Financial resilience is a top priority for the insurance authorities in Türkiye and there are great efforts being made to strengthen the insurance sector, said Mr Davut Mentes, chairman of the Insurance and Private Pension Regulation and Supervision Agency (SEDDK).
He said that to ensure financial resilience, the government acted in November 2023 to increase the capital requirements in the insurance market.
“We have made certain arrangements, in coordination with the sector, to tighten regulations,” Mr Mentes also said.
He emphasised that the SEDDK looks to make better utilisation of capital in long-tail branches of business. In addition, “the production of companies has to respond to the capital increase,” he said.
He was speaking at the 3rd International Insurance Summit & Türkiye Rendezvous and XVI International Istanbul Insurance Conference, which commenced yesterday and ends today.
Mr Mentes also said that the SEDDK is ramping up efforts to curb unhealthy management practices and improve levels of corporate governance in the sector. “We are studying to introduce amendments in the law to address these issues (….). For corporate governance, the draft law is to be enacted (soon).”
He added that the SEDDK’s recent focus has been on three main areas including compulsory earthquake insurance, a compulsory retirement scheme, and the motor insurance scheme.
Mr Mentes said that a main priority of the regulatory authorities is to enhance companies’ technical provisions, strengthen regulations over support services, and give more attention to retention at insurance companies.
Participation insurance (Takaful)
The vision for the participation insurance market share is to reach 15% of the total market operations in three years, up from the current 5%, said Mr Mentes. He noted that there is a potential for this business to grow, especially with the role Istanbul Financial Centre (IFC) plays in investments.
“Participation insurance in Türkiye can reach a 15% share in a short time and we are supporting that direction. We have a department (dedicated) to participation insurance … and are working to improve the business environment.”
He also disclosed that the existing regulations over this business are going to be amended and the SEDDK is currently preparing a draft for this purpose.
Another speaker, Mr Osman Celik, deputy Minister of the Ministry of Treasury and Finance, said that measures are being taken to ensure that participation insurance would play a stronger role in the market as part of efforts to provide coverage to larger social segments. He added that participation insurance would entice new investors, especially with the support of the International Financial Corporation.
Healthy signs ahead
Inflation in Turkiye is easing and there are expectations that it would register single digits in coming years, said Mr Celik. He said that Türkiye is targeting economic growth of 3.5% next year and the government is targeting to increase the GDP per capita from $13,000 to $20,000 by 2027.
He added that digital transformation and climate change are among the main factors affecting the insurance industry. He also noted that the increase in life expectancy is further widening the retirement gap. To face this demographic change, there is a need to motivate people to save. To promote this, the sector needs to diversify its products and improve its business tools, he said.
Organised by Middle East Insurance Review (MEIR), and co-hosted by TSB with the support of IUC Group, Sigorta Tatbikatçilari Dernegi (Insurance Practitioners' Association), and Invest in Turkey, this year’s gathering attracted over 500 delegates from 22 countries. The theme of the Summit and Rendezvous is "Narrowing the Protection Gap: Türkiye’s Journey to Resilience and Sustainability".