Premium levels of compulsory MTPL have been the hot topic for both policyholders and insurance market, as they have been following an ever-increasing course since 2015. Although they were reduced slightly due to the efforts of the regulator, it was not possible to decrease them down to the desired levels. Yesterday, Deputy Prime Minister Mehmet Şimşek announced that maximum premium caps will be determined and applied for compulsory MTPL policies.

Deputy Prime Minister Mehmet Şimşek gave a statement about compulsory MTPL premiums and underlined the significance of setting reasonable premium levels in free market circumstances for both citizens and insurance market. Şimşek stated that maximum premium amounts will be reviewed and determined for each vehicle group, and added: “With the application new premium caps, discount for automobiles which are in the highest risk level will reach 28 percent over the current premium levels, and 26 percent for vehicles in the lowest risk level group. For new vehicles in traffic, premium reduction will approximately reach 40 percent compared to existing premium levels. Therefore, average premium reduction for compulsory MTPL insurance for automobiles will nearly reach 30 percent.”

According to Deputy Prime Minister Mehmet Şimşek, new premium caps will become effective for MTPL policies as of 1 April.

Reminding that material and physical compensation paid by the insurance market has significantly increased in recent years following the inclusion of some risks that were previously left out of coverage scope due to a jurisdictional decision; Mehmet Şimşek stated that this made the increase in premiums unavoidable. He added that the Undersecretariat of Treasury had been implementing important regulatory amendments to relieve the market and solve structural problems and managed to decrease the premiums to some extent; though required improvement in premium levels could not be reached.

Mehmet Şimşek informed that a model was developed to display the prices of all insurance companies over a single platform so that citizens could benefit from lower MTPL premiums; but they continued to receive a high number of complaints from citizens nevertheless. 

Şimşek said: “As a result of our examinations, we have determined that insurance companies abstain from including high-risk customers in their profiles, and thus demand high amount of premiums from those customers.  We believe that this approach damages the trust in the insurance system. Therefore, we have decided to implement maximum premium caps to prevent unjust practices for citizens.