Probabilistic assessment of earthquake insurance rates for buildings - Seismic Risk Analysis and Management of Civil Infrastructure Systems - page 799

• To ensure risk sharing within the country and also to distribute the
fi nancial liabilities caused by earthquakes on to the international rein-
surance markets.
• To mitigate the possible fi nancial burdens on the government due to
earthquakes (especially construction of new dwellings after a
catastrophe).
• To utilize insurance as a means to encourage the construction of earth-
quake-resistant structures.
• To ensure the accumulation of long-term reserves to fi nance future
earthquake losses.

• To contribute to the development of insurance consciousness and risk

awareness in the public.

29.4.4 Organizational structure

TCIP can be considered as a public-private partnership. It is supervised by
the Under-secretariat of the Treasury, which forms the public side of the
partnership. The Under-secretariat develops and maintains a regulatory
framework and is responsible for overseeing the program, auditing of all
operations and accounts of TCIP. The other partner (private sector), the
so-called pool management company, performs the administrative duties.
The activities of the pool manager consist of coordinating the sale processes,
settling of accounts, getting the necessary reinsurance protection, settling
of claims regardless of which insurance company or agent issued the policy
and indemnifying the insured, maintaining the non-stop service of the IT
system, performing public relations, and managing funds of the pool
(Yucemen, 2011). This operational management duty has been contracted
out to leading reinsurance companies in Turkey for periods of 5 years. By
engaging the private sector in the process of administration, the bureau-
cratic burdens and ineffi ciency are minimized.
The overall management of TCIP is performed by the TCIP Board of
Directors. The main duties of the TCIP Board include: setting principles of
all operational work and deciding for expenditures including reinsurance,
and marketing and public relations expenses. The Board is composed of the
following seven members: Representative of the Prime Ministry, represen-
tative of the Under-secretariat of the Treasury, representative of the Min-
istry of Public Works and Settlement, representative of the Capital Markets
Board, representative of the Association of the Insurance and Reinsurance
Companies of Turkey, operational manager, and an earthquake scientist.

29.4.5 Major problems

Although the current market penetration of 26% is much higher than those
attained in other countries and the 5% penetration rate in Turkey prior to