TURKEY: MTPL price cap maintained for another year

9 December 2020 — Daniela GHETU
The ceiling on MTPL premiums' value will remain in place for another year starting 1 January 2021, the measure aiming to provide for affordable rated for insureds, the Insurance and Private Pension Regulation and Supervision Authority (SEDDK), Middle East Insurance Review reported.

The market authority has also established the indexation rate for the MTPL premiums for next year, at 1% every month. Consumer Rights Association's representatives has underlined that especially in this difficult period, when many people have to manage with lower income levels, but also tend to avoid public transportation because of the Covid-19 related risks, keeping MTPL rates at an affordable level is of a very high importance.

The ceiling on MTPL premiums was introduced in 2017 as a response to the significant premiums hikes in the previous years, being applied to premiums for high-risk drivers, including drivers of cabs, minibuses, commercial buses and trucks. While appreciated by consumers, the ceiling on MTPL prices is one of the main reasons behind the large technical losses seen by the motor insurance segment in the last years.

In May 2019, the Ministry of the Treasury and Finance of Turkey also added a new amendment to current MTPL Tariffs Principles Regulation, according to which insurance companies can use drivers' history to determine the final MTPL price. The new paragraph has introduced penalties for drivers, saying that traffic rule violations can be used in the process of risk assessment to determine insurance premiums, as well as the period in which the driver got his/her documents suspended and the reasons that led to these measures.

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