The owner of the car affects 25 million people. Traffic Insurance Flash Statement. Hürriyet’s Noyan Doğan has brought the unknowns about traffic insurance to his corner. Doğan’s article is as follows:
Whenever I write an article on traffic insurance, readers immediately ask, “These insurers have a job dealing with traffic, don’t they have any other topics to talk about?” comes the reaction. They are very right. But traffic is such an insurance that the former; It affects the whole of society, especially 25 million motorists, i.e. citizens. As such, traffic insurance is the best-selling and the share of traffic insurance in the insurance market is close to 30%.
Second, the highest loss in the insurance market is paid for in traffic. Third; Inflation, fluctuations in exchange rates, increases in the minimum wage, changes in the costs of spare parts and labor used in repairs have a direct impact on traffic insurance. Fourth, the state determines both the premium and the collateral in traffic insurance, which makes up the bulk of the insurance market, and insurance companies must sell this insurance; They don’t have the right to say “I don’t sell”. If they return their traffic insurance licenses to the state, they are not obligated to sell them.
And the insurance companies are making one loss after another from traffic insurance. The figures have been announced, the loss in the first three months of this year approached 3 billion lire. And the premiums collected from insurance sales in the first three months weren’t enough to cover the damage. That is to say, the companies paid 180 lire of damage for every 100 lire of premium collected. He had to pay those 80 lire from his own safe. And all 26 companies that sell traffic insurance without exception have also announced losses.
THE LOSS IS GROWING
So why are they sick? Indeed, insurers have never made a profit from traffic insurance, in fact they have generally suffered losses, but for the first time in history, the loss figure has reached that size. The weighted factor in this is the damage cost of inflation and rising exchange rates; raising the minimum wage also increases bodily wages such as death paid (physical wages are calculated entirely based on the minimum wage). Let me explain with an example. You took out car insurance in September last year. At that time, inflation was 19.58 percent, the average dollar rate was 9 lire, and the minimum wage was 3,577 lire. By all these calculations, you paid 700 TL for traffic insurance. You had an accident today; inflation is 73 per cent, the exchange rate is 17 lire, the minimum wage is 5 thousand lire. The insurance company will pay for material and physical damage according to today’s parameters.
You had another accident a month later, it will pay according to the conditions at that time. But you paid 700 lire, the policy is valid until September 2022 and you will not pay a cent of the price difference. This is why today insurers have to pay 180 lire of damage for every 100 lire of premium they collect. So, the traffic insurance premiums haven’t gone up? It is true that the public has not raised prices in proportion to the increase in costs so that the consumer is not a victim. In fact, from 1 July, the coverage of traffic insurance has doubled.
Another reason companies lose money is their inability to generate financial profits. Let me explain it like this. Until yesterday, insurers compensated for their losses in traffic insurance with a financial profit. Now, because interest rates are so low, they can no longer make a financial profit and the traffic insurance loss is increasing day by day. It is said that the loss of 3 billion lire in the first three months will exceed 5 billion lire in the sixth month.
REFLECTION TO THE CONSUMER
Why did I tell you? I wanted you to know, and for some time now I’ve been getting complaints from readers that “we’re having trouble getting traffic insurance, we’ve been waiting for hours”. I know very well that these complaints are also very public. Obviously, there is a chaos in traffic insurance. It goes like this; it does not work. Let me briefly explain what happens if no action is taken.
For example, I have sensations; Some companies are also considering returning their auto insurance license to the public. You can say, “Let them do it if they want to,” but that’s not the case. The burden and loss pile up on the remaining companies and more chaos ensues. Secondly, if this goes on like this, some companies will not be able to meet their traffic insurance liabilities, their capital will not be enough. In this period, both nationally and abroad; Nobody puts extra capital into their business because of traffic insurance. When this is the case, companies naturally avoid taking out traffic insurance in order not to incur further losses and to dissolve their capital. At the end of the day he does, but he drags his feet. Because this damage is not sustainable damage in today’s conditions. Even if it goes on like this, I fear that the consumer will have serious difficulties in obtaining insurance.
HOW TO SOLVE THE PROBLEM?
So, what should be done to ensure that both the consumer and the insurance companies are not victims? I have a couple of suggestions; let me share. First; Insurance companies should have the opportunity to invest in inflation-linked bills or bonds during this temporary period. This opportunity can also be provided for traffic insurance only. Known to banks. Banks are backed with CPI-indexed bonds to be profitable in the period of high inflation. Furthermore, banks are not liable to pay damages like insurance companies do.
My second suggestion is that the state can take damage in traffic insurance for a temporary period until the chaos in traffic insurance is resolved. How does? The insurers pay 180 lire of damage per 100 lire of premium they collect; For example, the state may temporarily cover over 100 percent. Think of this as the Credit Guarantee Fund (KGF) support for lending by banks. In summary; In an industry where the state determines everything, including premiums, guarantees and commissions, companies make huge losses and cover the losses out of their own pockets. The state must provide temporary support for this situation.
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