Turkey: Change in traffic laws bears fruit for motor insurers
Source: Middle East Insurance Review | Oct 2016
The motor insurance business in Turkey has shown improved results for the first half of this year, turning around the performance of the non-life sector from a net loss to profit, following a change in the traffic law, according to the Insurance Association of Turkey.
Insurers reported a technical loss of TRY515 million (US$173.3 million) for motor third-party liability (MTPL) business for the first six months of 2016, reduced by more than half from the TRY1.23 billion loss posted for the corresponding period last year.
The insurance companies reported an underwriting profit of TRY275 million for January to June this year for motor physical damage business, 7% lower than the TRY295.9 million technical profit posted for the first half of 2015.
The improvement in motor insurance has helped to turn around the overall non-life results. The non-life sector posted a net profit of TRY144 million for the first half of this year, in contrast to a loss of TRY198 million for the same period last year.
Meanwhile, a separate statement from the Turkey Insurance Association stated that motor premiums had been declining since May. The decrease was at least 10% up to the first week of August, according to available data.
The improved motor performance and lower premiums are attributed to a change on 26 April 2016 to the Highway Traffic Law which provided for standardised compensation calculations that permitted insurers’ costs to be more accurately predicted and reducing uncertainty. The amendment abolished the previous practice of the courts relying on expert witness damage assessments. The law was amended to help insurance companies become more profitable.
The association forecasts that the downward trend in motor premiums is expected to continue barring significant increases in traffic accidents.
TRY1 = US$0.33