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Mar 2024

Turkey: Mandatory auto premiums 30% lower on average wef April

Source: Middle East Insurance Review | May 2017

Compulsory motor third-party liability insurance is expected to be cheaper by an average of 30% from April, following a decision taken by the Undersecretariat of Treasury to cut premiums in this class of business.
 
   Deputy Prime Minister Mehmet Simsek, who announced the decision, said that, under the new pricing system, discounts of 26% will be granted to less risky policyholders and 28% will be given to high-risk cases for existing vehicles, while the discount for new vehicles will be 40%. “In this way, an average 30% discount on compulsory traffic insurance premiums will be provided,” he added.
 
   Subject to several conditions, policyholders who insured their vehicle at an expensive price have the right to cancel their existing policies so that they can switch to new policies that offer the announced discounts.
 
   Mr Simsek said that the Undersecretariat made the decision because despite all the well-intentioned steps the government had taken in favour of the insurance sector to operate in free market conditions, compulsory motor insurance premiums had not fallen to reasonable levels, reported the local media.
 
   He pointed out that it is important that premiums set in free market conditions are reasonable for both policyholders and insurers.
 
   Premiums for compulsory motor third-party liability insurance showed a slight dip in the middle of last year, following several reforms introduced by the government to curb losses for motor insurers. Previously, insurers faced problems such as inconsistent judicial decisions from different interpretations of the insurance legislation, and a lack of standards in the calculation methodology to determine compensation claims. At that time, Mr Simsek had said that it was a little early to see the results of the reforms and that the decline in premiums would become clearer in the coming months.
 
   Premiums had risen rapidly, by up to 300% in some cases, in mandatory motor insurance two years ago, prompting the government to act. One reason for the hikes was that courts had ordered insurers to make compensation for some risks that were not covered in the insurance policy concerned. M 
 
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