Page 17 - Turkinsurance Digital Magazine

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on the impacts of new technologies on insurance, insurtech, trans- and employees, ensuring restricted access to the MEDULA system
ferring all processes from sales to operation into the electronic for risk analysis and receiving authorizations in parallel with the
environment, monitoring new technologies closely and adapting SSI (Social Security Institution), differentiating services in city,
them into Turkish insurance market and our legislation. university and public hospitals by integrating them into the com-
plementary health insurance system.
Moreover, we continue to support activities of public authorities
to decrease the number and frequency of traffic accidents and to Ministry of Treasury and Finance and Insurance Association of
ensure road and traffic safety, as a bleeding wound of our country Turkey are conducting a joint two-phased project to form a basis
for a long time. One of our top priorities is to create an action plan for the decision on the transition of Turkish insurance market to
that is applicable to the circumstance of our country and decrease International Financial Reporting Standards 17 (IFRS 17) and
the number of deaths in traffic accidents by analyzing the success- Turkish Financial Reporting Standards 9 / Financial Instruments
ful examples from other countries in terms of reducing the fre- 9 (TFRS 9). The first phase of the project has been finalized, and
quency and number of traffic accidents. In parallel to the econom- is currently subjected to the assessment of the Ministry. Following
ic growth of our country, automotive industry continues to grow; the approval for transition, the second phase will be initiated to
increasing the number of vehicles in traffic with each passing year. reshape the relevant legislation.
However, as this development rate is not counterbalanced with a
similar increase in traffic awareness; we have failed to reach the How will recent economic developments and foreign exchange
targeted reduction in traffic accidents despite the infrastructural rates impact insurance and pension markets?
investments and continuous surveillance. Traffic remains to be a
major issue for our country. There are significant items in the insurance market that will im-
mediately be impacted by exchange rate increase such as share of
Insurance and pension market has a imports in the cost of medical equipment and vehicle spare parts,

function of deepening and stabilizing and the fact that raw materials of domestic production have to
be imported. Our sector’s input costs other than equipment and
the capital markets raw materials will gradually increase following the reflection of
exchange rate increase on the inflation rate. In this period, most
of the policies that are currently subjected to claims were issued
Besides organizing campaigns to increase awareness about traf- before the exchange rate increases. Especially the ratio of premi-
fic and road safety; we believe that it is important to implement ums received from these policies to the compensation of losses will
an efficient penalty mechanism and rehabilitating precautions for be lower than the earlier estimations.
drivers who are frequently engaged in accidents. We have also
shared a recommendation for a regulatory amendment to establish Current economic conjuncture and extraordinary increase in for-
a structure where accident-prone drivers face sanctions like DUI eign exchange rates have once again emphasized the importance
cases, such as the suspension of driver’s license, trainings and psy- of supporting domestic production. As of the end of 2017, finan-
chological examinations. Plus, we still think that demerit points of cial losses covered in MTPL was 4.5 billion TL; 60 percent of
drivers and period and reasons for the suspension of their driver’s which went to spare part costs. Approximately 80 percent of spare
license should be share with insurance companies; thus helping parts used in our market are imported. As a result, imported spare
insurance companies consider the penalty record of drivers while parts cost the insurance market 2.1 billion TL at the end of 2017.
determining their premium rates.
According to the analysis which compared August 2018 exchange
rates of the Central Bank to those of 2017 year-end, exchange
Our Association continues to work towards clarifying the liabili- rates are observed to have increased by 54 percent on average,
ties imposed on our sector by the Personal Data Protection Law, which resulted in 26 percent increase in the cost of spare parts
which was promulgated in 2016; and ensuring the compliance of alone. On the other hand, automotive companies increased their
business processes to its stipulations.
labor costs due to the exchange rate increases. Combined with this
increase, total increase in the cost of spare parts will reach 30 –
Our Association places special emphasis on the improvement of 35 percent range. In order to reduce the impacts of exchange rate
complementary health insurance, as a product that helps insurance risks and costs, it is crucial to provide necessary support for the
market reach out to a segment of our society that cannot afford production of equal spare parts used in hood, bumper, mudguard,
to buy standard health insurance, eases the burden of social secu- and illumination group inside our country. Last year, this group
rity system on financing healthcare, supports public authorities by of parts accounted for 60 percent of the 5.9 billion TL paid by in-
preventing unregistered cash-payouts and helping our government surance market for spare part costs. This will also make a contri-
charge necessary taxes on those payments, and enables companies bution to the reduction of current account deficit. To summarize,
to issue customized policies in accordance with the principles of we must encourage and support domestic and national spare-part
individuals. Therefore, we continue to work towards bringing a production to reduce our dependence on foreign sources. This will
special discount for health insurance from the basis of Income also pave the way for exporting them to neighboring regions with
Tax and Corporation Income Tax, establishing a more advanta- the scale and competition advantage we can reach.
geous structure for group policies that will favor both employers

Zeynep Tütüncü / zeynept@bestyayincilik.com