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© International Group Program
Country Panel Presentation: Turkey
2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016
Nuri Oğuz Şengöl, Supervisor, Allianz Turkey
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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.
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Key Topics
Background Information
Social Security
Private Practice Taxation Legislation
2
Country and Company Info &
Background
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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)
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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
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Key Topics
Background Information
Social Security
Private Practice Taxation Legislation
6
Summary of Social Security
Benefits
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₋ 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
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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?
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Key Topics
Background Information
Social Security
Private Practice Taxation Legislation
9
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
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Customary Private Employee Benefits Turkish Insurance Market
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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
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- 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
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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
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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
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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
Background Information
Social Security
Private Practice Taxation Legislation
16
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
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Taxation
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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
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
Tax exemption until 15% of monthly
employee salary, if not exceeding gross minimum wage
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
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Key Topics
Background Information
Social Security
Private Practice Taxation Legislation
18
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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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
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Key Topics
Background Information
Social Security
Private Practice Taxation Legislation
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
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www.allianzyasamemeklilik.com.tr
Contact Info
Nuri Oğuz Şengöl Allianz Turkey
+90.216.559 76 52 [email protected]
Supervisor Quotations & Sales Operations