country panel presentation: turkey€¦ · country panel presentation: turkey 2016 igp regional...

© International Group Program

Country Panel Presentation: Turkey

2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016

Nuri Oğuz Şengöl, Supervisor, Allianz Turkey

1

This presentation was exclusively prepared for the attendees of the 2016 IGP Regional EMEA Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.


Key Topics

Background Information

Social Security

Private Practice Taxation Legislation

2

Country and Company Info &

Background

© International Group Program © International Group Program

5,418 Agencies

189 Brokers

1,706 Bank Branches

3 Entities • AZS • AZYE • AZHE

2,500

Employees

AZTR

Health

GWP1 (mn USD) 144 Share 12% Rank # 2

AUM1 (mn USD) 2,046 Share 18% Rank # 3

GWP1 (mn USD) 417 Share 36% Rank # 1

Background Information Company Info

• Leading the Turkish insurance market for 27 years, with 5 million customers


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Background Information Company Organizational Chart

Ulaş Öztürk (Director)

Ceylan Alver (Manager)

Hande Çetiner (Global Channels)

Onur Aktimur (Local Channels)

A. Cem Gökkan (Bank Channel)

Özlem Tunçay (Direct Business)

N. Oğuz Şengöl (Bid Mng./Sales Operation)


1 2014-2016 forecasted annual GDP growth 2 Nominal GDP Source : OECD & World Bank Data

3.6 % GDP growth rate 1 whereas

OECD average is 2.4%

17th biggest GDP of OECD with

717 bn USD 2

Young population with

29.6 median age vs.

40.3 OECD average

79 million population 10th most populated

country of OECD

1.3 % population growth rate

78-year life expectancy

8-year increase

in the last 15 years

Background Information Country Info


Key Topics


Social Security


6

Summary of Social Security

Benefits


₋ Old Age Pension

₋ Sickness and Maternity Benefits

₋ Permanent Disability Pension

₋ Survivors’ Pension

₋ Medical Benefits

₋ Workmen's Compensation

₋ Termination Indemnity

# of Insured 20,486,345*

Annual Growth Rate 4.9 %

% of Insured to Labor Force 76 %

• However, the system has been suffering from various obstacles

• Fiscal constraints

• Unsustainability

Social Security Benefits Summary

• As a rule, social security provided by the state is a compulsary service

• independent from individual request

• with additional private services (pension, health insurance, etc.)

• widely available


Hea

lth

Life

Pe

nsio

n

• Increasing population • Ageing population • Higher incidence of chronic

diseases • Wider health insurance coverage • Increasing economic welfare • Changing disease profile

SGK cannot provide efficient health care system

• High-income employees face a decrease in salary in retirement; compensated by private pension plans

• Worker-to-pensioner ratio has been decreasing gradually which creates a budget burden − 1 pensioner = 7 worker in 1975, whereas − 1 pensioner = 1.75 worker in 2012

• Economical stability and the growth in purchasing power lead to increase in bank loans and life insurances

• Economic stability attracted MNCs which introduced life insurance as an employee benefit to Turkish Market

Social Security Benefits Why do we need Private Insurance and Pension Plans?


Key Topics


Social Security


9

Customary Private Employee Benefits:

Type & Level of Benefits / Survey

Data / Plan Design / Benchmarking /

Trends


Customary Private Employee Benefits Turkish Insurance Market

10

Health

36

1.145 mn USD 2

Life

28

1.253 mn USD 2

Pension

10.9 billion USD 2

19 # of Companies

Total GWP 1 & AUM 1

Company

GWP Market Share

1 Allianz 36.47% 2 Acıbadem 14.95% 3 Mapfre 9.95% 4 Anadolu 9.55% 5 Ak 5.73%

Company

GWP Market Share

1 Ziraat 16.45% 2 Allianz 11.51% 3 Anadolu 10.69% 4 Garanti 8.74% 5 Halk 8.41%

Company

AUM Market Share

1 Avivasa 19.1% 2 Anadolu 19.0% 3 Allianz 18.0% 4 Garanti 15.9% 5 Vakıf 7.0%

1 Figures as of May 2016 2 1 USD = 3 TRY


- Minimum 20 insureds

- Ages must be between 18 and 64 - Tax advantage for employees - In the event of an accident or illness, the insurance company covers the

expenses for medical examinations, diagnosis and treatment

General Features

Benefits

Out-Patient ₋ Medical Practitioner & Specialist Fees ₋ Prescribed Medication ₋ Diagnostic Methods ₋ Physical Teraphy ₋ Dental Treatment ₋ Eye Glasses and Lenses

In-Patient ₋ Hospitalization, Surgery ₋ Minor Treatment ₋ Chemoteraphy, Radioteraphy ₋ Dialysis ₋ Nursing at Home, Maternity

Care

Customary Private Employee Benefits Health Coverage


General Features

Sample Plan

Benefits

₋ The term of policy is one year ₋ Indexed to TL, USD and EUR ₋ Local and International Dividend ₋ Free Cover Limit is USD 750,000

₋ Minimum 10 insureds ₋ Ages must be between 18 and 65 ₋ Tax advantage for employees ₋ Policy holder must be the

company

₋ Death Benefit ₋ Accidental Death Benefit ₋ Accidental Death on a Public

Transportation Vehicle Benefit ₋ Critical Illnesses Benefit

₋ Accidental Disability Benefit ₋ Disability due to Illness Benefit ₋ Medical Expenses due to Accident Benefit ₋ Daily Indemnity Benefit due to

Accident Benefit

- Death Benefit: 1x Annual Salary - Accidental Death Benefit (Additional) 1x or 2x Annual Salary - Accidental Disability Benefit: (Additional) 1x or 2x Annual Salary - Disability due to Illness Benefit: (Additional) 1x or 2x Annual Salary

Customary Private Employee Benefits Life Coverage


General Features

Benefits

₋ Employers may define vesting periods up to 7 years

₋ Group pension funds with lower fund management fees available in group pension plans

₋ Employer Sponsored / Voluntary Plans ₋ Tax Advantages for employees and employers ₋ Lower Administration and Fund

Management Fees ₋ Minimum 5 insureds

₋ Retirement eligibility with 10 years of contribution and at 56-year-old

₋ Professional Fund Management

₋ Flexible entry-and-exit policy ₋ Government and Company

Monitoring at all Level ₋ Efficient Risk Management

Customary Private Employee Benefits Pension Coverage


Customary Private Employee Benefits

• Complementary Health Insurance Given current regulatory framework, and emerging survey results, individual complementary market

could reach 1.8 million customers in 2023 About 70% of this market will come from top 20 cities covering 80% of Turkey’s population About 80% of the expected 2 million corporate customers will come from 20-100 million TL

(large SME/commercial) companies segment and from manufacturing, construction, textile, transportation and retail industries

• General conditions Minimum 10 insureds Ages between 0 - 65 No aplication form or medical examination Current illnesses are excluded

• Sample Plan In-Patient (No limit) + Out-Patient (max. 8 times) Insured Number : 250 Individual premium: TRY 485

Trends

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Customary Private Employee Benefits

• Flexi Benefit Plans Allow employees to choose the benefits they want or need from a package of

programs offered by an employer

May include health insurance, retirement benefits, and discount options from various businesses such as whiteware, furniture, grossery stores, sports centers, travel agencies

In a flexible benefit plan, employees contribute to the cost of these benefits, enabling employers to control the expenses of these benefits

Trends

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Key Topics


Social Security


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Taxation of benefits (e.g. lump

sum versus pensions) /

Tax treatment of ER and EE

contributions


Taxation

17

Em

ploy

ee

Em

ploy

er

Life Health Pension

Life Health Pension

Tax exemption until 15% of monthly

employee salary, if not exceeding gross minimum wage



-25% state contribution

-Investment returns are not taxed during

the contribution period





Tax exemption until 15% of monthly employee

salary, if not exceeding gross minimum wage

-Investment returns not taxed during contribution

period. Different withholding rates applied

for exit at different durations


Key Topics


Social Security


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Current legislative issues with

significant impact on the funding of the benefit plans / How are employer

and employees affected?


Legislation

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2021

Previous Regulation

Entrance Fee Varies according to contract tenure, from 25% to 75% of MNMW1 (max 10% collected at point of entry, remaining postponed to exit)

Contribution charge 2%

Paid up charge 2TL per month

Current Regulation

1 MNMW: Monthly National Minimum Wage

First 5 years: Yearly deductions with 8% of MNMW1 (approx. 136 TL) Surrender within first 5 years: Remaining amount of 5 years’ cumulative deductions can be charged.

2016

FMC Refund2

No change in fund management charge structure

6th contract year onwards: FMC refunded by 2.5 % per year, ratio to be increased by 2.5% yearly until max of 25%

Fund Management Charges By fund type, all years: Cash T-bills & Bonds Managed & Equity

: 1.09% : 1.91% : 2.28%

Private Pension Legislative Amendments


Key Topics


Social Security


20

Current legislative issues with

significant impact on the funding of the benefit plans / How are employer

and employees affected?

Country and Company Info &

Background

Summary of Social Security

Benefits

Customary Private Employee Benefits:

Type & Level of Benefits / Survey

Data / Plan Design / Benchmarking /

Trends

Taxation of benefits (e.g. lump

sum versus pensions) /

Tax treatment of ER and EE

contributions


www.allianzyasamemeklilik.com.tr

Contact Info

Nuri Oğuz Şengöl Allianz Turkey

+90.216.559 76 52 [email protected]

Supervisor Quotations & Sales Operations

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