How Is an Insurance Premium Set?

Free Tariffs and Compulsory Tariffs

Article 12 of Insurance Law No. 5684 frames the question in one sentence: tariffs are set freely by insurance companies in line with insurance principles and generally accepted actuarial techniques. For compulsory lines created by statute, the sums insured together with the tariffs and instructions are fixed by the Minister and published in the Official Gazette.

So there are two regimes: in voluntary lines price forms in the market, in compulsory lines the State draws the frame. The same article also lets the Minister make tariffs subject to approval, or release them, in life, long-term personal accident, health, sickness and voluntary earthquake cover.

Compulsory Motor Third Party Liability sits between the two. Its tariff regulation states its purpose as regulating how insurers set tariffs freely, and lets them fix the base premium by vehicle type on a province basis. Yet it also imposes maximum premiums, and the Authority may require premium levels to change in order to strengthen insurers, prevent unfair competition and stop refusals to write business.

The Calculation Behind the Price: Actuaries and Oversight

A premium is the output of a calculation, not of haggling. Article 21 of Law No. 5684 requires insurers to employ a sufficient number of actuaries, and nobody may practise without being entered on the register.

In motor liability the calculation is kept auditable. Under Article 15 of the tariff regulation the authorised actuary's report on the tariffs is held at head office ready for inspection, summary reasoning goes to TRAMER, and policies must be issued through the TRAMER database.

Price changes do not slip in quietly either. Insurers send their base premiums and the grounds and rates of any discount or increase to TRAMER five days before applying them, and TRAMER makes them available to the Authority.

What Actually Moves the Premium

Legislation does not list rating factors for every class; the technical basis belongs to the insurer. Still, the regulations name concrete measures in places. In liability cover for motor trades the premium is rated on the vehicle capacity of the premises for custody and sales businesses, and on the number of permanent staff for repair and maintenance businesses.

The general picture looks like this:

Motor Liability: From the Step Table to an Index

Motor liability is the line where premium calculation is written out in most detail. Discounts and increases run on the step table in Article 5 of the tariff regulation, from step 0 to step 8: a clean period moves you one step up, each indemnity paid one step down. The step follows the operator and is set separately for each of that operator's vehicles, from the documents produced and the TRAMER claims record. The wording fixing the step for first-time operators was suspended by the Council of State's Eighth Chamber on 8 March 2024.

Article 4 of the regulation gives the Authority further levers:

On the ceiling side an index takes over. Provisional Article 11 caps the premiums insurers may set and provides that, from May 2024, the cap moves monthly with a claims cost index whose composition is written into the article: minimum wage increases at forty-five per cent, spare parts and accessories at thirty, motor vehicle prices at fifteen, maintenance and repair at ten. A negative index reading counts as zero.

Quotations have a shelf life too: a motor liability quotation stays valid until the end of the month in which it was given, and in no case for less than three working days.

• The Authority may decide that the premium is rated on the province of the operator's residence rather than the province of registration.
• Penalty points imposed on drivers for traffic offences, and the duration of and grounds for licence seizure, may be used in setting the premium.
• Discounts or increases of up to twenty per cent may be introduced by fuel type and emission values, on top of the rates in the regulation.
• A discount of up to twenty per cent may apply where certified equivalent or reusable parts are chosen in repairing the damage.
• A discount of up to twenty per cent may apply to contracts written for people recorded in the National Disability Data System.

Not All of the Policy Price Is Premium

Part of what you pay is charges levied on the policy by statute. As a rule the insurer is the taxpayer; you meet the cost within the policy price.

Rates sit in the statutes and can change. For the banking and insurance transactions tax (BSMV) the President may reduce the statutory rate or raise it back to its legal level, so no current rate is quoted here; the tax line on your policy shows the rate then in force.

One item is asked about constantly: intermediary commission. Article 31 of the Expenditure Taxes Law sets the tax base as the premium stated on the policy and forbids deducting payments made to intermediaries. The commission sits inside the premium; it is not a line added to your policy.

Why Two Insurers Quote Two Prices for the Same Car

Because the calculation behind the tariff differs between companies: claims experience, reinsurance cost, expense structure and actuarial assumptions. The motor liability regulation accepts this openly, letting each insurer set the base premium by vehicle type on a province basis.

The same regulation adds an equality rule: contracts written by one insurer for vehicles or operators carrying the same risk must in principle be issued on the same premium. Differences between companies are legitimate; arbitrary differences inside one company are not.

Nor is there a binding market-wide list. The Insurance, Reinsurance and Pension Companies Association of Türkiye may prepare a non-binding Motor Liability Guide Tariff within principles set by the Authority, published on its own website.

Does the Agency Set the Price?

It does not. RYL Sigorta Aracılık Hizmetleri is an insurance agency. Under Article 17 of the Insurance Agencies Regulation the authority to conclude contracts and collect premiums belongs to insurance companies and passes to an agency only where the agency power of attorney says so. Without that authority an agency may neither issue policies nor collect premiums.

One agency duty bears directly on price. A provision added in 2025 requires agencies to transmit information on the parties and beneficiaries to the insurer accurately. Information that travels wrong affects the claim as well as the premium: Article 1439 lets the insurer ask for a premium difference or withdraw where disclosure was incomplete or wrong.

So our work is matching rather than bargaining: setting out the risk in full, preparing comparative quotations from the insurers we act for, and putting cover and deductible differences side by side. To read through how much of your premium is cover and how much is tax, write to us through the quotation form. The claim itself is paid by the insurance company that issued the policy.

Frequently Asked Questions

Sources

• Insurance Law No. 5684 (mevzuat.gov.tr)
• Turkish Commercial Code No. 6102 (mevzuat.gov.tr)
• Regulation on Tariff Application Principles for Compulsory Motor Third Party Liability Insurance
• Insurance Agencies Regulation (mevzuat.gov.tr)
• Expenditure Taxes Law No. 6802 (mevzuat.gov.tr)
• Municipal Revenues Law No. 2464 (mevzuat.gov.tr)
• Motor Own Damage (Kasko) General Conditions (SEDDK)

This article is for information only; the scope of cover is set by the policy’s specific and general terms.