1

Insurance Association

of Turkey

&

Turkish Insurance

Market

18 May 2016

2

As of today;

37Non Life

1 Reinsurance

4 Life

19 Life and

Pension

A total of 61 companies are

actively operating

Number of Insurance Companies

3

Company employees 20.000

75.000employeesMore than

Brokers 120Loss adjusters 1 300

Agents 16.000

Number of employees

4

Prim Üretimi 2010 – 2015

Increase in total premium

productionbetween 2010-2015 is % 41 (in terms of USD)

Premium Production

2010 2011 2012 2013 2014 2015

Non Life 8,0 8,6 9,5 10,9 10,4 11,7

Life 1,4 1,6 1,5 1,8 1,5 1,6

Total 9,4 10,2 11,0 12,7 11,9 13,3

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

Bill

ion

USD

Non Life Life Total

0

2

4

6

8

10

12

14

Written premiums

2010-2015

2010 2015

2010-2015 Premium Production, Billion USD

41%

Private Pension Funds in Turkey

5

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013 2014 2015 2016April

Total Government Contribution 0,60 1,38 1,76 1,95

Contributor's Total Funds 6,32 7,37 8,99 13,18 15,88 15,64 15,62

(Billion USD)

6

72%

Foreign players in the market:

• Reflecting trust into the Turkish market

• Transfering global practices into the

local market

• Enabling insureds to benefit from

international novelties and

developments

Foreign Capital in the Market

Share of foreign capital in total

paid-up capital

7

Prim Üretimi Dağılımı (2015)

ACCIDENT4%

HEALTH 11%

MOTOR OWN DAMAGE

18%

MARINE2%

FIRE/NATURAL FORCES

14%GENERAL LOSES

MTPL24%

GENERAL LIABILITY2%

OTHER3%

LlFE12%

GWP broken down by branches

TSB, 2015

8

Dağıtım Kanalları (2015)

Agents

63%

Banks

15 %Brokers

13%

Other

2%

Companies7%

Banks

79%

Brokers

1%

Other

2%

Agents

9%

Companies9%

Non-life Life

Distribution Channels

TSB, 2015

9

Technical and Financial ResultsTotal (Million USD)

2013 2014 2015

Technical Profit 594 670 56

Financial Profit 208 137 165

Profit After Tax 645 634 92

(Million USD)

10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Equity 4.106 5.695 5.614 7.162 5.028 5.154 5.064 6.930 8.112 7.533

Return on Balance Sheet 153 424 596 182 -186 -15 -658 768 730 -577

Return on Equity 3,7% 7,4% 10,6% 2,5% -3,7% -0,3% -13,0% 11,1% 9,0% -7,7%

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

-2.000

-1.000

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000M

ILLI

ON

TL

Equity and Return on EquityNonlife Companies

Source: TSB

11

Prospects for the

Turkish Insurance

Sector

SEKTÖR PRIM ÜRETIMI (MILYAR TL)

A Promising Market: Rapid growth rate

12

17,2

31,0

2011 2015

2011-2015 80 %

13

A Promising market: Low densityTotal Premium Per Capita(USD)

128136

146

166153

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013 2014

14

• The rules and regulations are in compliance with the EU norms and thesector is highly regulated and supervised

• The authority and the association have been working together to achievecompliance with the Solvency 2 regulations

Sonuç

A Promising Market: Sound and Clear Financials

15

Yeni Ürünlere Yönelik Fırsatlar

Turkish Insurance Market continues its development with new products:

• Annuity products

• A model on complementary health insurance is on its way

• Legal protection insurance for employees is in the governmentprogramme in 2016

• Despite its potential, surety insurance is still a neglected branch

A Promising Market: New Products

16

Motor Third Party

Liability Insurance

(MTPL)

17

Growth in MTPL

The number of MTPL policies and premium production have been on the rise

in the past decade on a yearly basis

1.360 1.583 1.815 1.9722.306

2.700

3.600

4.966 5.073

6.793

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Premiums(Milion TL)

9,5 10,0 10,4 10,711,7

12,913,9 14,1

15,9 15,9

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Number of policies(Million)

Market Share of MTPL

Share of MTPL has reached to 25 % in 2015

18

MTPL

25%

Own damage

20 %

Other

26 %

Sickness-Health

13%Fire and

Allied Perils

16%

Source: TSB

19

Loss in MTPL

In the last decade, companies reported loss in MTPL

for each and every single period

-119 -245 -467

-296 -587 -462

-1.285

-654 -885

-2.345 -2.500

-2.000

-1.500

-1.000

-500

0

Teknik Zarar

Source: TSB

20

Reasons for the Loss in MTPL

21

Reasons for the Loss in MTPL

Varying interpretations due to lack of clarity in the

definitions and coverages of the indemnities

Lack of a standard calculation method for loss of support

and disability

Retroactive court decisions

22

Reasons for the Loss in MTPL

Share of bodily claims has rapidly increased in total sums paid

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

13% 13% 15% 16%13%

17%

26%

35%

47%51% 50%

Source: TSB

23

Average

Freq. (%)

Average

Prem. (€)

Turkey 9% 110

EU 6% 230

Turkey: One of the lowest average premiums

and the highest frequency

Reasons for the Loss in MTPL

2013

24

THE GOOD NEWS IS…

Regulatory changes needed in the Highway Traffic

Law came in force…

25

Direct Settlement System

Current Problems of Subrogation Process

• Higher costs and lack of control in subrogations

• Problems regarding spare parts and repair shops

• Lack of customer ownership

26

Direct Settlement System

• Appr. 16 million customers

• Solution to the important dilemma: quality of service instead of price competition

• Companies would retain their customers and gain theirloyalty as in the motor own damage business

27

28

Thank you...