Bakü, July 2012

Mrs. Menekse Ucaroglu

The devastating Earthquake in Marmara on 17th August and 12th November 1999

An insured loss of around USD 800.000.000

An economic loss of around 6 billions of USD

In 20th century 111 earthquakes above 5.0 Richter scale

HISTORY

REGION

PRODUCES

ONE THIRD

OF

NATIONAL GDP

CENTER OF COMMERCE

HIGH DENSITY OF INDUSTRY

AGRICULTURALPROJECTS

CAPITAL CITY

SEISMIC HAZARD ZONES OF TURKEY

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

World BankTurkish GovernmentEuropean 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

TCIPINSURERREINSURERSALES FUNCTIONSOPERATIONAL SERVICESRISK MANAGEMENT SUPPORTCLAIMS MANAGEMENT

HOUSEHOLDERSRISK MANAGEMENTBEHAVIOUR

AUTHORITIESREGULATION SUPERVISION

LEGAL FRAMEWORKRISK MANAGEMENT SUPPORT

DISASTER MANAGEMENT

PUBLIC-PRIVATE PARTNERSHIP

1.66

3.12

6

319.890

597.

554

95.172

2.04

5.66

2

516.837

757.

099

102.166

2.22

7.05

5

656.385

1.28

2.09

6

239.453

4.41

6.07

3

1.549.881

MED

ITER

RA

IN

EAST

AN

ATO

LIA

EAG

EN

SOU

TH E

AST

AN

ATO

LIA

CEN

TRA

LA

NA

TOLI

A

BLA

CK

SEA

MA

RM

AR

A

COMPULSORY EARTHQUAKE POLICIES (.000)

2.128 2.022 2.090

2.554 2.6182.844

3.4363.287

3.479

2.4172.428

159

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

PORTFOLIO

% 19,2

% 15,9

% 25,3

% 13,5

% 29,5

% 35,1

% 18,7

PENETRATION RATES

INSURED DWELLINGS

TOTAL DWELLING

% 26,8

TURKEY IN GENERAL

12

.98

8.6

63

Total No of policies

3.5 mio

Annual premium

214 mio USD

Avg. Sum insured

38.000 USD

Avg. Premium

62 USD

Total Claim Files (paid)

11.250

Total claims paid

13 m USD

TURKISH HOUSEHOLDERS

TREASURYGENERAL DIRECTORATE OFINSURANCE

TCIPBOARD OF DIRECTORS

INSURANCE COMPANIES

REINSURANCE

IT

FUND MANAGMENT

AGENCIES BROKERSBANCASSURANCE

DIRECT & ADC

CONTRACTUALAGREEMENT

PR

CLAIM OPERATIONS

CLAIM

TURKISH HOUSEHOLDERS

TREASURYGENERAL DIRECTORATE OFINSURANCE

TCIPBOARD OF DIRECTORS

INSURANCE COMPANIES

REINSURANCE

IT

FUND MANAGMENT

AGENCIES BROKERSBANCASSURANCE

DIRECT & ADC

CONTRACTUALAGREEMENT

PR

CLAIM OPERATIONS

CLAIM

STRUCTURE OF TCIP

DASK CENTER

ACENTALARCOMPANIES / AGENTS

INTERNETINTERNETINTERNETINTERNET

DMZDMZ

WEB SERVERWEB SERVERWEB SERVER

DATABASE

J2EE APPLICATIONSERVER

J2EE APPLICATIONSERVER

CALL CENTERCALL CENTER

LEASED LINELEASED LINELEASED LINELEASED LINE

FIREWALLFIREWALL

DISASTER RECOVER CENTER -

WANWANWANWAN

DMZDMZ

WEB SERVERWEB SERVERWEB SERVER

DATABASE

J2EE APPLICATIONSERVER

FIREWALLFIREWALL

REPLICATION

LDAP

LDAP

ISTANBULANKARA

STATE OF THE ART TECHNOLOGYUNINTERROPTEDSERVICE

SCOPE OF COVER AND TARIFFICATION

TYPE OF CONSTRUCTION

Zone1

Zone2

Zone3

Zone4

Zone5

Steel, RC 2.20 1.55 0.83 0.55 0.44

Masonary 3.85 2.75 1.43 0.60 0.50

Others 5.50 3.53 1.76 0.78 0.58

TYPE OF CONSTRUCTION

UNIT ONSTRUCTION COST PER M²

Steel, RC 590 TL

Masonary 425 TL

Others 220 TL

Type of constructio

n

Sum Insured

Turkish Lira

Zone1

Zone2

Zone3

Zone4

Zone5

Steel or R/C 59.000 140 101 59 42 36

Masonary 42.500 174 127 71 36 31

Others 22.000 131 88 49 27 25

Prices for a 100 square meter dwelling

SIMPLE TARIFF

Earthquake Zone

Construction Type

M² of apartment

SCOPE OF COVER

Only Earthquake and following

Fires

Explosions

Landslides

Tsunami

INSURABLE PROPERTY

Only BuildingNo contents

No BI

Land Registrar Office, Mortgage transaction ,Water Bureau, Electricity Bureau are control pointsPublic perception on public aid has not been changed

Land Registrar Office, Mortgage transaction ,Water Bureau, Electricity Bureau are control pointsPublic perception on public aid has not been changed

AFAD (Disaster and Emergency Management Presidency) has been establisheddecentralized cat managementIncreased cooperation between AFAD and other instittionsIncreased involvement into national earthquake issuesParticipating into Istanbul Disaster and Emergency Action PlanImproved the terms and conditions of Tariff and Earthquake General Conditions

AFAD (Disaster and Emergency Management Presidency) has been establisheddecentralized cat managementIncreased cooperation between AFAD and other instittionsIncreased involvement into national earthquake issuesParticipating into Istanbul Disaster and Emergency Action PlanImproved the terms and conditions of Tariff and Earthquake General Conditions

PROGRES

AFADCOORDINATING NATIONAL ACTIVITIES

ACVIEVEMENTS

MAJOR ACHIEVEMENTS OF TCIP

Improved penetration from 4% to 26%

Increased public awareness for earthquake and insurance

Centralized marketing activities and brand management

Kept pricing at affordable level

Enhanced claims-paying capacity: USD 3,3 billion

Solid reinsurance program

Increased operational efficiency

Improved coordinated work between the public agencies, the

insurance industry, universities, etc..

Model structure for effective public-private partnership

Lack of coordination

No effective renewal follow-up

Lack of knowledge on promotion

and discounts

Lack of necessary information

Inadequate intermediary operation

skills

Fraudulent policies

Lack of coordination

No effective renewal follow-up

Lack of knowledge on promotion

and discounts

Lack of necessary information

Inadequate intermediary operation

skills

Fraudulent policies

OPERATIONAL OBSTACLES IN HE FIELDOPERATIONAL OBSTACLES IN HE FIELD

PENETRATION

Two policies on one dwelling

Mismatch of policy periods

Printing paper

Collection problem on residual

payments

Law commission income

Stretchy cancellation procedure

Two policies on one dwelling

Mismatch of policy periods

Printing paper

Collection problem on residual

payments

Law commission income

Stretchy cancellation procedure

SENDING POLICIESBY E-MAIL

Emphasizing renewal obligationMutual follow-up activitiesEstablishing centralized call center support center

For renewalsFor claim

Emphasizing renewal obligationMutual follow-up activitiesEstablishing centralized call center support center

For renewalsFor claim

RENEWALSRENEWALS NEW CLIENTSNEW CLIENTS

Increase control pointsSupport internet salesEstablishing centralized call center support center

To reach 10 Mio peopleShared call center sales infrastructure

Organize sales campaignIncreased communication activities

Increase control pointsSupport internet salesEstablishing centralized call center support center

To reach 10 Mio peopleShared call center sales infrastructure

Organize sales campaignIncreased communication activities

IMPROVEDPAYMENT

TERMS FOR INSURANCE

CO’S

CREDITCARD PAYMENT

INCREASING PENETRATION

SENDING POLICIESBY E-MAIL

Emphasizing renewal obligationMutual follow-up activitiesEstablishing centralized call center support center

For renewalsFor claim

Emphasizing renewal obligationMutual follow-up activitiesEstablishing centralized call center support center

For renewalsFor claim

RENEWALSRENEWALS NEW CLIENTSNEW CLIENTS

Increase control pointsSupport internet salesEstablishing centralized call center support center

To reach 10 Mio peopleShared call center sales infrastructure

Organize sales campaignIncreased communication activities

Increase control pointsSupport internet salesEstablishing centralized call center support center

To reach 10 Mio peopleShared call center sales infrastructure

Organize sales campaignIncreased communication activities

IMPROVEDPAYMENTTERMS FOR INSURANCECO’S

CREDITCARD PAYMENT

TCIPDISTRIBUTIONNETWORK

CAMPAIGNES

HOUSEHOLDERS

PUBLIC RELATION AND EDUCATION

PUBLIC OFFICES

CHECK POINTS

Providing collaboration with related public cooperations and institutions Searching way to provide instant control of policies when the service or administrative act take place Getting the support of local administratives in this area Integration with land registry and cadastre (TAKBIS)information system

Increasing cooperation with insurance firms and agenciesImproving operational process Informing agencies more effectivelyIncreasing practices for motivation regarding sales

Advertising and awareness activities Increasing public relation activities Participating in social responsibility

projects Providing broad public support to ZDS (academicians, media, public institutions, local management, art community, businessmen, politicians, construction sector and related foundations and institutions...)

TCIPDISTRIBUTIONNETWORK

CAMPAIGNES

HOUSEHOLDERS

PUBLIC RELATION AND EDUCATION

PUBLIC OFFICES

CHECK POINTS

INCREASING PENETRATION

Turkey tour for 50 days, visiting 45 cities in 2009 Face to face interaction with 300.000 people in total Seminars in the cities

“The reality of earthquakes and the importance of mandatory earthquake”

Meetings with local managers Stands at train stations

Hürriyettreni

CONTINUES COMMUNICTION AND PUBLIC RELATION

CONTINUES COMMUNICTION AND PUBLIC RELATION

Bakü, July 2012

THANK YOU !