Turkiye is actively addressing new avenues to increase inclusivity of the financial ecosystem, including strengthening the takaful regulatory infrastructure and its framework, said the Insurance and Private Pension Regulation and Supervision Authority (SEDDK) Vice President Ali Burak Kurtulan at the opening of the DWIC Connect Istanbul held on 7 July.
Mr Kurtulan said, “Beyond financial strength and disaster management, we are actively opening new areas to increase the inclusivity of our circle. Takaful (participation insurance) stands at the forefront of these efforts. In Turkiye, this segment gained momentum alongside the growth of participation banking and has steadily fortified its institutional framework.”
He noted that the takaful sector is increasingly gaining traction in the country. “Today, eight companies operate fully in line with participation finance principles in Turkiye, accounting for about 7% of our total revenue.”
SEDDK plans to soon release a new set of regulations on participation insurance that would further integrate participation insurance into the insurance ecosystem.
Mr Kurtulan said that when the regulatory framework is completed, it will align takaful in Turkiey with global standards, through an established and comprehensive infrastructure. The SEDDK expects this to stimulate new investment interest in the country. “With these steps, we aim to transform Turkiye into a regional hub for takaful, creating a highly attractive ecosystem for international investors, and cementing our global position in participation finance," Mr Kurtulan said.
Profound reforms
In his opening welcome address, Mr Kurtulan also said that that the insurance sector in Turkiye has undergone an all-inclusive transformation in recent years, which included implementing fundamental reforms in financial reporting, capital adequacy, risk-based supervision, digital transformation, disaster risk management and participation finance (takaful).
He said, “Our ultimate objective is to strengthen the financial resilience of the sector and align fully with international standards and provide a more reliable, sustainable and inclusive system for our policyholders.”
A key pillar for this transformation is the implementation of IFRS 17, which is planned to take effect at the start of 2027, he said.
TCIP chalks up success
Turning to disaster insurance, Mr Kurtulan said that the Turkish Catastrophe Insurance Pool (TCIP), established in 2000, represents a success story as the number of insured residential properties has reached around 12m. “The TCIP offers a massive total insurance amount of $260bn, reaching an insurance penetration rate of 60%.”
He said that the importance of the TCIP has been proven, particularly after the devastating earthquakes on 6 February 2023. As the frequency and severity of natural disasters have increased both globally and in Turkiye, he said that there is a need for protection for disasters other than earthquakes.
Mr Kurtulan added that with the impact of climate change, the SEDDK is working on developing regulations to expand the scope of the TCIP to encompass flood, landslide, storm, hail, avalanche and forest fire coverage.
The one-day event was organised by Global [Re]insurance, co-hosted by the Dubai International Financial Centre.