News Middle East18 Nov 2018

Turkey:Insurance regulatory chief looks to technology to transform supervisory functions

18 Nov 2018

The new chairman of the Insurance Supervisory Board at the Turkish Treasury, Mr Mete Guler, has named technological transformation of the regulator as a priority goal. The aim is to provide the Board with a more effective information-based structure.

To do this, he told Insurance Gazette that the regulator has started work on the Insurance Information and Surveillance Centre.

“We want to establish a more efficient system where reports are obtained from insurance companies automatically, with more simple data patterns,” said Mr Guler, who was appointed to his current post in May. The system would also be changed to make it analysis easier.

Another plan of the Board is to eliminate the loss of time resulting from carrying out complex calculations. This is to be achieved by acquiring a reserve calculation software program.

Mr Guler said that in future, the Board would like to carry out short term inspections with the support provided by these IT changes.

“As a matter of fact, if we provide this transformation in information, we hope that we will be able to carry out instant monitoring of the risks of companies and ensure the effectiveness of audits,” he said.

Economic conditions

Asked whether there were any new risk areas faced by insurance companies under the current tough economic conditions in which the Turkish lira has weakened significantly, Mr Guler said that the Board saw the current situation as temporary.

He added, “Of course, we closely monitor how insurance and pension companies are affected by these changes or how they may be affected in the future. In this sense, we observe that the fluctuations in exchange rates do not have a significant impact on the financial structures of insurance companies. In the short term, the increase in spare part prices due to exchange rate changes may cause some reserves of the companies to increase slightly in some branches such as casco (casualty and collision).”

Asked about the reinsurance pool proposed in the New Economic Programme, Mr Guler said that the pool is aimed at increasing capacity. “But I do not know how nor when the pool will be established.”

The YEP was presented by Treasury and Finance Minister Berat Albayrak on 20 September who reiterated a statement made in August concerning the establishment of a reinsurance pool. The main reason for this decision is to offer access to affordable insurance to companies operating in certain industrial sectors, such as ginnery operators in the textile industry or dye and chemical plants. Representatives from these sectors had complained about the difficulties encountered in insuring their operations, which are considered risky by insurers which either refused to insure them or charged very high premiums.

Supervision philosophy

Mr Guler also outlined some of the principles guiding supervision by the insurance regulatory agency.

He said, “In fact, the expectations of supervisors in the insurance sector all over the world are close and parallel. In this respect, the insurance supervisor should make protecting the rights of customers a top priority.

“In order to achieve this, the financial stability of insurance and pension companies and the stability of the sector are our priorities. We care that companies have a balanced portfolio and sustainable growth structure. We closely monitor the legal and reasonable time durations for compensation payments made by insurance companies.

“We will continue our short-term, solution-oriented, horizontal inspections on financial matters, damage, reinsurance and audit issues with our risk-oriented approach.”

He added, “We would like to highlight that our communication channels are always open and we will cooperate with all stakeholders in the sector on issues we need to support.”


 


 

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