‘Pool system’ to be created for mandatory traffic insurance in Turkey
ANKARASome companies have been avoiding issuing policies for high risk groups of vehicles after a ceiling price was imposed on compulsory traffic insurance, Deputy Prime Minister Mehmet Şimşek has stated, adding that a “Risky Insurance Pool” will be created to distribute premiums and damages to all companies for a resolution of the problem.
The maximum premiums on compulsory traffic insurance were determined on April 12 on the basis of vehicle group and provincial groups, Şimşek told state-run Anadolu Agency, adding that traffic insurance premiums have been lowered to “reasonable levels.”
Şimşek stated that complaints have been made to the Treasury about some insurance companies for refusing to issue policies for certain high-level vehicles or groups of vehicles, especially after the application of the maximum premium.
The minister said the situation is being closely monitored by the Treasury. A “Risky Insurance Pool” will thus be created to distribute risk to all companies having a license in the traffic insurance branch, he added.
“In this model, companies will collect premiums for groups like the bad drivers who we refer to as first and second groups, or the premiums they receive from discontinued policies for vehicles that are constantly in traffic such as taxis, minibuses, buses, etc. Damages payments will be paid out from this pool but the company will carry out the payment process itself,” Şimşek said.
“The companies will participate in the pool model in prime and damage amounts according to certain rules. The market share of the companies in the last three years will be taken into consideration for 50 percent of the pool and the remaining 50 percent will be distributed equally among the companies. In addition, the companies that have transferred their policies will pay a share of the premiums to the pool as a commission for the expenses, which we plan to be around 5 percent,” he added.
Şimşek pointed out that the model was a subset of the ceiling price application. He recalled that each company received premiums and paid for damages itself in the ceiling price application, and the premium and damage amounts of the insurance groups deemed “risky” in the pool system were centralized and distributed among the companies.
“In the new model, the Treasury says ‘You will collect the premiums of the pools of vehicles and the policies to be cut for the steps in a central pool, and the damage will be paid from the money that will accumulate in this pool.’ It also introduces some rules for premium and damage sharing,” Şimşek said.
He pointed out that insurance companies in the pool model will continue to manage the damages processes themselves and stressed that there will be “no problem” finding the addressee in terms of insured persons.
Şimşek said the pool would be managed by the Turkish Motor Vehicles Bureau, while the bureau’s operations would be monitored and supervised by the Treasury.
The deputy prime minister stated that the premium and damage-sharing calculations within the pool would be carried out starting from April 12, which is the start date of the ceiling price application, covering all companies licensed in the traffic insurance branch.
“Thanks to the pool model, we expect that the agencies that complain about not being able to issue policies for risky groups will return to normal operation. We will enforce sanctions on insurance companies that violate the regulations of maximum price and pool model. The Treasury has completed its own studies on the general condition of traffic insurance and we expect the sector representatives to submit their final opinions. In this context, we will also support the large-scale workshop to be organized by sector representatives,” the deputy prime minister said.