Interview: Murat Çiftçi, General Manager, IBS Insurance & Reinsurance Brokerage (UIB Turkey) – MSI Turkish Defence Review / MSI TDR Reference Magazine of Turkish Defence and Aviation Industry

Interview: Murat Çiftçi, General Manager, IBS Insurance & Reinsurance Brokerage (UIB Turkey)

2 Kasım 2016

Like other sectors, insurance is a vital subject for defence and aerospace industry. For SMEs, insurance can be the key for reducing risks and establishing institutionalization.  Murat Çiftçi, General Manager of IBS Insurance & Reinsurance Brokerage (UIB Turkey), answered our questions about insurance in defence and aerospace sector.

Could let us know about the corporate structure of IBS? How many employees do you have? What was your annual turnover for the year 2015? What is the share of defence and aviation sectors within this figure?

As IBS Insurance and Reinsurance Brokerage (UIB Turkey), we have a past of almost 20 years. Next year, our British partner will be celebrating its 30th anniversary. With our well-experienced team and strong financial structure, we maintain a steady growth in the insurance brokerage field. Our short- and medium-term objectives include utilising organic and inorganic growth opportunities in the local and global markets. Hence, new procurement opportunities are mostly on the focus of our agenda. Even though we are a qualified and experienced team of 85 under the roof of a fast growing and institutionalizing organization; we still are able to blend professionalism with the amateur spirit and combine smoothly modern and traditional aspects in our business. This is what differentiates us from our competitors and gives us our strength. We are at the leading position among other broking houses in the defence and aviation industries. As of the year 2015, we have 100 million USD worth of premium production.

You are the UIB’s partner in Turkey. How does this partnership add strength to IBS?

Being a British Lloyd’s broker, UIB is the 6th biggest broker throughout the World. UIB is a company that could target and succeed in becoming a strong player at different geographical locations compared to their competitors’ geographical ranges – they are known as the “broker of the tough zones.” In addition to their presence in Europe and Far East; they have gained a more localised brand image in Middle East, Africa, Russia, Turkic Republics and Iran through their local teams and strategic partnerships compared to their competitors. Our clients and partners who build business partnerships with us at these geographical areas are aware of our strength in these zones and they stand to benefits. Also the fact that UIB is positioning itself as a reinsurance broker enables it to be perceived as a more reliable and closer partner in the eyes of agencies, captive agencies and insurance companies. In IBS, we grow whilst providing our clients with retail services alongside with this image of being a reliable partner on the reinsurance side. We have perfectly combined our retail broking house identity with our reinsurance DNA which is originated from UIB and at this respect we are different from our competitors.

Could you please tell us about your future objectives regarding defence and aerospace sectors?

We can say that defence and aerospace are two of the most important sectors for us. Being a company with local partnership yet having a global identity, we consider providing our services to defence and aerospace related firms not only as a commercial activity but also as a national duty. These sectors are going through an exciting development phase in Turkey in the recent years and as IBS, we are proud to provide our services as being the most experienced company in these fields with the highest market share. Our goal is to utilise and blend our experience in defence and aerospace to safeguard the financial statements of our customers while serving the protection of the national know-how. We are keeping a close track on the latest developments all over the world affecting national defence and aerospace sector; and we offer our clients the most extended coverage available at competitive costs which enable them to better position themselves against their competitors abroad. Our main overall objective is to keep our leading position and to improve ourselves in this context.

Which companies do you work with in defence and aerospace sector?

We currently are proceeding with our business partnerships with many companies including the market leaders. Our very position is getting stronger every day; since our most important reference is our background and experience of many years. In general such concepts as being local, customer confidentiality, experience and reference are highly important features in our sector. Naturally, the brand of IBS has a reliable image and we prioritize good service principle to make the best of our image.

As IBS, you are offering various insurance solutions for defence and aerospace industries. What should be the motivation of defence and aerospace firms for having insurance coverage? What are they losing by not having an insurance coverage and what would be the advantage if they had?

Investments and projects in defence and aviation sectors are becoming more complicated every day; the necessity for business partnerships between firms is inevitably increasing and investment volumes are growing. From the firms’ perspective, their most important motivation must be utilising the most beneficial and suitable insurance solutions during the project and prototype development phases and the protection of national defence industry’s financial statements with the help of precise property and liability insurances. It has a crucial importance to receive solutions from a team which is well-experienced in claims handling in the concurrent projects and in the insurance of partnerships between various firms. We, thanks to our position in the market, are the most experienced one also in the number of claims handled in these respects.

“Self-retention” is also another important risk resource in such industries where huge investments and turnovers also indicate high levels of risk. Especially according to regulations and legislations in aviation industry, liability insurances are mandatory. Thus aviation firms which do not have liability policies cannot perform aviation activities and their procedural operations are mostly interrupted. Other than those, growth of operations and possibility of extremely high costs to bear in case of a claim or loss make insurance even more attractive from a need-based perspective.

Risk management and minimization services before the occurrence of any damage are also provided as consulting services and hence enable insurance cost savings to experience increasing benefits.

When we talk about insurance, it is important to find the insurance plan that is right for the need. In some occasions, companies happened to experience the situations which are outside the coverage of insurance or they happened to pay much more than the required amount of payment. Could you please give us examples of how IBS help companies to overcome these issues?

In defence and aerospace industry, firms form consortiums to execute advanced projects today. As a result of government directives, when one firm finishes working on a project, other firm takes over and keeps working on the project. It is not possible to compensate the damage with the standard insurance solutions in this perspective. Largest inefficiencies in insurance premium occures at that point. Especially in this industry, we experience the situations where the insurance policies which are not optimally designed are inadequate to cover the damage. Unfortunately, we experience these situations and even though we are not the ones that provide the insurance policy, we still support them on the solution to cover the damage. Once an optimal insurance package is put together, it is our job to create the best cost.

It is important that insurance brokers guide customers well in this occasion. One of the companies that we work together have experienced a situation where the broker that they used to work with did not have the access to the reinsurance markets and the broker only offered them local solutions. As a result, classical property/fire coverage was provided as an insurance policy to an aircraft. It is impossible that such wrongly designed policies will work in the event of a loss. Still, many firms are considered as insured; however the insurance coverage which they have is inadequate to insure them against the risk they have. In this occasion, the right risk consultant can eliminate a million dollar worth of compensation risks.

Can you please give us information about the risk solutions that you provide?

  • Products liability Insurance
  • Aircraft product liability insurance
  • Product guarantee and recall insurance
  • Property and operation liability insurance
  • Space and satellite insurance
  • Machinery breakdown insurance
  • Cyber Risks
  • Marine insurances
  • Directors and Officers Liability
  • Health insurance

We provide solutions that create value globally and locally with our extensive experience and our integrated business models which are specialised for our projects. The insurances stated above only cover a portion of our product range. Our team of experts offers different solutions for all this insurance products.

How SMEs approach to insurance? Do you have recommendations for SMEs?

Unfortunately SMEs still consider insurance as a cost other than a necessity. For this reason, if the insurance is not compulsory, their approach is negative. However, insurance is more essential for SMEs than it is to corporate firms or holding companies, as they are more likely to be short of cash reserves needed to cover any possible damage. There are insurance products which specially designed for SMEs in the insurance industry. Our recommendation for SMEs is to consider insurance as a necessity other than a cost, and to pay attention to the recommendations to choose the most suitable insurance package. They should definitely include insurance costs in their feasibility works. We are aware of the fact that 2016 has been a tough year in terms of economic conjuncture; we have experienced unfortunate events all the year round. SMEs should consider insurance as a part of their institutionalization process rather than a cost. Global prime contractor firms demand insurances such as product liability insurance, from all companies and sub-contractors which they work with. This kind of insurances eliminates the producers responsibility rather than increasing costs of SMEs.

In the defence and aerospace industry, there are various governmental incentives to support firms in their R&D operations, fair and expo events, promotion processes, etc. Are there any similar practices for the insurance sector?

There is no legalized, permanent government support on this topic but of course immunity from taxation on some business lines is possible. Globally, there is no difficulty for defence and aviation industry to get any insurance coverage it seeks. However, should such a conjuncture occurs in the global market, where it is not possible to find the right insurance coverage, we would be more than pleased to be a pioneer in supporting the government to build the necessary insurance pool.

Is there any other topics you want to add?

You need an expert insurance broker in order for your firm’s sustainable growth and success. Companies lose reputation with each and every wrongly designed insurance program.

Insurance Broker

The term Insurance Broker identifies the ones who, as their profession, represent the ones who want to have an insurance or a reinsurance policy; acting absolutely unbiased and independent, whilst looking after the rights and interests of the ones who would like to buy an insurance coverage, performing travaux préparatoires before the conclusion of the insurance contract and assisting on the execution of the contracts or on the collection of indemnities when necessary.

As agents commercialize the solutions that they have in their product range, brokers search for the best option that is available in global and local markets and offer it to their clients.

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