This document provides a history and overview of general liability insurance in Turkey. It discusses: - Liability insurance in Turkey was initially made compulsory by government laws in the 1930s and 1950s. - Usage grew slowly until the 1990s as cultural understanding developed. New products have since been designed. - General liability premiums make up only 2.5% of the non-life market in Turkey, compared to higher shares in developed markets. - Opportunities exist to increase education and collaboration between domestic and international insurers to further develop the Turkish market and allow it to become a gateway for other markets.

1. General Liability in Turkish
Market
A Brief History,
Development, Statistics,
Facts, Possible
Opportunities and the
Conclusion
31st of July 2012

2. A Brief History of Liability
Insurance in Turkey
• Usage and the evolution of the liability products in Turkey, as in
the other line of businesses, were not stated with the demand of
individuals or companies but with the law enforcements by
Turkish Government.
• After the approval of the first business law in 1936, employers
were started to hold responsible for job accidents. Immediately
after the Social Security Law No: 506, a compulsory insurance
mechanism was created for employees and liability insurance
usage were started with narrow conditions and low limits.
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3. A Brief History of Liability
Insurance in Turkey
• Unfortunately, as a second step to the basic social security,
Employer’s Liability Insurance could not find an opportunity to
develop until the 90`s because cultural infrastructure of the
Turkish individuals weren`t developed enough in terms of
financial affairs before the 90`s. Still, if we would examine the
general structure of Turkey, Employer’s Liability Insurance
should be much advanced than it is now.
• First compulsory liability cover became effective after the road
traffic act in 1953. With the code number 51, this act was obliged
that every motor vehicle will have to use traffic liability insurance
and despite the traffic liability in Turkey is the most commonly
used one, it is not 100 % yet.
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4. Development In Liability
Insurance
• Second good example for the history of compulsory liability
insurance is the usage of Dangerous Materials and LPG
Compulsory Financial Liability policies which were started to use
in 1991.
• In recent years, insurers in Turkish market had designed new
general liability products for the increasing demand and for the
new regulations in market. And also for the EU policy of Turkey
and the latest regulations for Turkey`s membership for EU .
Such as;
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5. Development In Liability
Insurance
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6. Development In Liability
Insurance
• The future of the new products, especially medical mal practise
are promising. Yet, there are no products for some lines of
businesses in Turkey such as D&O risks. With the new
regulations in business law there will be increasing demand for
further coverage for all related general liability.
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7. Statistics
• Problem for sustaining technical profitability in Turkish market is
a major concern for the growth of market. In 2010, there was
0.04 % of technical loss in Non-Life line of business and 6.62 %
of technical profit in Life line of business. In general, there was a
1.39 % technical profitability in 2010 which is equal to 114.7
million TRY. This ratio for a 7.9 billion USD big Turkish
insurance market is very low.
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8. Statistics
• One of the major problems behind this fact is high losses in
motor vehicle insurances. Motor vehicle policy production is up
to 47.5 % in the whole non-life line of business. With the health
insurance policies this ratio is about 62 % of whole non-life
market. Loss frequency is very high at the both line of
businesses. 2011 Liability Premium Income
Compulsory Land
Transportation Liability
Compulsory Traffic Liability
Green Card
Facultative Motor Vehicles
Financial Liability
Aviation Liability
Marine Liability
General Liability
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9. Statistics
• For sustaining profitability in Turkish market, the solution for
preventing high losses for these lines of businesses ( motor
vehicle + health) is providing technical pricing structure and
allowing the development of other lines of businesses of the total
share.
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10. Statistics & Facts
• In this context, as one of the most important sources, liability
insurance can be shown, with an important share in developed
markets but sadly remained undeveloped in Turkish market.
• General liability premium income is about 2.5 % of the whole
Non-Life line of business in Turkish market. Pulling up this ratio
is significantly and extremely beneficial for creating a market
capacity and healthy risk distribution.
General Liability Premium Ratio in
2011
Genaral
Liability
Premium in
2011
Non-Life
Premium in
2011
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11. Facts
• For many years, general liability products such as directors’ and
officers’ (D&O) liability, while regarded as vital in the US, Europe
and Japan, have been seen as fringe items in Turkey. But with
the recent developments in Turkish Business Law and Turkish
Economy itself, general liability and especially D&O liability is
likely to become more common. When it happens, its status as
an essential catastrophe cover will need to be recognised.
• With growing consumer awareness and an increase in
legislation are affecting companies and shareholders will be
demanding results, directors and officers are at risk from several
quarters.
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12. Facts & Statistics
• These policies, with their structures can provide a solution for
both growing economy and the increasing risk of the financial
problems of the sector at the same time
General Liability in 2011
TRY 200,000,000
TRY 180,000,000
TRY 160,000,000
TRY 140,000,000
TRY 120,000,000
TRY 100,000,000
TRY 80,000,000
TRY 60,000,000
TRY 40,000,000
TRY 20,000,000
TRY 0 M
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13. Future Opportunities
• Roughly 25 % of Turkey is insured. Pulling up this ratio is
significantly and extremely beneficial for both national and
multinational insurers and all related individuals. In order to
achieve the optimization of Turkish market, the most vital part is
education of individuals and professionals in Turkey.
• If Turkish insurance market rises up, other close countries such
as Azerbaijan and other Central Asian insurance markets can
become alive. Turkey is a geopolitical and cultural gate to the
other markets with no significant insurance usage.
• The reinsurance underwriters in London market have significant
appetite for Turkish market. Unfortunately, the grey areas in law
and regulations with the uncertain technical data about the
market are preventing underwriters to accept risks from Turkish
market.
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14. Future Opportunities
• When the insurance usage percentage of Turkey raises enough
to maintain healthy risk distribution, domestic knowledge level of
insurance will be sufficient enough to provide an infrastructure of
a framework in neighbour countries.
• In short, Turkey can have a function to be used as a jump point
to insure insurable but uninsured values in other countries where
the insurance market is almost non-existent. Eventually, this will
help to maintain global risk distribution which is desired by all
global market actors.
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15. Conclusion: Lets do it together!
• About more than 70 % of insurance companies in Turkey are
multinational insurance companies. The way of their functioning
in Turkey should be heavily involved with the education of
Turkish insurance professionals. They have the expertise and
knowledge. When needed, their guidance about how to operate
would be a contributing factor for sustaining technical profitability
in Turkish market.
• Effective collaboration between the Turkish and the foreign
professionals would significantly speed up the evolution and
adaptation of the Turkish market. An evolved Turkish insurance
market can be considered as a milestone in Turkish economy on
Turkey’s route to EU membership.
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16. Conclusion: Lets do it together!
• Constant exchange of information between Turkish and
international insurance markets would provide solid ground for
needed regulations, accurate underwriting and proper risk
distribution. This would contribute to the optimization of Turkish
insurance market.
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17. Thank You
• "The clock is running. Make the most of today. Time
waits for no man. Yesterday is history. Tomorrow is a
mystery. Today is a gift. That's why it is called the
present."
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18. General Liability in Turkish
Market
Deniz Güney Akkor
Marine & Liability Trainee Underwriter
d.g.akkor@gmail.com
0090 537 367 10 00