The new Turk P&I started operations on Feb. 19, 2014 after many years of efforts to insure Turkey’s thousands of small vessels, many of which have never had insurance
The company was founded by three local P&I correspondents, plus three state-owned insurance companies-Günes, Halk and Ziraat Insurance. The insurer provides fixed income premiums with cover worth up to $500 million. Half of the capital for the venture was provided by Turkey’s Omur Marine, Metropola and Vitsan as correspondent companies. One member of the board of directors of Turk P&I is appointed by the Ministry of Transportation, Maritime and Communication.
Aret Tasciyan, head of Turk P&I Sigorta, told MarineDeal News that the insurer’s priority are vessels that operate in Turkish waters. “Since there haven’t been, until today, any insurers that can offer insurance cover up to $500 million in Turkey, some of the larger ships which are legally required to have P&I insurance worked with insurance companies located abroad. Some of them continued to sail without any insurance at all, leaving the passengers, crew and third persons aboard these vessels without any insurance. Owners who had P&I insurance had to be involved in foreign courts in case of an accident, as most policies are crafted according to British laws. This is why many operators of smaller vessels were victimized, failing to defend themselves properly abroad. As Turk P&I offers its insurance within the framework of Turkish legislation, Turkish citizens may now claim their rights under Turkish laws.”
The creation of Turk P&I is also a significant development for the Turkish shipping industry, Tasciyan noted.
“Turk P&I has brought toget-her three state-owned insurance companies to benefit from their experience as insurers and three local P&I correspondents, given their experience in P&I, in parallel with the recommendations of the Ministry of Transportation, Maritime and Communication, creating this company which amounts to a huge step for the Turkish shipping industry.”
Turk P&I has already included in its portfolio a large number of privately owned coasters; prestigious fleets such as the ferries of the Istanbul Ferry Lines (İDO) and inner Istanbul ferry lines; and Ataturk’s yacht Savarona, which has significant symbolic meaning for the company. Tasciyan said the company so far has proven that it can be successful in the field of P&I as a Turkish company, and foreign insurance firms have already felt its presence.
‘Insurance for the sector’
Turk P&I General Manager Ufuk Teker told MarineDeal News that although the company was created in response to the need for insurance for smaller craft, it will operate on a profit-oriented basis for the sake of sustainability.
“Turk P&I was initially founded in response to the need that arose with liability insurance becoming obligatory for vessels of more than 300 grt tons. We are still having talks for the reinsurance to provide insurance up to 10,000 grt tons, although we expect that most of the vessels we’ll insure will weigh less. Turk P&I initially wants to insure at least 1,000 vessels although we hope that this number can go up to 2,0000,” Teker said. However, the percentage of vessels with insurance remains law in the sector, although P&I insurance is legally required for vessels that carry more than 12 passengers. He said awareness about insurance still needs to evolve in the sector.
“Turkey has recently increased its liability limits to world standards as part of the international agreements it has become a signatory of. To give a simple example, in the New Turkish Commercial Code, the liability limit per passenger is set at SDR 250,000 (around $385,000). A vessel that transports 500 passengers needs a guarantee limit of $200 million. Currently, very few companies can offer such a guarantee. Other vessels or operating companies either don’t have P&I guarantees, or the companies that offer these guarantees are not reliable or well known companies,” Teker said.
‘$10 million dollar volume target’
Turk P&I seeks to offer P&I insurance for all the vessels that run the Turkish flag, Teker said, noting that in case of a potential risk being realized, all the parties involved will be under the guarantee of insurance.
“Owners and operators will no longer have to pay insurance premiums they don’t know whether will cover their loss or not. I want to emphasize that this will contribute to Turkish shipping greatly. P&I insurers are not companies that become active only after the damage is down. One of their main functions is to warn owners and operators to fend off risk through inspections based on the vessel types and work fields.”
The total volume of marine insurance sector is about $30 million, Teker said, noting that the company’s target is to attract $10 million of the total volume. “Our priority target is to expand our domestic portfolio and become a major insurance company in Turkey. For now, we are not interested in operations abroad but I think we will have the necessary infrastructure to extend our operations abroad in a year and a half.”
