Page 14 - Turkinsurance Digital Magazine

12 interview

and economy continues to expand accordingly. Floods, landslides Private Pension System has reached a fund size of 86 billion
and hails that have increased as a result of climate change prove TL and 7 million participants in figures. To what extent do you
that possessions need to be protected. Natural disasters make a assume the BES will grow by the end of the year? We observe
negative impact on every course of our lives, from agriculture and a deceleration in the number of voluntary BES participants.
stockbreeding, to vehicles, houses and offices. For instance, in- What are the reasons for this deceleration?
surance market had to pay 500 million TL for the losses caused
by floods and hails occured in July 2017. Despite the growing im- As of 7 September 2018, Private Pension System (BES) has
pacts of natural disasters on our lives, one of every two businesses reached a fund size of 86 billion TL, including state contribution
lack fire insurance, three out of every four houses lack property funds, and 7 million participants. By the end of this year, we expect
insurance, three out of every four vehicles lack motor insurance, the fund size to exceed 90 billion TL together with state contribu-
and one of every two houses lack earthquake insurance. In a sense, tion funds, and the number of participants to go over 7.1 million.
insurance means social solidarity; and we must protect our citi-
zens to a greater extent by increasing the insurance awareness and “Higher-than-expected inflation rate
insurance rates against all these risks. The Association is working
on a communication plan that will increase awareness especially increases insurance costs and causes
by using social media more effectively. Moreover, we are planning pressure on market’s financial results”
to cooperate with universities and local administrations in order
to prevent losses occurring due to climate changes and to increase
the awareness in our society. We have observed a notable slowdown; i.e a decrease in the rise
of the number of new participants joining in the third pillar, vol-
2017 witnessed many regulatory amendments. Do you believe untary pension plans, for the last two years. Since 2016, the net
those amendments are useful, especially those in Motor Third number of participants has decreased by 50 percent. The most im-
Party Liability (MTPL)? What do you think about the market’s portant reason beneath under this slowdown is the auto enrollment
expectations for free tariff? process. Growth in the number of participants started to decrease
sharply as of 2016, when auto enrollment system came into the
picture. This slowdown is partly due to the saturation of the third
MTPL continues to remain on top of market’s agenda; considering
the facts that MTPL accounts for nearly 43 percent of non-life pillar; but more importantly, employees within the scope of auto
segment, and MTPL for 27 percent concerning 20 million vehicle enrollment do not prefer to enter into third pillar pension plans
owners. The most important regulatory amendment about MTPL and some of them even decide to terminate their existing pension
in 2017 was the establishment of Risky Policyholders’ Pool by the plans. In my opinion, it is crucial to maintain the size of third
Regulation Amending Regulation on Tariff Application Principles pillar pension system and keep encouraging employees over 45
on Motor Vehicles Compulsory Third Party Liability Insurance, (who are not included in the scope of auto-enrollment), farmers
which was published on the Official Gazette Issue No. 26582 as of and housewives to participate in BES plans. Plus, enabling people
14.07.2017. However, due to the long statute of limitations and younger than 18 to participate in pension plans will make a posi-
judicial process of liability insurance, it would only be possible tive contribution to the acceleration of BES system.
to make healthy assessments about the results of this pool in the
coming years. Auto-enrollment has reached a fund size of 3.6 billion TL and
5,2 million employees. Could you briefly inform us about the
performance of auto-enrollment system?
Activities of our Association primarily focus on solving the struc-
tural problems of MTPL, and aim to minimize the number of
conflicts between insurance companies and beneficiaries. At this Auto-enrollment in private pension system was launched in 1 Jan-
point, we finalized our work on bringing standardization to the uary 2017. It is a tremendeous project initiated to support the
“calculation method of compensation for loss of support and per- social security system of our country, as a tool to introduce 14
manent disability”, and submitted it to regulatory authorities. Af- million employees to the BES by 2019. Auto-enrollment was de-
ter this standard is applied, we expect a considerable decrease in signed to start with large scale companies and institutions employ-
the number of conflicts and estimate that the ambiguity of com- ing 1.000 or more people, and gradually include companies and
pensation amounts will be overcome. In this way, the market will institutions that have fewer employees. During the first phase, 834
make faster payments to the victims of traffic accidents, without companies and 3.2 million employees were included in the system.
needing to share commissions with intermediaries. The second phase, which began in April 2017, brought 38 thou-
sand companies and institutions with 250 to 999 employees and
6.4 million people working in private sector or public institutions
Markets open for free competition are for the benefit of the con-
sumers in any case. In addition to compensating for losses, insur- in the system. The scale narrowed a bit during the third phase in
ance can also be a preventive tool through its deterrent influences. July 2017, down to 10 thousand companies that employ 100 to
For example, deterring influences of high premiums for acci- 249 people and mostly operate in textile, ready-made clothing,
dent-prone drivers with, contribute to road safety and help prevent transportation, education, construction, food, and manufacturing
traffic accidents. Thus, we see the new Pool system as a temporary industries. At the end of the first year, 49 thousand companies and
solution towards transition to the free tariff system. institutions and nearly 11.4 million employees were introduced to
the auto-enrollment system.