1. 1
6 October 2016
Insurance and Private
Pensions Sector in
Turkey

2. 2
1. SECTION
Turkish Insurance
Market: An Overview

3. 3
As of today;
38Non Life
2 Reinsurance
4Life
18Life and
Pension
A total of 62 companies
Number of Insurance Companies

4. 4
72%
Foreign players in the market:
• Reflecting the trust into the Turkish market
• Transfering global practices to the local
players
• Enabling policyholders to benefit from
international novelties and developments
Foreign Capital in the Market
Share of foreign capital in total
paid-up capital
Source: Undersecretariat of Treasury, ınsurance and
Private Pension Report 2015

5. 5
Number of employees working
for the insurance companies 19.353
75.000 people
Employed in the
insurance sector
More than
Brokers 119
Loss adjusters 1 305
Agents 15 587
Number of employees

6. 6
Total Assets
23.2
24.4
28.3
32.5
36.0
35.2
36.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2010 2011 2012 2013 2014 2015 2016/Q2
Assets (Billion USD)

7. 0
2.000
4.000
6.000
8.000
10.000
12.000
2011 2012 2013 2014 2015
1.598 1.506
1.780
1.497 1.380
8.616
9.508
10.920
10.364
9.930
Life
Non-life
7
Written Premiums 2011-15 (million USD)
Overall premium production has increased 80% since 2011
Annual average incrase: 16%.

8. 8
Premium production increases by % 33 in 2016 second quarter compared to the same
period of the previous year.
Written Premiums 2015 Q2-2016 Q2 (million USD)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2015/8 2016/8
945 1,003
6,607
7,962
Life Non life

9. 9
Source: TSB
14.3 15.8 15.4
8.2
37.7
38.9 38.2
19.3
2.8
3.0
3.1
2.7
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2013 2014 2015 2016/6
Million
Traffic Non Life (except traffic) Life
2013 2014 2015 2016/6
Life 2,8 3,0 3,1 2,7
Non Life (except traffic) 37,7 38,9 38,2 19,3
Traffic 14,3 15,8 15,4 8,2
Total 54,8 57,7 56,7 30,2
Number of Insurance Policies

10. 3.36%
14.74%
11.53%
11.25% 11.06%
6.87%
10.83%
30.36%
ACCIDENT
LAND VEHICLES
FIRE AND NATURAL FORCES
SICKNESS/HEALTH
GENERAL DAMAGES
OTHER
LIFE
MTPL
10
Breakdown of Insurance Premiums by Branches,
2015

11. 11
Premium Production by Distribution Channel
(2016 Quarter 2)
Center;
8.6%
Agency;
5.7%
Bank;
81.6%
Broker,
4.1%
LIFE
Center
8%
Agency
64%
Bank
13%
Broker
15%
NON LIFE

12. 12
Total Insurance Coverage Provided by the Sector
2010-15
Source: Undersecretariat of Treasury, Insurance and Private Pension Report 2015
In 2015, the sector povides an insurance coverage 44 times of the country’s GDP .(2015
GDP=715 billion USD)
21
23
28
33
35
32
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015
Total Coverage (trillion USD)

13. 13
102
66
31
84
18
29 24
67
56
141
67
44
82
23
57
19
74
59
0
20
40
60
80
100
120
140
160
Trafic Land
Vehicles
Fire and
Natural
Disaster
Health TARSİM General
Losses
Accident Total
Non-life
Life
LOSS RATIO (%)
GROSS LOSS RATIO (%) 2016-06 GROSS LOSS RATIO (%) 2015-06
Loss Ratio by Branches

14. 14
Profitability
TECHNICAL PROFIT/LOSS (million USD)
BRANCHES 2016-06 2015-06
Traffic -189,8 -477,8
Land Vehicles 94,4 115,3
Fire and Natural Disaster 48,2 31,5
Health -10,9 17,9
General Losses 39,3 35,0
Accident 77,6 77,5
Total Non-life 125,8 -84,1
Life 121,4 115,3
2016 2. quarter

15. 15
2016/Q2
Quarter 2 Technical Profit: 254,4 million USD
Net Profit: 249,3 million USD
Profit in;
Non-life branches: 125,8 million USD
Life branches: 121,4 million USD
Private Pensions: 7,2 million USD

16. 16
ROE
4
0
-11
12
10
-7
2
-15
-10
-5
0
5
10
15
Non life companies(%)
16
13
14 14
18
20
12
0
5
10
15
20
25
Life and Pension companies(%)

17. Paid-Claims in Non Life Branches
17
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
2011
2012
2013
2014
2015
5,2
5,9 6,2
6,3 6,4
Paid Claims(billion USD)

18. Paid Claims in Life Branch
18
0,0
0,2
0,4
0,6
0,8
1,0
1,2
2011
2012
2013
2014
2015
1,0 1,1
1,2
1,0
0,8
Paid Claims(billion USD)

19. 19
2. SECTION
Importance of the
Insurance Sector and
Prospects for
Development

20. 20
Premium Per Capita (USD): An International
Comparison
153
4017
4823
307
1902
142
4096
4358
312
1634
0
1000
2000
3000
4000
5000
6000
Turkey USA UK Asia Europe
2014 2015

21. 21
Penetration Rate: Insurance Premiums/GDP
In 2015, penetration rate of Turkish insurance sector is below the penetration
rate of world average which was 6,2%.
Source: Sigma No3/2016, Sigma no4/2015, Sigma no3/2014, Sigma no3/2013, Sigma no3/2012, Sigma no3/2011
1.3 1.3 1.4 1.5 1.4 1.6
6.9
6.6 6.5 6.3 6.2 6.2
7.5
7.1
6.7 6.8 6.8 6.9
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014 2015
Penetration Rate(%)
Turkey World Europe

22. Private Pension Funds/GNP of OECD Countries % (2014)
Importance of Private Pension Funds in the
Economy
159.3
146.8
120.3
110.0
96.0
84.4
83.0
76.2
68.3
58.1
54.9
51.0
48.6
37.2
30.2
20.0
15.7
11.3
10.6
10.1
9.5
9.3
8.8
8.8
8.0
7.3
6.7
6.7
5.8
5.6
5.5
4.2
4.1
3.2
0.6
0.5
0 20 40 60 80 100 120 140 160
Netherlands
Iceland
Switzerland
Australia
United Kingdom
Weighted average
United States
Canada
Chile
Ireland
Israel
Finland
Denmark
Simple average
Japan
New Zealand
Mexico
Estonia
Slovak Republic
Portugal
Spain
Sweden
Norway
Poland
Czech Republic
Korea
Germany
Italy
Austria
Belgium
Turkey
Slovenia
Hungary
Luxembourg
Greece
France
2.2
37,2
22
Source: OECD, Pension
Markets in Focus, 2015

23. 23
Fırsat Sunan Demografik Yapı / İletişime Açık Genç
Nüfus
• Population 79 milyon
• Urban Population % 92
• Age 0-14 % 24
• Age 15-64 % 67,8
• Age 65+ % 8,2
• Average 31
• Internet Usage % 58
• Ratio of ocial Network Usage % 53
• Cell-phone Usage %90
Demographic Structure
Source: TUIK, 2015

24. 24
Büyük Yatırım Projeleri
• Total value of investments reached to 69
billion USD in Turkey during the last 5 years.
• Huge projects have been financed by banks
and insured by insurance companies of
Turkey ; Projects such as 3rd Bridge, 3rd
Airport, Eurasia Tunel, İzmir-İstanbul
Highway, electrcity production and
distribution privatizations.
Source: Banks Association of Turkey/Statistics of Project Finance/June 2015
Investment Projects

25. 25
KOBİ’lerin Sigortalanması
• SME’s constitute 99,8% of total firms in business
• SMEs accounted for 52,8% of value added generated in the economy by
2013
• SME’s accounted for 63,8% of the turnover, 53,3% of investments and
66,4% of exports (2014)
• 50% of SME’s are uninsured
• SME’s present an important opportunity for insurance sector
Source: TUİK, 2015
Insurance Potential of the SME’s

26. 26
• Insurance and Private Pension Sectors are well regulated industries,
regulated under the ‘ Insurance Law’, ‘Private Pension Savings and
Investment System Law’, and related subordinate legislations. By and
large insurance sector has been operating in line with the EU’ and
international norms and standards
• Works are underway to bring the Turkish Insurance Industry in line with
the Solvency 2 Directive
• Studies continue to update mortality and annuity tables in life insurance
branch
Highly Regulated and Transparent Sector

27. 27
Pazarlamaya Yönelik Fırsatlar
• Digital distribution channels in insurance business have become critical
especially reaching to young generations.
• Providing tailor-made insurance product for customer needs ,
• Focus on the customer satisfaction ,
would contribute to increase the insurance penetration in Turkey.
Opportunities for Marketing

28. 28
SONUÇ
Turkish economy presents opportunities for local and
international insurance companies thanks to its dynamics
and solid legislative infrastructure
As a Result;

29. 29
Hot Topic: MTPL

30. 30
-83
-188
-358
-190
-377
-275
-714
-343 -404
-860
-190
-1,000
-900
-800
-700
-600
-500
-400
-300
-200
-100
0
Technical loss
Total amount of loss: 3,9 billion USD
Zorunlu Trafik Sigortalarında zararIn the last decade, companies reported loss in MTPL for each and every
single period
Loss in MTPL

31. 31
Trafik Sigortası Primleri Neden Yükseldi?
Neden Bu Dönemdeki Prim Artışları Daha Yüksek?
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
2016-
Q2
Equity 2,858 4,359 4,300 4,609 3,227 3,067 2,813 3,633 3,702 2,763 2,898
Balance Sheet Profit 107 325 456 117 -119 -9 -365 403 333 -212 49
ROE 3.7% 7.4% 10.6% 2.5% -3.7% -0.3% -13.0% 11.1% 9.0% -7.7% 1.7%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
-1,000
0
1,000
2,000
3,000
4,000
5,000
MILLIONUSD
Equity and Balance Sheet Profits of Non-life Insurance Companies
Loss in MTPL

32. 32
Reasons for the Loss
MTPL Offers a Wide Insurance Coverage
• MTPL provides coverages for;
• Material damages
• Treatment expenses and
• Permanent disability and deprived of support
Treatment costs are paid by Social Security Instıtution(SGK) after the
change of Traffic Law, No:2918.

33. 33
Percentage of bodily injured claims increased in total claims.
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -
Q2
13% 13% 15% 16%
13%
17%
26%
35%
47%
51% 52%
56%
Reasons for the Loss
Percentage of the Bodily Injured claims in Total claims

34. 34
Source: Insurance Europe, Haziran 2016
Reasons for the Loss
Turkey’s and EU Countries’ Damage Frequencies

35. 35
Source: Insurance Europe, Haziran 2016
Reasons for the Loss
EU Countries’ and Turkey’s Average MTPL premiums

36. 36
Briefly;
Although Turkey
has been marked by the highest
damage frequency,
in Europe
MTPL Premium charges were the
lowest among other European
countries…
Reasons for the Loss
Turkey vs. EU (2013)

37. 37
105 127
157
125 131
221
-
100
200
300
400
500
600
700
2011 2012 2013 2014 2015 2016-M8
USD
Average MTPL Premium
Reasons for Loss
Raise in Claims/Raise in Premiums

38. 38
Trafik Sigortası
AylartTGöre Ortalama Primler
302
329
360
422
441
466
523
589
611
651
679
683
664
659
613
0
100
200
300
400
500
600
700
800
The Most Popular Question?

39. 39
The Most Popular Question?
IN 2015;
• 1.2 million accidents
• 7.500 people had lost their lives
• 12.000 people had become permanently
incapacitated
• 2.000 people had become reliant on care
• Retroactivity…
Source:TUIK 2015

40. 40
Average
Frequency(%)
Average
Premium(€) Loss Ratio(%)
Combined Ratio
(%)
Turkey
(2015/9) 9 105 133 163
222 103 127
EU(2014) 5,9%* 221 77 105,3*
Turkey
(2016/2.Quarter)
*Source: Insurance Europe, Haziran 2016
The Most Popular Question?

41. 41
Trafik Sigortası
Tavan Prim Uygulaması Öncesi ve Sonrası Durum
Taxi
Before Price
Ceiling (Oct.
2015)
August
2016
Change(Oct.
2015 -
August2016)
1.2.3. Pillar 3.272 4.021 22,9%
4. Pillar 2.281 3.371 47,8%
5. 6. 7. Pillar 1.238 1.939 56,7%
Van
Before Price
Ceiling (Oct.
2015)
August
2016
Change(Oct.
2015 -
August2016)
1.2.3. Pillar 1.666 1.432 -14,0%
4. Pillar 594 895 50,6%
5. 6. 7. Pillar 451 660 46,3%
Minibus
Before Price
Ceiling (Oct. 2015)
August
2016
Change(Oct.
2015 -
August2016)
1.2.3. Pillar 2.566 2.236 -12,9%
4. Pillar 1.026 1.406 37,0%
5. 6. 7. Pillar 693 1.076 55,2%
Bus ( 31+ )
Before Price
Ceiling (Oct. 2015)
August
2016
Change(Oct.
2015 -
August2016)
1.2.3. Pillar 6.268 8.785 40,1%
4. Pillar 4.138 6.659 60,9%
5. 6. 7. Pillar 3.038 4.742 56,1%
Tariff System: Is it a Solution!
or a Dilemma!

42. 42
Trafik Sigortası
Basamaklara Göre Poliçe Adetleri
Policy
1.2.3.
Pillar
4. Pillar
5. 6. 7.
Pillar
OTOMOBILE 1% 20% 79%
TAXI 6% 13% 81%
VAN 2% 21% 77%
TRUCK 5% 16% 79%
MINIBUS (10-17 Seat) 3% 20% 77%
BUS (18-30 Seat) 6% 20% 74%
BUS (31+ Seat) 9% 19% 72%
ALL VEHICLES GROUP 2% 20% 78%
Tariff System: Is it a Solution!
or a Dilemma!

43. 43
268,236
3,257,162
12,495,407
1.2.3. Pillar 4. Pillar 5. 6. 7. Pillar
Tariff System: Is it a Solution!
or a Dilemma!

44. 44
Tariff System: is it a Solution!
or a Dilemma!
2010 2011 2012 2013 2014 2015 Ekim
1.Pillar 0.36% 0.28% 0.24% 0.21% 0.17% 0.15%
2. Pillar 0.95% 0.68% 0.54% 0.46% 0.42% 0.36%
3. Pillar 3.20% 2.31% 2.16% 1.84% 1.66% 1.54%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
Pillar Percentage
1.Pillar 2. Pillar 3. Pillar
Accelerating Premium in MTPL has deterrent effect and preventive effect
for driving safety.
2010 2011 2012 2013 2014 2015 Ekim
4. Pillar 32.48% 34.23% 30.14% 28.17% 28.01% 27.17%
5. Pillar 19.49% 21.48% 23.13% 21.35% 20.22% 18.74%
6. Pillar 14.01% 12.43% 14.35% 15.80% 14.61% 14.50%
7. Pillar 29.51% 28.58% 29.44% 32.17% 34.91% 37.53%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Pillar Percentage
4. Pillar 5. Pillar 6. Pillar 7. Pillar

45. 45
Final Remarks
• Loss trend in MTPL continues. Loss of MTPL reached to 190 million USD in
the 2nd quarter of 2016
• Loss trend causes a risk for sustainability in MTPL branch.
• Court decisions should be in line with the legislation,
• Premium decline trend will go on due to competition. But it will take time
• Free tariff system definitely must continue..

46. 46
Thank you very much
for your patience...
Mehmet Akif Eroğlu
Secretary General
Turkish Insurance Association
akif.eroglu@tsb.org