Recent Revisions to Turkey’s Earthquake Tariff

In recent years, Turkey has witnessed several revisions to its compulsory earthquake tariff, reflecting the dynamic nature of the insurance landscape. These changes are a response to factors such as high inflation, currency fluctuations, and the profound impact of the devastating earthquake in February, which significantly influenced the Turkish insurance market. This article aims to provide a succinct overview of the key modifications implemented since 2021.

Chronological Changes:

July 1, 2022: Increase in Free Tariff Limit

The free tariff limit, denoted at 193,200,000 TL, was elevated to 290,000,000 TL on July 1, 2022. This limit serves as a crucial threshold; if the Total Sum Insured (TSI) for a client’s location surpasses this amount, insurers are authorized to apply any rate for the excess TSI.

July 1, 2022: Adjustment in Business Interruption (BI) Rate Calculation

Previously, the tariff allowed the application of the BI rate as half of the Earthquake (EQ) rate. For instance, if the EQ rate was 2.63, the BI rate could be applied as 2.63/2, resulting in 1.315. However, as of July 1, 2022, this practice was altered, and the BI rate is now aligned with the full EQ rate.

January 1, 2023: Further Increase in Free Tariff Limit

The free tariff limit experienced another increase, reaching 400,000,000 TL as of January 1, 2023, showcasing an ongoing effort to adapt to market conditions and provide flexibility to insurance providers.

August 1, 2023: Significant Raise in Free Tariff Limit

In a substantial move, the free tariff limit was dramatically increased to 2,000,000,000 TL on August 1, 2023. This adjustment, equivalent to approximately 68 million euros, aims to ensure that insurers can continue to provide adequate capacity to firms amidst economic challenges.

November 2023: Announcement of Earthquake Zone Rate Increase

In a recent development, it has been announced that earthquake zone rates will undergo a 25% increase each, effective January 1, 2024. This measure seeks to address evolving risk profiles and maintain the financial resilience of the insurance market.

The evolution of Turkey’s compulsory earthquake tariff underscores the nation’s commitment to adapting to economic realities and ensuring the sustainability of insurance capacity for businesses. These strategic revisions, including adjustments to the free tariff limit and earthquake zone rates, reflect a proactive approach to mitigate risks and provide a stable foundation for the Turkish insurance industry. As stakeholders navigate these changes, staying informed and adapting to evolving regulations remains paramount for a resilient and responsive insurance market.