The application of a ceiling on premiums for compulsory motor third-party liability (MTPL) insurance would cause insurers to lose TRY3 billion (US$777.4 million) a year, according to a senior insurance executive.
The ceiling, implemented with effect from 12 April this year, is pulling down the average insurance premium by around 30%, said Ms Aylin Somersan Coqui, CEO of Allianz Turkey, to news organisation Anadolu Agency. “The financial impact of this regulation will be TRY3 billion losses,” she said.
Total premiums in the Turkish insurance market hit TRY40.49 billion last year, according to data from the Turkish Insurance Association. The non-life sector contributed TRY34.46 billion or 85% of the total, of which CTPL premiums accounted for TRY12.93 billion.
Ms Somersan Coqui also referred to the high-risk motor pool introduced by the government in July where some insurers had avoided covering high-risk vehicles, such as buses and commercial goods carrying vehicles, after a ceiling price was imposed on compulsory traffic insurance in April. The pool distributes premiums and damages to all insurers that are licensed to conduct motor insurance business. About 50% of the losses suffered by the pool are shared based on the market share of motor insurers in the last three years and the remaining 50% are distributed equally among the insurers.
Ms Somersan Coqui said: “The current situation is not sustainable in the long term. We have to distinguish between good drivers and bad drivers and adopt actuarial processes correctly. We believe that it is necessary to reduce costs further and to focus on reducing the risks of risky drivers and vehicle types.”
Motor accidents kill 21,000 in last 4 years
In the last four years, more than four million traffic accidents occurred in Turkey, killing 21,000 people and injuring more than 674,000, according to data from the Turkish General Directorate of Security.
More recent data show that in the first nine months of this year, 307,000 traffic accidents occurred across the country, killing 2,700 people. In addition, more than 232,000 people were injured in the January-September period, reported Hurriyet Daily, citing the data.
Insurers paid TRY4 billion for those killed, as well as injuries and property damages suffered during the first six months of 2017. M
TRY1 = US$0.26