News Middle East04 Jun 2018

Turkey:Credit insurance pool being planned for SMEs

| 04 Jun 2018

A pool for credit insurance for small and medium-sized enterprises (SMEs) with a cap on premiums is currently on the agenda of the government and insurers. It is understood that around 25 insurers will participate in the pool, according to local media reports.

The scheme is targeted to begin operations on 1 January 2019.

Deputy Prime Minister Mehmet Simsek responsible for economic affairs recently raise this agenda and the way in which the credit insurance for SMEs will work, reported the local media.

According to information obtained from Treasury officials and sector representatives, the proposed low-cost receivable insurance pool for SMEs will operate along the lines of Tarsim, Turkey's agricultural insurance pool. Participating insurers will transfer their risks to the credit insurance pool. Several products specific to SMEs will be identified. Most important, a ceiling price will be set to ensure that the insurance coverage is affordable.

The Treasury will control the pool. Insurance companies will sell pool products to SMEs at prices set by the Treasury. The definition of an SME will be set out specifically for the scheme. Large businesses that do not meet this definition will not be able to benefit from the low price scheme. To date, the definition of an SME has not yet been agreed upon.

To establish the pool, information such as financial data and the credit status of SMEs to be covered by the insurance scheme will be collected by the Insurance Information Centre.


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