An investment fund model similar to the Private Pension System (BES) should be created in the life insurance market in Turkiye, according to the President of the Insurance Association of Turkiye, Mr Ahmet Yasar.
He told the news organisation Anadolu Agency, “If we set aside BES and only look at life insurance, we are unfortunately far behind the rest of the world in terms of insurance penetration. However, this also shows something positive. When you look at the figures, we still have many people who want to take out life insurance. We have a long way to go. Therefore, we have extremely high potential."
To realise the potential, he said, "We need to enable our citizens to both invest their savings in investment-backed insurance policies and determine their fund allocations, just like in private pension schemes, as well as to have the option to change the fund allocation during the policy period.
“We are carrying out a number of studies for this purpose. We are holding discussions and carrying out evaluations alongside our SEDDK (Insurance and Private Pension Regulation and Supervision Agency) and, from time to time, with the Capital Markets Board.”
He said that the TSB’s Life and Pension Management Committee, in particular, is working very seriously on this issue. This will make a very significant contribution to both the development of the life insurance sector and the stabilisation of capital markets.
The BES has developed significantly in Turkiye, reaching around 16m unique participants with the Automatic Enrollment System, and this success has surpassed life insurance.
Mr Yasar also said, “When we combine the funds our insurance companies hold with the savings funds in the Individual Pension System, we have a fund size of TRY5.6tn ($121.4bn).”
This makes the Turkish insurance sector the largest institutional investor in Turkiye in terms of the funds they manage. Mr Yasar said, “The more we can increase this with life insurance and the Individual Pension System, the more stable and deepened our capital markets will be."
Under the BES, subscribers choose how their money is invested through various pension mutual funds. These range from conservative (government bonds, gold, interest-free/Katilim funds) to aggressive (stocks, international equity indexes). They are also allowed to change their fund allocation strategy a number of times.