TURKEY: 1 out of every 3 policies sold is a MTPL one; in 2015 over 15,9 million MTPL policies have been

21 April 2016 — Daniela GHETU, Mihai CRACEA
The Turkish insurance market "has achieved a 41% increase in the premium production between 2010 and 2015, denominated in USD", stated Mehmet Akif EROGLU, General Secretary, Insurance Association of Turkey on the occasion of the 2016 edition of IIF - "Motor insurance - the road towards profitability", adding that at the moment the industry employs over 75,000 people.

The high growth pace, as well as the market's potential and the future development perspectives of the country have attrackted numerous foreign investors in the insurance sector, so that "currently 72% of the market capital is owned by international companies".

"The rules and regulations governing the Turkish insurance market are in compliance with the EU norms. The sector is highly regulated and supervised. The authority and the association have been working on the implementation of the Solvency II regime," emphasized EROGLU.

According to the Turkish official, "24% of the total premiums written by the Turkish companies come from MTPL, which generated 2,3 billion USD in losses in 2015". In fact, "1 out of every 3 policies sold in Turkey is a MTPL policy. Over 15,9 million MTPL policies have been sold in 2015 in the country." Thus, MTPL represents both an important source of business, but also a significant challenge in profitability terms. "The market had 92 million USD profit after tax in 2015 in comparison with 634 million USD in 2014 because of MTPL as the claims ratio reached 138% so non-life companies are losing money," said Mehmet Akif EROGLU. Also, considering the current status of the market, the TSB's Secretary General said that dispite the efforts put into the market's profitability improvement, the association doesn't expect insurers to obtain significant profits from the MTPL line in the short term.

As for the near future, insurers hope that "a new piece of legislation will look to change things around - which will also include a system of direct compensation. Reporting requirements in the new law should improve outcomes for claimants and insurers, to the benefit of consumers," said Chris HALLIDAY, Senior Consultant, TOWERS WATSON. Talking about the motor insurance market's profitability he explained that "significant bodily injuries claims have been affecting the Turkish market in recent years due to slow payments, length of courts processes, claims management activity and "at fault" liability. This caused a significant challenge for actuaries in predicting and in reserving. A lot of the profitability issues on the market are derived from reserving as 90% of all reserves made in 2015 are for bodily injuries, in comparison with about 10% in 2010."

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