Around 20m comprehensive automobile insurance quotations are given annually, of which 8.5m were subsequently converted into purchases, according to the Insurance Association of Türkiye's (TSB) vice president Ahmet Yasar who is also president of Maher Holding Insurance Group.
“It is not enough to just show the customer the price, we must also explain insurance policies simply and clearly,” reported the Insurance Gazette, citing Mr Yasar.
Explaining reasons for the conversion rate, he said that while traffic insurance (motor third-party liability insurance) is mandatory, automobile insurance (own damage) is still seen as a non-essential expense. “This mentality limits conversion,” he said.
The premium payable is also a factor in insurance decisions. However, Mr Yasar indicated that the perception that vehicle insurance prices are high is no longer valid today On the contrary, due to intense competition, the rate of increase in insurance premiums is on average 10 points below that of costs.
Another big problem is that customers do not fully understand the details of the insurance coverage. Mr Yasar said, “If we cannot clearly explain the difference between a simple motor policy and a more comprehensive product, the customer remains indecisive and gives up on the policy. In addition, the same customer receives offers from several other agencies. Only one of them converts to a policy, the other offers are in vain. This drives down premium rates.”
An important structural reason is the state of the vehicle fleet in Türkiye. Today, the average age of vehicles registered in Türkiye is 14.3 years; trucks 18 years; buses 16 years; and cars 14.2 years. In fact, 26% of the vehicle population is aged at least 21 years. This vehicle age group is considered riskier than others by insurance companies. Therefore, some companies either do not make insurance offers on old vehicles or price them very high. This is a deterrent for users who want to have insurance. In other words, another reason why the number of insurance policies is lower than traffic insurance is the risk approach adopted in the sector.
Mr Yasar said, “I think that more balanced, age-based flexible pricing models should be developed.”