Recent development
The Turkish Under Secretariat of the Treasury (“Treasury“) has recently amended the Regulation on the Tariff Implementation Principles on MTPL Insurance (“Regulation“). The recent amendments introduce a new concept of “Risky Insured Pool (“Pool“)”, which regards insureds with high damage frequencies. The amendments were published in the Official Gazette No. 30121 on July 11, 2017; however, the enforcement date of each amendment varies.
What the amendments bring
- Firstly, a provisional article has been added effective as of 12 April 2017 (the date on which the premiums caps were introduced), and this provisional article brings a pool concept. The Pool essentially eases the insuring process for insureds with high damage frequencies. The Pool will be managed by the Bureau of Motor Vehicles. Additionally, Appendix 4 has been added to the Regulation to regulate working principals of this Pool. The Motor Vehicles Bureau and related insurance companies will split the MTPL premiums and damages according to the respective appendix. The appendix was also made effective as of 12 April 2017.
- Further, the amendment added footnotes for the 7th, 8th, 9th and 10th columns of the table stating that the limit for monetary compensation for value depreciation to be paid by the insurance companies will no longer exceed 15% of the cash collateral limitation. The addendum will be effective as of the date of issue and it will be applicable to the insurance policies drafted from the date of issue.
- The agency/broker commission for the Pool policies is 8%.
- The claims will be managed by the insurance companies in return of 5% commission.
- 50% of the premiums and claims will be shared by all insurance companies (having MTPL insurance license) equally; remaining 50% will be shared according to the market shares for the last 3 years.
- The Motor Vehicles Bureau is authorized to resolve the disputes between the insurers and the Pool.
Conclusion
MTPL has been the most popular topic of debate in the Turkish insurance sector for the last couple of years. The changes made in the last years liberalizing the MTPL insurance premiums had been vastly criticized by consumers and professional drivers as a result of which the Government intervened to limit the premiums that can be collected which, in turn, was the main reason of the reaction from the insurance companies. With the Pool, the Treasury seems to have found a compromise that balances both interests.
