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ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB

ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB. TURKISH INSURANCE SECTOR July 2011. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY.

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ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB

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  1. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB TURKISH INSURANCE SECTOR July 2011

  2. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY • The Association of the Insurance and Reinsurance Companies of Turkey is a specialist institution with the characteristics of a unique non-governmental institution operating under Insurance Law No. 5684. • All local or foreign insurance and reinsurance companies operating in Turkey are members of the Association. As of June 2011, the Association has a total number of 64 members, 62 of them being insurance companies and the remaining 2 being reinsurance companies.

  3. COMMITTEES OF THE ASSOCIATION The Association established the following committees to facilitate the preparation and revision of all legislation, tariffs, working guides and general clauses relating to insurance; to foster the insurance sector and to conduct studies and research on sectoral problems: Fire Insurance Health Insurance Marine Insurance Liability Insurance Casualty Insurance Agriculture Insurance Non-life Claims Financial & Accounting Engineering Insurance Law & Legal Protection Life Insurance AML/CFT

  4. INTERNATIONAL MEMBERSHIPS • CEA, The European Insurance and Reinsurance Federation www.cea.eu • IAIS, International Association of Insurance Supervisors www.iaisweb.org • IMIA, International Association of Engineering Insurers www.imia.com • IUMI, International Union of Marine Insurance www.iumi.com • ICC, International Chamber of Commerce www.iccwbo.org • FALIA, The Foundation for the Advancement of Life & Insurance www.falia.jp

  5. TURKISH INSURANCE SECTOR

  6. TURKISH ECONOMY IN 2010 • National Income: • GDP: 1.105 Billion TL (736 Billion USD) • GDP per capita: 10.079 USD • Inflation: • CPI (consumer price index):6.40 % • PPI (producer price index):8.87 % • Unemployment:11.4 %

  7. WORLD INSURANCE SECTOR & TURKEY (2009) • Total premiums:4.1 Trillion USD (- 1.1 % decrease) • Premium size in: • Developed countries: 3.5 Trillion USD • Developing countries: 533 Billion USD • Turkey: 7.9 Billion USD • Real increase (inflation-adjusted): • Developed countries : - 1.8 % • Developing countries : 3.5 % • Turkey:- 18.9 % ( - 2.3% in local currency)

  8. WORLD INSURANCE SECTOR & TURKEY (2009) • World premiums in percent of GDP : 7% • Developed countries: 8,6 % • Developing countries: 2,9 % • United Kingdom: 12,9 % • Poland 3,8 % • Hungary 3,1 % • Turkey: 1,3 % • World premiums per capita:595 USD • Developed countries : 3 405 USD • Developing countries: 92 USD • United Kingdom:4 579 USD • Poland 630 USD • Hungary 398 USD • Turkey: 109 USD SOURCE: Swiss Re, Sigma No: 2/2010

  9. TURKISH INSURANCE SECTOR INSURANCE AND REINSURANCE COMPANIES As of June 2011, the Association has 64 members. Out of these 64 companies, 62 are insurance (10 life, 14 life and pension and 38non-life companies )and remaining 2 are reinsurance companies.

  10. EMPLOYMENT IN INSURANCE AND REINSURANCE COMPANIES As of the end of 2010, the number of people employed in the insurance sector is 16.568. Around 15.000 agents, 81 broker and 1.072 loss adjuster operate in Turkish insurance market.

  11. PREMIUM PRODUCTION (2006 – 2010) ($)

  12. PREMIUM INCOME ACCORDING TO THE BRANCHES ($)

  13. DATA ON CASCO AND MOTOR TPL INSURANCE (2009-2010) (USD)

  14. TOP TEN INSURANCE COMPANIES (2010)

  15. DISTRIBUTION CHANNELS (2010)

  16. TOTAL PREMIUM PRODUCTION IN % OF GDP

  17. TOTAL PREMIUM PRODUCTION PER CAPITA($)

  18. TECHNICAL PROFIT/LOSS ACCORDING TO THE BRANCHES – 2010

  19. PROFITABILITY, ASSETS AND EQUITY (USD) Financialprofitratio= financialprofit / grosspremium Balancesheetprofitratio = balancesheetprofit / grosspremium Equityratio = equityprofit / total equity Assetratio = balancesheetprofit / total assets

  20. MOST ATTRACTIVE SEGMENTS IN FUTURE • General liability insurance • products should be more customer-focused • Mortgage insurance: • new system (legal background established in 2007) • new insurance products are expected to be introduced • Unemployment insurance: • becomes more important in times of global financial crises • Unemployment insurance products are widespread in countries like the UK, Netherlands, Italy, Spain, etc. These products are expected to be more widely demanded in the Turkish market in the near future.

  21. LEGISLATIVE DEVELOPMENTS

  22. Turkish Insurance Law • “Turkish Insurance Law” enshrines 12 chapters and 47 articles. • All insurance and reinsurance companies operating in Turkey, the Association of the Insurance and Reinsurance Companies of Turkey, intermediaries, actuaries and insurance experts are subject to this law. • Turkish Insurance Law was approved on June 3, 2007 at the GeneralAssembly of the Turkish Parliament and published in the Turkish OfficialGazette (No: 26552) on June 14, 2007.

  23. Turkish Commercial Code &Code of Obligations • The new Turkish Commercial Code was recently enacted. The new Turkish Commercial Code introduces important novelties in the field of consumer protection, categorization of insurance classes, information society, etc. The Code will enter into force by July 2012. • The new Code of Obligations was recently enacted. The code which regulates obligations between legal and natural persons and contains provisions relating to insurance sector will enter into force by July 2012.

  24. Draft Law on Catastrophe Insurances • Another important legal development in the Turkish insurance market is the Draft Law on Catastrophe Insurances. • The Draft Law not only foresees the extension of the penetration level for compulsory earthquake insurance through new measures but also the completion of legislative and technical infrastructure work for the extension of the Turkish Catastrophe Pool (TCIP) indemnity to cover all natural catastrophes (flood, landfall, storm, avalanche, hail), environmental pollution and terrorism. • The draft Law is still pending.

  25. Draft Law Amending the Motorways Traffic Law No. 2918 • Draft Law Amending the Motorways Traffic Law No. 2918, which is prepared in line with EU standards, envisages the introduction of new traffic measures. • The Association of the Insurance and Reinsurance Companies of Turkey has formulated the views of the insurance sector on the Draft Law, specifically on measures relating to compulsory third party liability insurance. • The Draft Law also empowers the Association to authorize “special experts” to intervene traffic accidents with material damages. After the coming into force of the Law, traffic police will only intervene such accidents when traffic security necessitates. • The draft Law is still pending.

  26. Solvency II • In Turkey’s EU harmonization process, the Turkish insurance sector has been workingon the implementation of Solvency II. • Within this context, a “Specialized Committee on Solvency II” was established in accordance with Art. 33 of the Turkish Insurance Law No. 5684. • A sample of ten insurance companies were determined to conduct Quantitative Impact Study 4 (QIS 4), which had previously been conducted by the European Commission in EU countries. QIS 5 was also started to be applied from December 2010. • The Solvency II Directive was also translated into Turkish and distributed to companies by the Association.

  27. Technical Reserves • There have also been major amendments to the “Regulation on Technical Reserves of Insurance, Reinsurance and Pension Companies”. In this context, a more developed and sophisticated actuarial chain ladder method for the calculation of IBNR reserves has been introduced.

  28. Medical Malpractice Insurance • Medical malpractice insurance became compulsory in Turkey in July 2010. • With the introduction of “Compulsory Liability Insurance on Medical Malpractice”, doctors and dentists are required to be covered by professional liability insurance. • Doctors working at public or private institutions will pay half their insurance premiums and their institutions will pay the remainder. Doctors working at their own private offices will pay the entire premium.

  29. Coastal Facilities Sea Pollution Compulsory Liability Insurance • Another compulsory insurance that was introduced in 2010 with the publication of tariffs and procedures is the “Coastal Facilities Sea Pollution Compulsory Liability Insurance.” • In this context, all coastal facilities (including refineries, gas terminals, power houses, industrial production facilities, shipyards, etc.) are obliged to be covered by insurance against sea pollution.

  30. THANK YOU FOR YOUR ATTENTION… ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY www.tsrsb.org.tr

  31. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES CONSTRUCTION & ENERGY July 2011

  32. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  33. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  34. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE Turkish installed generation capacity by fuel (September 2010)

  35. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  36. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE Distribution of HEPP in number and in MW

  37. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  38. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE 27 HEPP, WHICH HAVE 100 MW OR HIGHER CAPACITY, REPRESENTING 77% OF TOTAL INSTALLED HYDRO CAPACITY OF TURKEY

  39. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE TURKEY’S HYDRO ENERGY POTENTIAL

  40. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE 1.500 HEPP ARE IN PROJECT PHASE FROM 1 MW TO 100 MW FROM EUR 5 MIO TO EUR 100 MIO

  41. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE • MAIN UNDERWRITING PROBLEMS OF HEPP PROJECTS IN TURKEY • LACK OF INFORMATION • INSUFFICIENT FLOOD RECURRENCE PERIOD IS USED • FOR DESIGN OF UPSTREAM COFFERDAM SUCH AS 2 – 5 – 10 YEARS • SOMETIMES ACCUMULATION PROBLEM CAUSED BY • VERY CLOSE HEPP LOCATIONS • DEDUCTIBLE LEVEL IS AT LOW SIDE COMPARING TO INT. MARKET • SUCH AS 20% COINSURANCE WITH THE INSURED AND • 2% DEDUCTIBLE FOR EQ & SRCC + S&T • USD 50,000,- FOR ALL OTHER ACT OF GOD • USD 50,000.- FOR OVERTOPPING • USD 20,000.- FOR ALL OTHER LOSSES

  42. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  43. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE THERE ARE ONLY 800 WIND TURBINES IN 41 WIND FARMS IN OPERATION AND 388 WIND TURBINES IN 19 WIND FARMS UNDER ERECTION LIST OF WIND FARMS ARE AS FOLLOWS ;

  44. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  45. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  46. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE TURKEY’S WIND ENERGY POTENTIAL Installed Capacity in Wind: 1.415 MW Turkey’s Technical Wind Energy Potential: 120 GWh/yr

  47. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE WIND POWER CAPACITY 18 MW IN 2004 1.415 MW AS OF MARCH 2011 TECHNICAL AND ECONOMICAL CAPACITY : 12.000 MW

  48. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  49. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE

  50. ASSOCIATION OF THE INSURANCE AND REINSURANCE COMPANIES OF TURKEY–TSRŞB ENGINEERING INSURANCES COMMITTEE LARGE LOSSES(> USD 1,000,000.-) OCCURRED IN 2010 USD 4,000,000 PAID IN 3 MB LOSSES USD 8,000,000 PAID IN 4 CAR/EAR LOSSES USD 2,000,000 O/S IN 2 CAR/EAR LOSSES

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