Erhan Tuncay
Ex Vice Chairman of TCIP’s BoD
(TURKEY)
Saturday, 28.9.2013
TURKISH
CATASTROPHE
INSURANCE POOL
May 2010, ISTANBUL
AGENDA
Background of TCIP
Current Structure of TCIP
Basic Figures of TCIP
Emergency Action Plan of TCIP
HISTORY
The devastating Earthquakes in
Marmara region on 17th August and
12th November 1999
Insured loss: around USD 800 milion
Economic loss: over USD 10 billion
Low insurance penetration (especially
for residential risks)
Burden on public budget
Decree law no 587 – compulsory
earthquake insurance as of 27th
September 2000 untill 18th of August
2012
As from 18th August 2012 new 6305
Catastrophe Insurance Law
PRE-TCIP
WHY
Reactive solutions versus proactive
solutions
Shortage of funds in immediate need
Allowance of funds to those in need
is problematic
Political and bureaucratic
considerations may prevail
Government priorities is on getting
back to economic and social life
GOVERNMENT’S PRIORITIES
A compulsory earthquake insurance
system for homeowners
Affordable price for every
homeowner
True risk transfer mechanism
Claims-paying capacity to limit
government’s exposure
Build national catastrophes reserves
by time
improvement of risk culture and
insurance consciousness in public
Rely on distribution channels of
Turkish insurance industry
ESTABLISMENT OF TCIP
LEGAL AND FINANCIAL BASE OF TCIP
Financed by Marmara Earthquake
Emergency Reconstruction Project
co-financed by
Turkish Government
World Bank
European Bank for
Reconstruction and
Development
Decree law no 587 – compulsory
earthquake insurance as of 27th
September 2000.
Eureko Sigorta is tendered for the
following 5 years till August, 2015
As from 18th August 2012 new
6305 Catastrophe Insurance Law
PUBLIC-PRIVATE PARTNERSHIP
HOUSEHOLDERS
RISK MANAGEMENT
BEHAVIOUR
INSURER
REINSURER
TCIP
SALES FUNCTIONS
OPERATIONAL SERVICES
RISK MANAGEMENT SUPPORT
CLAIMS MANAGEMENT
AUTHORITIES
REGULATION SUPERVISION
LEGAL FRAMEWORK
RISK MANAGEMENT SUPPORT
DISASTER MANAGEMENT
STRUCTURE OF TCIP
THE TREASURY
GENERAL
DIRECTORATE OF
INSURANCE
REINSURANCE
TCIP
BOARD OF DIRECTORS
FUND MANAGMENT
CONTRACTUAL
AGREEMENT
CLAIM
MANAGEMENT COMPANY
IT
PR
INSURANCE
COMPANIES
CLAIM
OPERATIONS
AGENCIES
BROKERS
BANC
ASSURANCE
16 MILLION
HOMEOWNERS
DIRECT & ADC
PROGRES
AFAD (Disaster and Emergency
Management Presidency) has been
established
decentralized cat management
Increased cooperation between AFAD
and other instittions
Increased involvement into national
earthquake issues
Participating into Istanbul Disaster and
Emergency Action Plan
Improved the terms and conditions of
Tariff and Earthquake General
Conditions
New Parliament law as from 18 August
2012
Beside Land Registrar Office and
Mortgage transaction, utility services
request earthquake policies
Public perception on public aid has not
been changed
AFAD
COORDINATING
NATIONAL
ACTIVITIES
IT INFRASTRUCTURE
IT STRUCTURE
COMPANIES / AGENTS
ACENTALAR
INTERNET
CALL CENTER
LEASED LINE
ANKARA
ISTANBUL
DASK
DISASTER RECOVER CENTER
-
Merkez
FIREWALL
FIREWALL
WEB SERVER
WEB SERVER
DMZ
DMZ
WAN
J2EE APPLICATION
SERVER
J2EE APPLICATION
SERVER
DATABASE
J2EE APPLICATION
SERVER
LDAP
REPLICATION
LDAP
DATABASE
State of the art technology
Continuous improvement
99,9% service level
Various level Back-up services, data
and programs
Investing into satellite and
mobile technologies
Disaster Recovery Center is able to
be in full operation within 2 hours
ACVIEVEMENTS and NEW LAW
NEW LAW
ACHIEVEMENTS
Improved penetration from 4% to
35%
Increased public awareness for
earthquake and insurance
Centralized marketing activities
and brand management
Kept pricing at affordable level
Claims-paying capacity: USD 4
billion
Solid reinsurance program
Operational efficiency
Improved coordinated work
between the public agencies, the
insurance industry, universities,
etc..
Model structure for effective publicprivate partnership
NATIONAL
Finding quality capacity
Ethical sensitivity
STRATEGIC PLAN
FOR
2023
Inforce since 18th of August 2012:
flexible framework enabling
improvements on product and
structure
Improve awareness and sign of state
support
Increased check points in utility
services
Additional natural perils to be included
in case of market shortage
Able to provide reinsurance support for
natural perils
Treasury to act as the last resort by
providing reinsurance support
Able to establish alternative
distribution channel
Government aid being subject to
having TCIP policy
Other articles on cat response,
scientific research, international
coordination
COMPULSORY EARTHQUAKE INSURANCE
INSURABLE PROPERTY
In
general meaning, intended for
dwellings that remain inside the
boundaries of the municipalities;
Building constructed as dwellings on
lands subject to private ownership
and has registered title deed,
Independent sections within the
context of the Condominium Law No:
634,
Independent sections situated inside
residental buildings but used as
small
business
establishment,
bureau and similar purposes,
By reason of natural disasters,
properties built by the government
or built by housing credit.
UN-INSURABLE PROPERTY
The properties that fall outside the
Compulsory Earthquake Insurance
are as follows:
The dwellings belonging to public
body and institutions,
The dwellings built in residential
areas of a villages,
The dwellings entirely used for
commercial and industrial purposes
(Block of offices, business center,
administ.sevice buildings, training
center buildings etc.),
The dwellings that are still under
construction,
COMPULSORY EARTHQUAKE INSURANCE
INSURABLE PROPERTY
With
the
Insurance;
Compulsory
INSURABLE PROPERTY
Earthquake
Earthquakes
Fires as a result of earthquakes
Explosions as a result of earthquakes
Landslides as a result of earthquakes
Tsunami as a result of earthquakes
Building only
causing material damages to the
insured buildings are covered up to
the sum insured by TCIP including
foundations, main walls, common
walls
separating
independent
sections, ceilings and bases, stairs,
platforms,
halls,
roofs,
and
chimneys.
SCOPE OF COVER AND TARIFFICATION
SCOPE OF COVER
INSURABLE PROPERTY
Only Earthquake and
following
SIMPLE TARIFF
Only Building
Earthquake Zone
Construction Type
M² of apartment
No contents
Fires
No BI
Explosions
Landslides
Tsunami
TYPE OF
CONSTRUCTIO
N
Zone
1
Zone
2
Zone
3
Zone
4
Zone
5
TYPE OF
CONSTRUCTION
UNIT
ONSTRUCTION
COST PER M²
Steel, RC
2.20
1.55
0.83
0.55
0.44
Steel, RC
700 TL
Masonary
3.85
2.75
1.43
0.60
0.50
Masonary
500 TL
Others
5.50
3.53
1.76
0.78
0.58
Others
260 TL
Prices for a 100 square meter dwelling
Type of
construction
Sum Insured
Turkish Lira
Zone
1
Zone
2
Zone
3
Zone
4
Zone
5
Steel or R/C
70.000
164
119
68
49
41
Masonary
50.000
202
148
82
40
35
Others
26.000
153
102
56
30
25
BASICS OF TCIP
BASIC FIGURES
Total No of policies
BASIC FACTS OF COVERAGE
5.950.000
Total coverage 151.490.500.000 €
Compulsory for household
owner’s
Annual premium
Only residential buildings
Avg. Sum insured
Avg. Premium
239.666.000 €
25.465 €
40 €
Total Claim Files
20.622
Total claims paid
56.996.000 €
Only earthquake risk, no flood,
windstorm, clearance etc.
Only building coverage, no
contents, no business
interruption, etc
Only TCIP is providing
earthquake cover to households
up to SI 150.000 TL
First loss based policy
Recently, Renewal Discounts
provided
* as 06.09.2013
** Euro 2,714
%43,7
PORTFOLIO
PENETRATION
7.000.000
NUMBER OF POLICIES (000)
6.000.000
227.511
%32,0
%28,3
1.135.179
805.077
610.854
461.681
UNINSURED HOMES
INSURED HOMES
MAR MARA
2.046.411
İÇ ANADOLU
1.543.486
EGE
KARADENİZ
572.893
DOĞU ANADOLU
1.164.909
737.969
1.707.403
AKDENİZ
3.252.134
179.717
0
PORTFOLIO DIST FOR EQ ZONES
%28,3
1.000.000
%23,8
%23,5
2013
2.000.000
GÜNEYDOĞU
5.950
4.786
3.000.000
2012
3.725
2011
3.287
2010
3.436
2009
2.844
2008
2.618
2007
2.554
2006
2.417
2005
2.090
2004
2.022
2003
2.128
2002
2.428
2001
2000
159
5.000.000
4.000.000
%35,5
2.528.876
INSURANCE PENETRATION
PORTFOLIO DIST PER REGIONS
ZONE 5
1,0%
EAST ANATOLIA
3,6%
MEDITERRAIN
10,0%
ZONE 1
45,7%
ZONE 4
16,0%
EAGEN
14,0%
MARMARA
42,8%
ZONE 3
10,9%
ZONE 2
26,4%
BLACKSEA
7,6%
SOUTH EAST
ANATOLIA
3,0%
CENTRAL
ANATOLIA
19,0%
TCIP IN NEAR FUTURE
6.000.000 policies
10.000.000 number of householders to reach
Increase communication and public relation activities
Excelling in claim management
Increased use of Technology
EMERGENCY ACTION PLAN
Why
Secure un-interrupted service availability
Plan “Pre-During-After” Earthquake activities
Plan available resources according to size of
earthquake
Plan coordination activities with related
Institutions
NEW ERA IN CAT MANAGEMENT
LESSONS
LESSONS
Less loss of lives in the countries with
stringent building codes (Chile and
New Zealand)
Multiple events are not unusual (1999
Turkev and 2011 New Zealand)
Secondary risk causing severe
damages (tsunami, aquafaction)
Modeling has it’s limitation
Underestimated scenarios
Economic
Political
Demographic
Ambiguity on expectations from
insurance industry
Importance of strong construction
industry
Operational capacity is as important
as financial capacity
Outdated operational manuals
Procedures must be simple and lean
Application of sum insured or
indemnity limits
Necessity for collaboration between;
Industries
companies and public offices
cities-countries
Lack of;
adjusting capacity
technology
Field knowledge
12.01.10 7.0 Haiti Earthqauke
11.01.11 Australian Flood
27.02.10 8.8 Chile Earthquake
11.03.11 8.9 Japan Earthquake
04.09.10 7.1 New Zealand Earthquake
22.02.11 6.3 New Zealand Earthquake
CAT EVENT CLAIM MANAGEMENT
DASK
HASAR
DANIŞMA
KURULU
HASAR
TESPİT
UZMANLARI
SORUMLU
LUK
BÖLGELER
İ
Collaboration with
reinsurers
SORUMLU
LUK
BÖLGELER
İ
SORUMLU
LUK
BÖLGELER
İ
SORUMLU
LUK
BÖLGELER
İ
SORUMLU
LUK
BÖLGELER
İ
TCIP
EMERGENCY CALL CENTER
TO INCREASE
MODELLING
CAPACITY
TO IMPROVE
DATABASE
TO IMPROVE
UNDERWRITING
YÖNETİM PLATFORMU
SORUMLU EKSPER BÜROLARI
LİSANSLI
EKSPERLER
EĞİTİM
PLATFORM
Strong and
efficient client
contact
Emergency
call center
services
Fast and accurate
claim adjusting
Claim adjusting
resources
Main
Emergency
TO INCREASE
COORDINATION
W/ INSURANCE
INDUSTRY
OBSTACLES
OBSTACLES IN MASSIVE CLAIM
OPERATION
Limited number of claim adjusters
Long period of training and
education
Limited number of training courses
No promise of income for adjusters
To be raedy for service in un-known
time in the future
TRAINING PROGRAMS AND
INSTITUTIONS
Construction knowledge
Princeples of insurance – TCIP
Claim adjusting knowladge
Claim database modelling
Universities
Insurance Institutes
Engineering associations
Claim adjusters association
FUTURE COMMUNICATION PLAN
FACE TO FACE COMMUNICATON
LOCAL
COMMUNICATION
CITIES IN CONTEST
EARTHQUAKE
SEMINARS
BRAND AWARENESS
EARTHQUAKE
TRAILER
THE HURRIYET
TRAIN
TOUCHING YOUTH
GENERATION
TCIP MEETING
YOUTH
3.NATIONAL FILM
CONTEST
GET SUPPORT OF
PUBILIC OPINION
LEADERS
COLLABORATION W/
UNIVERSITIES
MEETING W/
ACADEMICIANS
BE CLOSE TO
INSURANCE CO’S
CAMPAIGN FOR
AGENCIES AND BANK
BRANCHES
TCIP LISTENING THE
INDUSTRY
INC POPULARITY OF
EQ INSURANCE
TCIP ON SOCIAL
MEDIA
FREQUENT
APPEREANCE ON TV
CONTINUES COMMUNICTION AND PUBLIC RELATION
CONTINUES COMMUNICATION AND PUBLIC
RELATIONS
CHALLENGES AND OBJECTIVES
CHALLENGES
Low insurance awareness
Enforcement of new Catastrophe
Insurance Law
Low penetration rate
Restructuring of TCIP after a decade
Aligning with national databases
Effective control level in public
offices
Ensuring sound reconstruction
activities after claim payment
High cost of maintaining contingency
capacity
OBJECTIVES
Increasing number of policies
Excelling in Cat Response
Establishing strong synergy between
institutions
Public offices
Insurance companies,
intermediaries
Claim adjusters
Increasing Reinsurance capacity
Using alternative claim financing
tools
Implementation of new projects
TURKISH
CATASTROPHE
INSURANCE
POOL