Page 14 - Turkinsurance Digital Magazine

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Inflation adjustment may bring tax advantages for some taxpayers problem.
while creating additional tax liabilities for others.
One of the issues highlighted in earthquakes is the different results
The sector's costs continue to increase every year. Will these produced by the modeling used. To achieve more accurate results in
burdens be able to be absorbed without being passed on to the potential future disasters, the use of alternative scenario analyses in
insured? How will penetration be shaped? earthquake modeling is crucial for predictability of risks.

As is known, our country is prone to earthquakes, and this reality On the other hand, earthquake insurance provided as an additional
reminds itself with significant earthquakes occurring at different coverage for fire and engineering branches in Turkey is subject to
times. In our country, earthquake coverage is provided by insurance the tariff approved by the Insurance and Private Pension Regula-
companies for commercial/industrial facilities. The number of busi- tion and Supervision Agency (SEDDK). Following the Kahraman-
nesses in our country is increasing day by day, and in this regard, maraş earthquake, discussions were held to ensure the coverage of
the importance of fire insurance for industrial facilities and SMEs both costs and the accumulation of funds for future disasters. As
cannot be denied. In the event of an unexpected disaster, it is crucial part of these discussions, the amount set for the application of the
for SMEs to quickly restart production to prevent the loss of accu- open tariff has been increased from 400 million TL to 2 billion TL.
mulated efforts over the years, avoid market loss due to production Subsequently, tariff prices based on risk groups have also been in-
interruptions, and protect the reputation of the created brand. creased as of January 1st.

One of the significant roles of the insurance sector is to conduct in- Moreover, following the disaster, the importance of the reserve that
itiatives that increase societal awareness about insurance. The low insurance companies hold as a balancing provision to cover cata-
rate of insurance coverage is a problem that can only be solved with strophic risks has once again been recognized.
the establishment of insurance awareness within the society. In the
aftermath of recent disasters in our country, it has been observed Additionally, the inclusion in the Medium-Term Plan; the estab-
in conversations with disaster victims that a large majority of our lishment of professional liability insurance for individuals and en-
citizens lack information about securing damages caused by natu- tities involved in the construction inspection process, with the aim
ral disasters under insurance coverage. Unfortunately, the rate of of improving construction quality, could be one of the sector's most
insurance coverage in this area is quite low. In this regard, consid- significant contributions to addressing deficiencies in this area.
ering the role of the insurance sector in mitigating the destructive
financial damages caused by natural disasters and sharing the risk Istanbul is the lifeblood of the country's economy. While ex-
with international markets through reinsurance, we consider aware- perts articulate that an earthquake in this city would pose a risk
ness-raising actions to be crucial. even to economic independence, is the reinsurance capacity of
the sector currently sufficient for such a widespread disaster?
Earthquakes are one of the biggest realities in our country.
What contribution will the insurance sector make to address It is known that Istanbul is one of the cities in our country that
the deficiencies in this area? stands out in terms of earthquake risk. Experts have reached a con-
sensus that there is a high probability of a major earthquake occur-
The earthquakes centered in Kahramanmaraş on February 6, 2023, ring in Istanbul in the near future. A major earthquake in Istanbul,
have been instructive in identifying areas that need improvement which houses 25% of Turkey's population and generates 40% of its
in the insurance system; many issues related to the insurance sec- GDP, is expected to result in significant material and human losses.
tor have emerged in the aftermath of the earthquake. One of the In this context, it is crucial for our sector to take measures against
most important of these is the problem of insufficient insurance. a potential earthquake to be prepared, not only for the sake of the
In the Kahramanmaraş earthquake, similar to past earthquakes sector but also for the country's economy, considering Istanbul's
in our country at different times, it has been understood that, by economic significance.
many policyholders, the square meters were not accurately declared
during the policy issuance process. In this context, it is crucial for Furthermore, the use of alternative scenario analyses in earthquake
the insurance amount to be accurately determined, and for possible modeling is important for the predictability of risks. For instance,
damage to be fully covered, that the policy information is correct. even though there was relatively little loss of income due to the
earthquake disaster in Kahramanmaraş, considering that the Mar-
In this context, the implementation of the MAKS project, currently mara Region is the area hosting Turkey's most crucial industrial
being carried out by the Ministry of the Interior, and the integration cities, it is quite likely to face a significant loss of income in the
of insurance companies into this system to obtain square meter in- event of a possible earthquake in Istanbul.
formation for residences will be a significant step in preventing the
issues encountered. Similarly, in identifying all the provinces that will be affected by
the earthquake in Istanbul, it is necessary to conduct discussions
However, another factor leading to insufficient insurance is that the with all relevant parties (academicians, etc.) under the coordination
reconstruction cost stated in the policies falls below the minimum of the Insurance and Private Pension Regulation and Supervision
construction costs in the market conditions. Agency (SEDDK) and to ensure reinsurance protection by insurance
companies at a level that covers the expected damage in all these
Another issue is that, in tenders organized by the Public Procure- provinces.
ment Authority, insufficient insurance situations arise when project
costs remain below the current value within the current economic Moreover, implementing policies that encourage the transfer of
context, resulting in public losses. In this context, it is considered risks in Istanbul and the provinces that may be affected by the earth-
that requesting an increase in the real insurance amount for pro- quake to areas with lower seismic risk is also considered beneficial
jects by the Administration could provide a solution to the existing in this regard.