Retirement Services

  15. PENSIONs in TURKEY: an OVERVIEW • HOW DID PENSIONS START in TURKEY? • inefficiency of the social security system. • However the legal and institutional framework of the Turkish Private Pension Systemwas completed in 2002. Implementation of the private pension system is a major milestone inthe improvement of the public social security system. • The first pension policies have been issued on October 27, 2003 Funds under Management (1.000 TL) Number of Participants Banking - Investments - Life Insurance - Retirement Services

  16. PENSIONs in TURKEY: an OVERVIEW The Turkish private pension system is a voluntary, defined contribution system intended tobe a complementary scheme to the mandatory social security scheme, which providesretirement earnings to participants on a pay-as-you-go (PAYG) basis. The penetration of pensions is low. There are exclusive tax advantages, but only %58 of the customers are aware. Banking - Investments - Life Insurance - Retirement Services

  17. PENSIONs in TURKEY: How much do Turkish People Save for their future? PUTTING THE BES SYSTEM INTO THE CONTEXT OF FORMAL SAVINGS IN TURKEY: Pension Funds Under Management represents only 1,5% of the total savings market. The full breakdown is as follows:   47%  Bank deposits in TL   23%  Bank deposits in foreign currency 10%  Government bonds 6,5% Stock Market 5%    Mutual Funds   4%    Term deposits 1,5% PENSIONS   3%    Various other items Banking - Investments - Life Insurance - Retirement Services

  18. PENSIONs in TURKEY: DISTRIBUTION CHANNELS THE SAME DISTRIBUTION CHANNELS AS IN LIFE INSURANCE Banking - Investments - Life Insurance - Retirement Services

  19. PENSIONs in TURKEY: DISTRIBUTION CHANNELS Agencies and banks don’t display a remarkable performance in sales of pension plans mainly due to the fact that they focus on non-life insurance sales. The potential these two branches isn’t applied yet to the sales of pension products. Contracts acc. to Sales Channel Corporate Sales Direct Individual Sales Agency Proportions by distribution channels given out of a sum of 2.203.886 contracts in force as of 2009 year-end. “Other” covers “Call Center” and “Broker” Bank -Tied agencies, -Individuals who are not permanent staff at a bank or agency, but works on a fixed pay + premium model Others Banking - Investments - Life Insurance - Retirement Services

  20. WHO WILL BE THE WINNERS? Banking - Investments - Life Insurance - Retirement Services

  21. WHO ARE IN THE CONTEST? Banking - Investments - Life Insurance - Retirement Services

  22. WHO WILL WIN? Those who listen to the customer. Net Promoter Score Agents have much more success in terms of client retention and average premium than other channels Banking - Investments - Life Insurance - Retirement Services

  23. WHO WILL WIN? Those who watch for cross&up-sell opportunities Agents are most efficient in cross-selling and upselling Banking - Investments - Life Insurance - Retirement Services

  24. WHO WILL WIN? Those who get the proper support from the insurance/pension company Banking - Investments - Life Insurance - Retirement Services

  25. WHO WILL WIN? Those who focus on long term high quality growth rather than commission-driven sales Banking - Investments - Life Insurance - Retirement Services

  26. LESSONS - TURKEY: Banking - Investments - Life Insurance - Retirement Services

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