Transit insurance supply crisis: SEDDK called general managers

Selcuk ALTUN

Insurers have reduced supply, creating a billing problem in order not to cut the mandatory traffic insurance policy, which they lost due to rising costs. SEDDK intervened and advised the companies and summoned the general managers to the meeting. At the meeting to be held today at SEDDK headquarters, the causes of the problem will be discussed and ideas exchanged for the adoption of structural and permanent measures.

Insurers began to struggle not to cut traffic insurance policies, where they recorded large losses. When the agencies, which could not cut the compulsory policy, came face to face with citizens, they complained to the insurers to the Agency for Regulation and Supervision of Insurance and Pensions (SEDDK). SEDDK sent out an alert text to the companies for the second time on Monday and called the general managers to a meeting.

There is a mandatory transit policy crisis in the insurance industry. As is well known, there is a mandatory tariff on transit insurance. Insurers have to produce and sell policies at this rate. However, there is an unmanageable situation on the cost side, mainly due to the increase in exchange rates. Companies that fail to reduce their claims costs also avoid producing policies.

To open the problem with numbers; In the financial statements of 27 companies with mandatory transit insurance licenses, as of March 31, 2022, premium production increased by 61.3% over the previous year and reached 7.8 billion TL. The gross loss ratio, which was 98.1% in the first quarter of 2021, was 162.7% in the first quarter of 2022, while the net loss ratio was 188.2%. During this period, technical losses of approximately 2.5 billion LT were recorded. Total technical loss reached approximately TL 3.3 billion, with a net compound rate of 214%. In summary, companies that pay 214 lire for transit, where they generate a premium of 100 lire, do not want to cut policies because they have a loss. However, as it is a compulsory policy, they do not have such opportunities. Companies are looking for ways to cut supply in different ways. The most applied method is to make collections difficult. Some companies do not accept payment by credit card or even TEF. It is even said that there are companies that want payment from the bank that has no branch.

Second notice from SEDDK

Thus, the biggest problem became the foot of the agency. Agencies that were unable to issue and renew policies complained to SEDDK when confronted with citizens. Earlier this week, SEDDK urged insurers not to restrict the transit insurance premium collection process and said that all measures would be taken against complicated practices.

In the SEDDK communiqué, which similarly warned companies on June 28, it was mentioned that the Compulsory Motorway Civil Liability Insurance is a bilateral obligation, and that both vehicle owners and the insurer holding the license in the respective branch are required to issue this policy. In the communiqué, in which it is observed that some practices have been observed recently, which made it difficult to issue policies by restricting payment instruments in the compulsory collection of traffic insurance premiums, the following statements were made: It was clear that obliging the insured to use a certain instrument for the payment of premiums by insurers during the issuance of the insurance policy and practices that make it difficult or prevent the issuance of the policy incompatible with good faith will be considered as ‘avoiding the obligation of insurance’. In this context, as of today, our Agency published a sectoral communiqué on not restricting the premium collection process, and all types of action will be taken in accordance with Insurance Law No. 5,684 if contrary practices continue.”

General Managers invited to the meeting

SEDDK sent an invitation to insurers along with the second notice and called general managers. Today, a meeting will be held at SEDDK headquarters with the general managers of 27 insurers and the matter will be discussed. At the meeting, the causes of the problem will be discussed and ideas will be exchanged to take structural and permanent measures.

“Agents are in a state of rage”

Levent Korkut, chairman of the Executive Committee of TOBB Insurance Agencies (SAİK), told WORLD about the problem they experienced and said that they could not issue policies to customers and renew them. Korkut explained the difficulties faced by insurers as follows: “In order not to take out a policy, one wants a card, the other has created a wallet and says that I will not issue a policy before the money arrives. Some want a pension card, some say there’s an error in the system. We found strange requests, they bring water from 40 streams not to do this. At the moment, the agencies are in a state of outrage.” On the other hand, Korkut stated that they are subsidiaries of companies, they do exclusivity deals and cannot say no to large online organizations and issue policies, and continued: “But when it comes to issuing policies through agencies, they bring 40% water. rivers. During the pandemic period, they were cutting policies at half price. They were offering a policy of 1,000 lire for 500 lire. The pain of those days leaves today. We said to give policy to these prices. At the point we have reached today, since companies are having losses, the State should come and do this as a pool, we are going to sell policies from the pool, this matter will be resolved.”

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