Page 17 - Turkinsurance Digital Magazine

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Continuous and Positive Communication

Will Increase Savings and Insurance Rates

Uğur Gülen, President of the Insurance Association of Turkey, stated, “In the second half
of the year, we will be discussing more about free pricing, Baremo that will reduce traffic

costs, and the limitation of loss of value coverage.”

The insurance sector has left the first half of the year be- What are your expectations and forecasts for the second
hind; how do you assess the sector's activities for both the half of the year? What will be the agenda items for the Un-
BES and elementary branches? ion in the second half?

As of the end of June 2024, our sector achieved a premium As of the first six months, it is observed that our sector's
production of 380.4 billion TL, reflecting an 80.7% increase premium production has reached expected levels. In the
compared to the same period last year, with 337 billion TL in insurance sector, growth above inflation is expected in 2024. A
non-life branches and 43.3 billion TL in the life branch. premium production level of 900 billion TL is forecasted, with
an expected growth rate of 80%.
Auto insurance produced a total of 131.4 billion TL in premiums,
accounting for 39% of the sector's total premium production In the first six months of the year, our sector has made changes
and continuing to be the driving force of the sector. to the fire insurance earthquake tariff, which has been long
awaited and followed. This has led to a certain improvement
The traffic branch saw a premium production of 81 billion TL, in fire compensation and tariff premiums, and I see this as a
representing a 69.6% increase compared to the same period last favorable regulation for the sector. While building completion
year. The share of this branch within the total non-life segment insurance also holds significant potential, it requires additional
was 24% during this period. The comprehensive insurance regulatory needs; however, having the regulation in place is
branch grew by 41.2% compared to the same period last year, beneficial for providing the sector with a new production line. As
reaching 50.4 billion TL, with its share of the total non-life a Union, we will continue our efforts to promote the widespread
segment being 15%. The fire and natural disasters branch saw adoption of Building Completion Insurance and emphasize its
a 124% increase, producing 57.8 billion TL, while the health importance on every platform.
branch produced 63.1 billion TL, marking a 100% increase and
standing out as other prominent branches. Indexing based on damage costs in the ZTS has been introduced
to regulate long-standing traffic damages, but unfortunately,
The health branch, with a 100% increase, stood it remains behind the actual inflation faced by the sector and
does not take frequency developments into account. It would be
out by generating 63.1 billion TL in premiums. beneficial to reassess this instrument. It does not seem possible
to achieve functional integrity in the machine just by tightening
As of the first six months, it is observed that our sector's the screws. Instead, it has become clear once again through the
premium production has reached expected levels. While growth Damage Cost Index that we should first transition to a band
above inflation is anticipated in our insurance sector in 2024, system, followed by the implementation of a free tariff as soon
we foresee a premium production reaching 900 billion TL by the as possible.
end of the year, with an expected growth rate of 80%.
In addition, considering that the anticipated Marmara
Of course, there's the individual pension system (BES)... Since earthquake is expected to lead to a financial loss of 300 billion
its establishment in 2003, BES has continued its stable growth US dollars alongside the recent major disaster, the need for
for over 20 years, with the number of participants exceeding 16.5 insurance companies to find reinsurance capacity and create
million according to the latest data from the Pension Monitoring funds has become an important agenda item. On the other
Center. The total fund size, including state contributions, has hand, due to the significant loss in limits set in TL during the
also reached the critical threshold of 1 trillion TL. inflationary environment, updating the tariff limits for fire
industrial and commercial risks is crucial for the message it
At the beginning of this year, the increase in the number of sends to international reinsurance markets.
participants in the voluntary BES segment was around 6%,
while the fund size experienced a notable growth of 41%. This Furthermore, due to inflation and the resulting increases
growth in funds is attributed to both the increase in participants' in asset values, it is necessary to raise the insured amount
contribution payments and the sustained high performance of used as a reference for the voluntary earthquake tariff in its
the funds over the past few years. We expect both the growth implementation of free tariffs.
in the number of participants and the funds to continue with the
same momentum in the second half of this year. In this sense, the changes made have been an important step
regarding preparation for the anticipated Marmara earthquake