May 26, 2015Istanbul

ABOUT DASKCLAIMS & CAT MANAGEMENTREINSURANCE

HISTORY

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

Insured loss: around USD 800 milion

Economic loss: over USD 10 billion

Low insurance penetration (especially for residential risks)

Burden on public budget

Decree law no 587 – compulsory earthquake insurance as of 27th September 2000 untill 18th of August 2012

As from 18th August 2012 new 6305 Catastrophe Insurance Law

PRE-TCIP

WHY

Reactive solutions versus proactive solutionsShortage of funds in immediate needAllowance of funds to those in need is problematicPolitical 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 homeownersAffordable price for every homeownerTrue risk transfer mechanismClaims-paying capacity to limit government’s exposureBuild national catastrophes reserves by timeimprovement of risk culture and insurance consciousness in publicRely on distribution channels of Turkish insurance industry

ESTABLISMENT OF DASK

LEGAL AND FINANCIAL BASE OF DASK

Financed by Marmara Earthquake Emergency Reconstruction Project co-financed by

Turkish GovernmentWorld BankEuropean 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, 2020As from 18th August 2012 new 6305 Catastrophe Insurance Law

PUBLIC-PRIVATE PARTNERSHIP

NOWHEREWITHOUT

TECHNOLOGY

WAN

J2EE APPLICATION

SERVER

J2EE APPLICATION

SERVER

ORACLE DATABASE

LDAP

J2EE APPLICATION

SERVER

LDAP

ORACLE DATABASE

DMZWEB SERVER

FIREWALL

DMZWEB SERVER

FIREWALLDISASTER RECOVER CENTER

TCIP

CENTER

CALL CENTERCOMPANIES

L LINE

INTERNETİSTANBUL ANKARA

16 MILLIONHOMEOWNERS

THE TREASURYGENERAL DIRECTORATE OF

INSURANCE TCIPBOARD OF DIRECTORS

INSURANCE COMPANIES

REINSURANCE

IT

FUND MANAGMENT

AGENCIES BROKERSBANC

ASSURANCEDIRECT & ADC

CONTRACTUALAGREEMENT

PR

CLAIM OPERATIONS

CLAIM

MANAGEMENT COMPANY

• State of the art technology• 99,9% service level• Investing into satellite and mobile

technologies• Continuous improvement• Various level Back-up services, data and

programs• Disaster Recovery Center is able to be in full

operation within 2 hours

BASICS OF DASKPUBLIC AND

PRIVATE PARTNERSHIP

30.000 POS

SINGULARITY AND SIMPLICITY

PROPERTY

EARTHQUAKE

RESIDENTIAL BUILDINGS

DASK

SINGLE

LINE

PERIL

RISK

PROVIDER

ONLY EARTHQUAKE

ALL BANKS AND AGENCIES

3 PRICING FACTORS

FEW INFORMATION

SIMPLE

TO UNDERSTAND

TO ACCESS

PRICING

CLICK PRODUCT

JUST CALL 125CLICK POST-SALES OPT

PRODUCT CONCEPT - SINGULARITY

PRODUCT FEATURES - SIMPLICITY

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 700 TL

Masonary 500 TL

Others 260 TL

TYPE OF CONSTRUCTİON

SUM INSUREDTURKİSH LİRA

Zone1

Zone2

Zone3

Zone4

Zone5

Steel or R/C 70.000 164 119 68 49 41

Masonary 50.000 203 148 82 40 35

Others 26.000 153 102 56 30 25

Prices for a 100 square meter dwelling (TL)

SIMPLE TARIFF

• Earthquake Zone• Construction Type• M² of apartment

SCOPE OF COVER

Only Earthquake and following•Fires •Explosions•Landslides•Tsunami

INSURABLE PROPERTY

Only Building• No contents• No BI

IMPROVED PENETRATION

FROM

4% TO 40%

SUSTAINED LOW PRICES

LESS THAN

€ 40ANNUAL PREMIUM

12 MİLYAR TLÖDEME KAPASİESİ

ACHIEVEMENTS

INCREASED PUBLIC AWAIRNESS

OVER

90%BRAND AND PRODUCTRECOGNITION

RELEASE ONNATIONAL BUDGET

€ 4.4 BILLIONCLAIM PAYMENT CAPACITY

LOW OPERATIONAL COST

LESS THAN

3%

EFFECTIVE PUBLIC-PRIVATE PARTNERHIP

HAS BECOMEA GLOBALROLE MODEL

OVERALL 40%

50%31%

29%39%36%

938,457

34% 26%

763,075AVERAGE PREMIUM - US$

POLICIES

DASK - TURKISH NATURAL CATASTROPHE INSURANCE POOL www. dask.gov.tr

$39 $33252,467

$55$221,308,985

$52222,467

$492,999,067

$39525,038

$ 427,0 mio

VARYING REGIONAL PENETRATION / LOW COST ACROSS THE COUNTRY

DASK IN THE FUTURE

HAVING ROBUST PLATFORM

DEVELOPING CONTINGENCY

RESOURCES

IMPROVING COORDINATION

USE OF HIGH END TECHNOLOGY

7.5 MILLION POLICIESIN 2015

10 MILLION POLICIES2017

EFFECTIIVE USE OF CHECK POINTS USE OF IMPROVED METHODOLOGIES AND RISK REDUCTION STUDEIS

STRONG COORDINATION WITH STAKE HOLDERS AND CONTINOUS PUBLIC RELATION ACTIVITIES

INCREASING PENETRATION IMPROVING CAT MANAGEMENT

ABOUT DASK CLAIMS & CAT MANAGEMENTREINSURANCE

LESSONS

Operational capacity is as important as financial capacity

Outdated operational manuals Procedures must be simple and lean Application of sum insured or indemnity limits Necessity for collaboration between;

Industries companies and public offices cities-countries

Lack of; adjusting capacity technology Field knowledge

LESSONS

Less loss of lives in the countries with stringent building codes (Chile and New Zealand)

Multiple events are not unusual (1999 Turkey and 2011 New Zealand)

Secondary risk causing severe damages (tsunami, liquefaction, nuclear damage)

Modeling has it’s limitation Underestimated scenarios

Economic Political Demographic

Ambiguity on expectations from insurance industry

Importance of strong construction industry Need for more involvement of Government

support

NEW ERA IN CAT MANAGEMENT

o 12.01.10  7.0 Haiti Earthquake

o 27.02.10  8.8 Chile Earthquake

o 04.09.10 7.1 New Zealand

Earthquake

o 11.01.11 Australian Flood

o 11.03.11  8.9 Japan Earthquake

o 22.02.11 6.3 New Zealand

Earthquake

OPERATIONAL CAPACITY

AS IMPORTANT AS FINANCIALo 23.09.2011 Van Earthquake

o 09.11.2011 Van Earthquake

o 2012 Kütahya Earthquake

JAPAN MODEL NEW ZELAND MODEL

DASK’S STRATEGY FOR THE FUTURE

EXPERIENCE GAINED IN TURKISH EARTHQUAKES

LESSONS

When to start claim adjusting; after rescue operations or aftershocks

How important to have continuous observation on damage development of on the field because of after shocks

Appointing adjusters to the building not to the policies How important to have standard, simple and transparent

adjustment To have fixed construction cost tables for claim adjusters Adjustment of common areas of the buildings Difficulties in logistics and housing of the claim adjusters Claim adjusters reluctance on leaving in the earthquake

area. Public offices, such as Municipality and Land Register

Offices, being un-operational due to physical damage or loss of lives Unavailability of construction capacity in the region

Public confusion on claim adjustment due to Government’s damage assessment activities.

Public prosecutors and mortgage holders' discretion on the claim payments.

Low sum insured on the policies Physiological trauma causing people to leaving the city, Confusion on address information Lack of engineering knowledge of the professional claim

adjusters Lack of coordination with insurance companies

VAN EARTHQUAKE

TOTAL NUMBER OF CLAIM NOTIFICATION 8.701

TOTAL PAID CLAIMS 7.000

TOTAL PAID AMOUNT 123.000.000

JUSTIFIYING TCIP’S SUM INSURED

TOTAL NUMBER OF TOTAL LOSSES 1.289

TOTAL PAID 75.639.234

TOTAL SUM INSURED 99.043.410

DIFFERENCE 24%

%24 EXACTLY SAME FOR SIMAV EQ

SOCIAL OBJECTIVES

INSURANCE PRINCIPLES

CAT MANAGEMENT PLATFORM

Uydu Görüntüleme ve Fark Algılama

İB1_

DA

SK

İnt

erak

tifİB

2_O

pera

syon

el

Ver

imlil

ikİB

4_H

asar

Yön

etiş

im

2. Ç 3. Ç 4. Ç 5. Ç 6. ÇİB Proje 1. Ç

P1

P2

P3

P4

P5

P6

İB3_

Etk

in H

azır

lık P7

P8

P9

P10

P11

P12

İTÜOnay

BirimMaliyetlendirme

İzmirTasarım Algoritma

HasarKategorizasyon

TOBB Eksperleri Bilgi Dosyası Yeni Eksper Bilgi DosyasıÇŞB, AFAD, Üniversiteler ve Mühendislik Odaları ile

Görüşmeler

Eğitim İçerik Yönetimi ve Organizasyonu

Konsolide Veri Modeli İş Kuralları ve Kontoller

Saha LojistikAlternatifli Aksiyon Planlaması

Saha Organizasyon Modellemesi

Banka / PTT ile MutabakatÖdeme Uygulaması

IVR

Sigortalı ve Aday Sigortalı Mobil Uygulaması

Sigortalı Portalı

Modelleme (BOUN)

Hava ve Sokak Görüntüsü

Mobil Eksper Uygulaması

Analitik Kapsamı ve Analizi

Nakit Akış Planlaması

Hasar Uygulaması **

2014* 2015*

Program Planlamasıve Mobilizasyonu

Proje ekiplerine bilgi aktarım ve kapsam detaylandırma workshop’ları

Program Yönetimi; Değişim ve İletişim Yönetimi

Veri Ambarı Senkromizasyonu ve Optimizasyonu (Tasarımların tamamlanmasını takiben)

Veri Modelleme, BT Altyapı ve Mimari Değerlendirme Workshopları (Program boyunca)

Öncelikli Veri Temizliği

AFAD, ÇŞB ile ortak kaynak kullanımı ve/veya ortak eğitim kapsamının ve planının oluşturulması

Eğitim StratejisiEğitim Sertifikasyonu

Geocode

Eğitim İçerik Güncellemeleri

Hasar KPI ve SLA’ler

Eksper KPIve SLA’ler Hasar

DashboardEksper

Dashboard

Haritalandırma ve Etki Tahminleme Poliçe Entegrasyonu

Hasar Kategorizasyon Modülü Güncellemesi

Hızlandırılmış Başlangıç

P13

Eksper Dashboard Güncellemesi

Üst Yönetim Raporlama

,U

Rap

orla

ma

ve D

ataW

areh

ouse

Dış Entegrasyonlar

E-Posta

Posta

Çağrı Merkezi

IVR

Web Portal

Mobil

Telefon / Fax

İhbarDosya

DeğerlendirmeRücu/Sovtaj

Dosya NotlarıHasar

Kontakları

Şablonlar

SuistimalPatternler Ödemeler Tahsilatlar

LimitMuafiyet

Muallak Yönetimi

Eksper & PerformansYönetimi

E-posta / SMS Görevler Raporlama KonfigurasyonHasar Destek Fonksiyonları

Hasar Yönetimi Finansallar

Hasar Uygulamasıİletişim Kanalları

Çıktı

Poliçe Sistemi

Ödeme SistemiReassürans

Sistemi

Risk YönetimiSkorlama Sistemi

İç EntegrasyonlarMaliyetlendirme

SistemiModelleme ve Tahminleme

UygulamasıPoliçe Sistemi

Ödeme Sistemi

Analitik ve Veri Madenciliği

Muhasebe Sistemi

Risk YönetimiSkorlama Sistemi

Döküman YönetimiArşivleme

İş Süreç/AkışYönetimi

Olay Tanımlama

Coğrafi Bilgi Sistemleri

Dönüşümler ve Haritama

Modelleme ve Tahminleme UygulamasıMaliyetlendirme Sistemi

MaliyetlendirmeStandardizasyonu

MaliyetlendirmeKategorizasyonu

Analitik ve Veri Madenciliği

Performans ÖlçütleriVeri Madenciliği

Muhasebe SistemiÖdeme Sistemi Reasürans Sistemi

Hasar Uygulamasını Destekleyen Uygulamalar ve Kurumsal Uygulamalar

Web Satış(Vizyoneks)

TAPUElektrik Su

DairesiUAVT

Sigorta ŞirketleriAcenteler

E-DevletPortföy Yönetim

ŞirketleriTOBB

BankaPTT

TAPUAFADCBS

VEDOP UYAPKandilliSistemi

Eksper Yönetimi

• DASK designed the cat management structure with improved procedures and new model

• Accenture’s study justified the target model and provided implementation plan.

• DASK preferred to built it’s model on the renown platform, SAP

• Local partner, Vizyoneks, is integrating and developing the application together with SAP

• IBM is the program manager and business modeller on behalf of DASK

DASK CLAIM ADJSUTMENT PRINCIPALS

BEFORE EARTHQUAKE

IMMEDIATELY AFTER EARTHQUAKE

SHORTLY AFTER EARTHQUAKE

EARTHQUAKE OPERATION

EXCEL ON MODELLING

EXCEL ON ESTIMATION

EXCEL ON DESKTOP LOSS ASSESMENT

EXCEL ON CLAIM ADJUSTMENT

T -1

T 0

T 1

T 2

WHY AND HOW TO INTEGRATE GIS TECHNOLOGIES

AFTERSHOCKS EXCEL ON TRACKING THE FIELDT

3

ABOUT DASKCLAIMS & CAT MANAGEMENT REINSURANCE

DESIGNING CLAIM PAYMENT CAPACITY

Diversify the Market More capacity from financial markets (credit lines,

bonds etc) Diversify the Tools

Alternative solutions (cat bond, structured deals, swaps etc)

Diversify the Regions Spread through all regions

Diversify the Currency Policy, construction industry, reinsurance program

Diversify the Payback conditions Ensure solvency of the system

CAT FINANCE

310

RISK ASSESMENT Increased risk perception causing higher loss estimates Ever increasing claim protection needs Increased sensivity on removing burden on national

budget TCIP’s leading role in Turkish Insurance market

CLAIM PROTECTION NEEDS Rapid growth in number of policies Accumulation sensivity in Istanbul Region Currency fluctuations Global Trends Vendor Modeling assumptions Comfort zone of TCIP Solvency II Rating Agency criteria's

MAINTAINVERTICAL AND HORIZONTAL

CAPACITY

OBTAIN AND MAINTAIN

TREASURY’S SUPPORT

MORE USE OF FINANCIAL

INSTRUMENTS

PROTECTION CAPACITY

PERMITTED INVESTMENTS YIELD

+ INTEREST SPREAD OREXTENTION PERIOD

PERMITTED INVESTMENTS

YIELD

SERIES 2013-1

CLASS ANOTEHOLDE

RS

BOSPHORUS 1 RE LTD

TCIP

U.S TREASURY MONEY MARKET

FUNDS OR CASH

PREMIUM PAYMENT DEPOSIT ACCOUNT

MEAG BOSPHORUS

REIN

SURA

NCE

AG

REEM

ENT

PREM

IUM

PAY

MEN

TS

AND

AD

DIT

ION

AL

PREM

IUM

ISSU

ERPA

YMEN

TS

400 MIO PROCEE

DS

INITIAL PERMITTED INVESTMENTS

400 MIO PROCEEDS

REPAYMENT AMOUNT

FUNDED INITIALLY WITH 190 DAYS OFINTEREST SPREAD AMOUNT CALCULATED

ON THE ORIGINAL PRINCIPAL AMOUNT

SECURITY INTEREST

CLASS ACOLLATERAL

ACCOUNT

• Rapid growth pushes TCIP to buy additional capacity• Great interest for diversifiers• High capacity demand is prone to surcharge in reinsurance premium• Cat Country Traditional Capacity available in the market is exhausting• TCIP takes higher portion of the reinsurance capacity in the market• Local insurance companies are getting difficulty in raising capacity• Earthquake exposure leaves not much capacity for other natural perils

450 MIO EURO

335 MIO EUROCAT BOND

3,15 BILLION EURO

3.250 BILLION EURO

%10

TRE

ASU

RY S

UPP

ORT

• Keep on investing into operational excellence• Continue to implement diversification strategy• Lead and support Turkish Insurance Market • Decrease cost of claim financing• Concentrate on building strong reserve funds • Abiding cat bond issuer• Maintain government support • Respect strategic partnership

• High quality of information/data for Investors• Transparent• Reliable• On-line• Unprocessed/row data from field

• Sponsored by TCIP• Established and operated by Kandilli Observatory• Availability of Historical data • Not only data but also availability of tools for calculation• Independent maintenance

EXAMPLE OF CALCULATION LOCATIONS’ IERREWS GROUND MOTION DATA

STATE OF THE ART TECHNOLOGY IN FINANCIAL INSTUREMENT AND THE FUTURE

KARADENIZ EARTHQUAKE, ML 4.5 PEAK GROUND ACCELERATION AT THE CALCULATION LOCATIONS

FINANCIAL PRODUCT BLENDED

WITH TECHNOLOGY

EX-ANTE CLAIM FINANCING EX-POST CLAIM FINANCING

CAT BONDS

CONTINGENCY CREDIT

TRADITIONAL REINSURANCE

ALTERNATIVE REINSURANCE

CORPORATE BONDS

RESERVE FUNDS

GOVERNMNET SUPPORT

EARTHQUAKE

PREMIUM BONDS

SWAPS

T-0

CLAIM FINANCING IN THE FUTURE