Insurance and Private Pensions Sector in Turkey M. Akif EROLU - - PowerPoint PPT Presentation
Insurance and Private Pensions Sector in Turkey M. Akif EROLU General Secretary 04/10/2018 AGENDA i. Turkish Insurance Market: An Overview ii. MTPL 1 . Reducing Traffic Accidents 2. Tariff System 3. Regulation 4. Court & Insurance
04/10/2018
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Source: SDK 2017, TSB , 1 USD = 4,0865 TL, 2018 Q2 Exchange Rate for USD
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86,9 bln TL (21,3 bln $) 3,8 bln TL 930 mln $
10 20 30 40 50 60 70 80 90 100
Total Funds
BES OKS
90,7 bln TL (22,0 Bln $) 7,0 5,0
2 4 6 8 10 12 14
Number of Participants (mln)
BES OKS
12,0
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Source: TSB, TÜİK
8,9 8,5 2,2 4 2,9 6,1 3,2 7,4
13,6 10 8,8 13,8
9,7 20,2 2,7
5 10 15 20 25 2010 2011 2012 2013 2014 2015 2016 2017 Growth Rate of GDP Growth Rate of Premium
Other 7,3% Accident 3,9% Sickness/Health 13,2% Fire and Nat. Cat. 13,7% General Damage 12,5% Land Vehicles 15,9% MTPL 33,5%
Motor:
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Soruce: TSB August 2018
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Source: TSB June 2018 Gross Loss Ratio
93 76 38 14 42 18 70 37 88 68 38 14 37 18 69 41 10 20 30 40 50 60 70 80 90 100
Traffic Land Vehicles Fire and Natural Disaster TARSİM General Losses Accident Total Non-Life Life Gross loss ratio (%) 2018Q2 2017Q2
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56 88 52 41 108
35 22 1 9 2 41 429 178 52 6 90 56 29 41 92 25 17
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28 353 166 30
200 300 400 500
Technical Profit (million USD)
2018/6 2017/6
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Source: TSB June 2018 Income Statement
Non-life Insurance 1,8 billion TL (428,6 mln $) Life Insurance 727 million TL (177,8 mln $) Private Pensions 213 million TL (52 mln $) Total Technical Profit 2,7 billion TL (658,4 mln $) Net Profit 2,8 billion TL ( 684,8 mln $) 01/07/2017 – 30/06/2018 Non-Life Life ROE %17 %39,4
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018/Q2 MTPL
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Non-life 32 232 427 130 3 58
834 1.030
1.744 2.090 1.661
500 1.000 1.500 2.000 2.500
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32 232 427 130 3 58
834 1.030
1.744 2.090 1.661
Source: TSB June 2018 Income Statement
2015 2016 2017 2018/Q2 Technical Profit ( Excluding Investment Income Transfered from Non-Technical Part)
Technical Profit
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500 Technical Profit Technical Profit ( Excluding Investment Income Transfered from Non-Technical Part)
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MTPL 2015 2016 2017 2018/Q2 Technical Profit
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Investment Income Transfered from Non-Technical Part 343 888 829 563 Technical Profit ( Excluding Investment Income Transfered from Non-Technical Part)
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Traffic Accidents Issues on the Court Stages MTPL Price Cap Regulation Effect
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Traffic Accidents
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%9 %5,9
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Turkey EU
EU-Turkey Claims Frequency (2014)
Source: 2016, European Motor Insurance Markets Addendum, TÜİK
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Turkey EU 9 4
Number
lost their lives in the traffic accidents
Source: IRTAT , 2016
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79,6 thousand Drivers
The number of accidents by those drivers who caused 3 and more accidents in the preceeding 3 year-period. (2014-2017 May)
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Price Cap
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Combined Ratio
Loss Ratio
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Combined Ratio
Loss Ratio
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Regulation effect
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and permanent disability)
24 0% 10% 20% 30% 40% 50% 60% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
13% 13% 15% 16% 13% 17% 26% 35% 47% 51% 52% 51% 38%
The share of bodily injuries claims within the total paid claims has increased rapidly in recent years.
25 0,00% 20,00% 40,00% 60,00% 80,00% 100,00% 120,00% 2010 2011 2012 2013 2014 2015 2016 2017
Application Rates of Insurance Arbitration Commission
MTPL Casco
26.000 to 85.000 between the years 2015 to 2017.
% 95 of application is MTPL, % 75 of application is loss in value.
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0% 10% 20% 30% 40% 50% 60% 70% 80% Oca.14 Şub.14 Mar.14 Nis.14 May.14 Haz.14 Tem.14 Ağu.14 Eyl.14 Eki.14 Kas.14 Ara.14 Oca.15 Şub.15 Mar.15 Nis.15 May.15 Haz.15 Tem.15 Ağu.15 Eyl.15 Eki.15 Kas.15 Ara.15 Oca.16 Şub.16 Mar.16 Nis.16
Usage rates of Original/Equivalent Spare Parts
Usage rate of Original Spare Parts (%) Usage rate of Equivalent Spare Parts (%)
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Issues on the Court stages
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Decisions taken in compliance with the regulation Decisions taken not in compliance with the regulation Courts
39 42
Arbitration
24 27
Total
63 69
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Average cost
made for loss in value
Loss in value calculated by arbitration
The overall cost of loss in value by arbitration
*Includes expenses for experts and legal expense
2.037 TL
3.385TL 5.195 TL %155
Arbitration Fee 100 TL Arbitrator Fee 350 TL Expert Fee 330 TL Legal Expenses 1800 TL Total 2580 TL
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We have taken initiative with all the stakeholders relating to the road safety in
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#Bu Kemer Sana Çok Yakışır
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adjustment rate
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Regulation
indemnity
minimizing current deficit (500 million USD less import) Special Thanks.
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courts
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Treasury and Finance
Special Thanks..
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Almost 400.000 workplaces, have 5-9 employees, will enroll to the pension system
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Target Population
Number of Participants (employees) Total Fund 14 mln 4,9 mln 3,8 bln TL (880 mln $) 1000+ 250-999 100-249 50-99 10-49 Total %100 %99,8 %94,1 %94,1 %56,5 %64
Enrollment rates of workplaces to pension system by their size (number of employees)
Enrollment rate of workplaces, 10-49 emplyees,
%56,5
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Source: 2018-2020 OVP Draft, 2021 – 2023
system, compulsory and entails employer contribution.
pension system with no obligation to stay in the system and without employer contribution.
need to reform the auto-enrollment practice
to the high share of the population in productive working age group therefore this opportunity should be seized..
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Once enrolled into the system employees should be locked-in for a certain period Starting employer’ contribution as a small amount or transforming part of severance payment as employer’ contribution Changing the short-termness in perspective with constant communication with the public
Successful models in auto-enrollment Rise of employees in occupational funds after auto-enrolment New Zelland: %59,2 growth UK: %47,2 growth Italy: %11,6 growth
Source: EIOPA Pension Statistics 2004-2016, PPI Brefing Note No:99, OECD Statistics
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Source: EGM 30 June 2018
2016 2017 2018 Q2 (Net Participant Number) 436.242 226.302 107.885 100.000 200.000 300.000 400.000 500.000
Q2 (Net Participant Number)
Average annual increase in the new participants declined by 49% in the last two years Private pension savings should be collateralized in loan applications Legislative amendment allowing under 18s to enter into the private pension system Average annual increase in the new participants declined by 49% in the last two years
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Bank 89% Insurance and Pension 4% Other 7%
2017
3,7 trln TL
Source: TSB, TBB, TCMB, SDK 2017, BDDK, July 2018
Turkey is a fast growing economy in need of long-term financial resources: diversity of funds In this respect, it is necessary to increase domestic savings and develop insurance and pension industry
Credit/deposit rate= %125 Syndicated loans are fragile and relatively costly
2019-2021 Economy Program/YEP… Banking system funds maturity very short …Not enough for funding long term investments
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Source: TCMB, IMF , Sigma, TBB, 2017
291% 105% 62,2% 4,7%
0% 50% 100% 150% 200% 250% 300% 350%
EU Turkey
Assets/GDP (%)
Banking Sector Insurance Sector
In 2017;
the world
in the World
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TL: %85 Foreign Currencies: %15
Bank Account (TL); 34,4; 26% Bank Account (Foreign Currencies); 8,5; 6% Equities; 11,3; 8% Eurobond; 10,9; 8% Corporate Bonds; 13,9; 10% T-bills&Gov. Bonds; 43,2; 32% Bonds on gold; 4,8; 4% Other Capital Market Instruments; 8,4; 6%
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Source:: Takasbank, 30/06/2018; Balance Sheets 2018/Q2
Capital Market %81,2
DASK: 6 bln TL (1,5 bln USD), TARSİM: 1 bln TL (244,7 mln USD)
135,3 bln TL (33,1 bln USD) long maturity
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0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 14,0% 16,0%
Eyl.17 Eki.17 Kas.17 Ara.17 Oca.18 Şub.18 Mar.18 Nis.18 May.18 Haz.18 Tem.18 Equity
Eurobond, Foreign Securities
Equities and Foreign Currencies in Portfolio of Pension Funds
Source: TCMB, BIST , Takasbank; Graph: TSB
TL : %85 Foreign Currencies: %15
3,56 3,79 3,93 3,79 3,76 3,8 3,96 4,07 4,54 4,6 4,82 102.902 110.143 103.984 115.333 119.529 118.951 114.930 104.283 100.652 96.520 93.352 90.000 93.000 96.000 99.000 102.000 105.000 108.000 111.000 114.000 117.000 120.000 3 3,4 3,8 4,2 4,6 5 USD BIST100
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2000 2050
,12 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 ,10 ,8 ,6 ,4 ,2 ,2 ,4 ,6 ,8 ,10 ,12
59 Increased life expectancy increases the pressure on social security systems. Private pension systems gain importance,
Ageing Population
Source: EUROSTAT , TÜİK, UN Report
Year Men Women Total 2014 (TÜİK) 75,3 80,7 78,0 2050 (UN Report) 81,0 85,0 83,0
Expected Lifetime
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Worsening Dependency Ratio
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45,7% 85,3% 54,3% 14,7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
World Turkey
Life Non-life
Supporting different life insurance branches (education insurance, return of premium life insurance, old age insurance, care insurance) in order to level up with the world scale in terms
and providing public subsidies to investments such as nursing homes)
Source: Sigma, SDK 2017, SBM
Breakdown of Written Premium by Insurance Branches (life & Non-life) World vs. Turkey
Penetration Rate Life Non-life Turkey 0,20% 1,22% EU 3,77% 2,68%
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permits/licences
Every 3 house out
household insurance Half of the houses don’t have TCIP insurance
Half of the companies don’t have fire insurance
Increasing TCIP penetration for Houses & Increasing Facultative Earthquake Insurance for Workplaces
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Source: Swiss Re
Half of civil dwellings and workplaces do not have earthquake insurance and are at serious risk!
will be damaged structurally in Istanbul.
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Re-structuring regulatory and supervisory authority Preparing the sector and all stakeholders for the Industry 4.0 and
radical developments such us autonomous vehicles, new trends and custom changes
generations… Supporting digitalisation/insurtech/ start ups..
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Government support
To emphasize the importance of insurance and savings in the mosques (Cuma Hutbesi)
Public service broadcasting Introducing courses into the curriculums with subjects to educate students on the role and importance of insurance More effectively designed insurance week /with the help of government support
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Strategy & Distribution Channel & Communication Commities
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Insurance and Private Pensions Industry should be; Recognized as «THE STRATEGIC INDUSTRY» And should be;
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Mehmet Akif Eroğlu Secretary General Turkish Insurance Association akif.eroglu@tsb.org.tr