Middle East - Turkey: Minimum wage hike to raise motor claims payout - association head

Source: Middle East Insurance Review | Feb 2016

The increase in the minimum wage that took effect at the start of the year is expected to drastically increase auto insurance payout rates for accidents involving injury or death, and could result in a TRY2.5-billion (US$825.2 million) annual burden on the insurance sector, said Mr Ramazan Ulger, President of the Insurance Association of Turkey.

Auto insurance payout rates are calculated based upon the national minimum wage, and a nearly 30% increase that just took effect will have a major impact, reported Today’s Zaman.

The country’s minimum wage was hiked to TRY1,300 from TRY1,000, after the ruling Justice and Development Party (AK Party) made the issue a central part of its election campaign last year.

Insured driver rates have already slumped in the face of rising premiums, Mr Ulger said.

“In the past year, the number of insured vehicles dropped from 82% to 80%. Due to premium increases, 2% of drivers decided to forgo insurance. Two per cent of 19 million vehicles is a serious number and a serious risk,” he said.

TRY1 = US$0.33

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