XPRIMM: How would you assess the current state of the Turkish insurance market in terms of stability, penetration, and resilience?

Davut MENTEŞ: The Turkish insurance industry is currently in one of its most stable and secure periods in terms of capital adequacy, liquidity, and risk management. Despite the challenges created by global uncertainty and domestic economic conditions, our market continues to expand dynamically. Premium production has shown strong growth, and the sector has proven its resilience in the face of major shocks, such as the recent earthquakes.

The year 2024 was one in which geopolitical risks, inflation, and financial vulnerabilities tested the global economy. Global growth reached 3.9%, marking a period when “stability” characterized advanced economies and “resilience to external shocks” defined developing ones.

Within this environment, Türkiye’s insurance and private-pension sector - representing 5.83% of the financial system - continued to expand. By year-end, the sector comprised 73 insurance and reinsurance companies (49 non-life, 4 life, 16 pension and 4 reinsurance), along with 215 brokers, nearly 19,000 insurance agents, 75,500 pension intermediaries, 1,890 loss adjusters and 4,147 agricultural-insurance pool loss adjusters.

Total sector assets increased by 60% year-on-year, reaching TRY 2.4 trillion, while total premium production grew 74% in nominal terms, to TRY 839 billion. Insurance penetration in GDP stood at 1.9%. Of this total, TRY 739 billion came from non-life lines and TRY 100 billion from life insurance. Reinsurance premiums rose 65%, to TRY 35.9 billion.

As of October 9, 2025, The Private-Pension System (BES) counted 9.9 million participants and a fund size of TRY 1.8 trillion, while the Automatic Enrollment Scheme (OKS) covered 7.8 million employees with TRY 117.6 billion in assets - both providing vital long-term funding for the financial system.

Although our insurance penetration rate remains below the OECD average, we take encouragement from the steady improvement observed in recent years. It now stands at approximately 3.1%, reflecting the industry’s growing contribution to the national economy. I believe this momentum shows both the resilience of Turkish insurers and the increasing public awareness of insurance as a key pillar of financial security and sustainable development.

XPRIMM: Inflation and currency volatility remain pressing issues for the Turkish economy. How do these macroeconomic factors influence supervision and regulatory policy?

D.M.: Persistent inflation and exchange-rate volatility have led us to reinforce prudential oversight. We increased minimum capital requirements, tightened risk-based solvency metrics, and have introduced a regulatory discount rate for cash flow projections to ensure more accurate, inflation-adjusted valuations under volatile economic conditions.

Stress-testing has become a standard supervisory tool - we now run comprehensive scenarios, including earthquake and liquidity-shock simulations, to test capital adequacy.

We have also restricted excessive risk concentration in volatile branches and required companies to align their asset-liability management with Solvency II-consistent standards. Our approach is proactive: by acting before vulnerabilities crystallize, we safeguard sectoral stability and policyholder confidence.

XPRIMM: What are the key regulatory priorities for the next three years?

D.M.: Our “Strategic Plan 2024–2028” defines five priority axes:
 

• Strengthening financial resilience.
  We raised the minimum paid-in capital for insurers and intermediaries, imposed equity-based limits on risky branches, and implemented new measurement standards for capital and asset adequacy. Stress testing and scenario analyses will remain central instruments.
• Modernizing internal governance.
  Insurers operate automated risk-capital monitoring systems and will use the “smart expert assignment” module in claims management to reduce fraud. We have tightened requirements for independent actuaries, internal auditors, and external audit firms.
• Accelerating digital transformation.
  We launched the “E-Government My Insurance” platform, allowing citizens to view all their active and expired policies on one interface. Parallel to this, we completed the Common Data Model (OVM) and the first phase of the Insurance Company Collateral Project, enabling real-time supervision of guarantees.
• Promoting inclusive and sustainable coverage.
  Implementation of the Compulsory Disaster Insurance (ZAS) scheme, integration of the Supplementary Pension System (TES), and a renewed push for participation (takaful) insurance are among our core legislative initiatives.
  Work is underway to transform the OKS into the Supplementary Pension System (TES). The new system is designed as a second-pillar pension structure that includes employer contributions. The implementation is planned for the second quarter of 2026, in line with the 2024–2026 Medium-Term Program.
• Enhancing supervisory capacity.

We are recruiting and training specialized staff, investing in IT infrastructure, and expanding on-site inspection capacity. In 2024, 82 on-site audits were carried out across agents, brokers, and pension operators - a record number for the Authority.

XPRIMM: Motor insurance is often under pressure from high costs. How is IPRSA responding?

D.M.: Motor insurance remains a cornerstone of the Turkish market, yet also one of its most delicate segments. We have pursued a multi-layered strategy:
 

• Dynamic pricing and risk pooling.
  The high-risk insureds pool and new dynamic-pricing model for high-loss vehicle categories were introduced to maintain supply security and prevent abrupt premium volatility.
• Damage-cost indexation.
  A national claims-cost index now guides tariff adjustments, ensuring that pricing reflects auto prices, repair and labor inflation.
• Higher coverage limits.
  MTPL material-damage caps were raised to approximately TRY 600,000 per accident, while bodily-injury limits reached TRY 13.5 million aggregate, preserving real protection. These amounts will be updated soon for 2026.
• Standardization of loss of value calculations.
  We've begun working with loss adjusters to calculate loss of value using a standard method. Standardizing these calculations will ensure both rapid compensation for losses and reduced costs.
• Digital claims oversight.

The “smart expert” allocation system and digital offer-platform requirements promote transparency and reduce fraudulent activity.

These reforms aim to secure price stability, adequate protection, and sectoral profitability in balance.

XPRIMM: Catastrophe risk is a constant concern. How do you assess the performance of DASK, and what developments are planned?

D.M.: The Turkish Catastrophe Insurance Pool (DASK) has proven its value repeatedly, especially following the devastating 2023 earthquakes. In 2024, coverage limits were increased substantially. As of 2024, under the Compulsory Earthquake Insurance (CEI) scheme, the IPRSA has implemented a regulation that provides for the monthly adjustment of coverage amounts based on the Domestic Producer Price Index. This ensures that coverage amounts for residential buildings with similar characteristics remain consistent regardless of the policy issuance date, guaranteeing that citizens are protected at current values. For insurance companies, a minimum square meter fee has been determined by IPRSA and also this fee will be automatically increased every month by the inflation rate. For November 2025, this fee is approximately 23 thousand TL. Inflation protection has been brought into force in favor of the insured in both products

We are now working on:
 

• Developing a comprehensive disaster insurance that extends beyond earthquake coverage, addressing the increasing frequency of extreme weather events in Türkiye.
• Including additional perils such as floods, landslides, storms, hailstorms, avalanches, and wildfires within the insurance coverage. Covering not only residential buildings but also the urgent needs of inhabitants for perils other than earthquake.
• Expanding coverage to village areas, which are currently not insured, in order to reduce the protection gap and ensure broader social protection.
• Full integration with geospatial and seismic databases to speed up claim payments.
• Developing a public–private catastrophe-risk pool for broader peril coverage.

DASK is also central to our climate-risk strategy, providing a template for pooling mechanisms that can later be adapted for agriculture or flood protection.

XPRIMM: Life insurance and pensions have enormous potential. How is the Authority fostering growth in this area?

D.M.: Life and pensions are vital for long-term savings and economic resilience The currently effective BES and OKS contribute to channeling long-term funds into the economy. As stated above, the project to transform OKS into the TES, which is planned to be implemented in the last quarter of 2026, aims to increase the number of participants and strengthen integration with the capital markets.

Life insurance products generally appeal to a wide range of individuals and offer a high level of product diversity. In this context, efforts are being carried out to promote the tax advantages of these products to a broader audience and to raise awareness among policyholders regarding both life insurance and credit-linked insurance products.

The combined growth of these systems is already producing tangible macroeconomic benefits by broadening domestic capital supply and stabilizing consumption over the life cycle.

XPRIMM: How do you reconcile innovation and consumer protection, especially in life and health products?

D.M.: Our philosophy is balanced progress. We encourage insurers to develop innovative products but always within a framework of transparency and suitability.

Priority is given to raising consumer awareness about life insurance products, which offer a wide range of options. In this context, an informational text messaging system is being implemented for policyholders regarding insurance types, including life insurance products that can be arranged in connection with credit agreements.

We strengthened disclosure requirements, standardized benefit illustrations, and mandated plain-language policy documentation. Digital distribution channels are also supervised under specific licensing rules to ensure data protection and cybersecurity compliance.

This balance between innovation and accountability builds trust and keeps the consumer at the center of transformation.

XPRIMM: Digitalization and InsurTech are reshaping the market. What steps has IPRSA taken?

D.M.: Digitalization is perhaps the most visible aspect of our modernization drive. In 2025 we advanced several milestones:
 

• E-Government “My Insurance” Platform.
  Citizens can monitor all insurance contracts - active or terminated - through a single government interface. The platform is already visited by more than 2.5 million users each month.
  An accessibility widget has also been added to the institution’s website, facilitating access to information for users with special needs, including those with visual, hearing, physical, or cognitive impairments.
• Common Data Model (OVM).
  Standardized reporting now enables consistent analytics across all companies, feeding directly into supervisory dashboards.
• Actuary Tracking System (ATS).
  Licensing portal for actuaries enhances transparency and efficiency.
• InsurTech framework.
  Digital brokers and agencies must register with the Authority, ensuring innovation proceeds under prudential oversight.
• EBRD Technical Assistance Project on Sup-Tech

IPRSA and EBRD has launched a technical assistance project in the field of Surveillance and Audit Technology (SUP-Tech) with the European Bank for Reconstruction and Development (EBRD). With this collaboration, IPRSA and the EBRD aim to contribute to the Turkish financial system by pioneering the digital transformation in the surveillance and auditing of the insurance and pension sector.

We consider technology not as a disruption but as a catalyst for accessibility, efficiency, and compliance.

XPRIMM: ESG and climate-related risks are high on the global agenda. How is IPRSA incorporating these themes?

D.M.: Sustainability is integral to our regulatory vision. We assess insurers’ exposure to environmental risk through climate stress tests and integrate ESG criteria into prudential evaluations.

We encourage insurers to:
 

• develop green insurance products that reward risk-mitigation measures (e.g. resilient construction);
• integrate ESG principles into investment policies;
• disclose environmental and social impacts in line with international frameworks.

Our cooperation with the OECD, World Bank, and IAIS helps align Türkiye with evolving global standards and reinforces the sector’s contribution to sustainable development.

XPRIMM: What recent regulatory updates in 2025 should the industry pay close attention to?

D.M.: Several new frameworks mark 2025 as a landmark year for regulatory modernization:
 

• Participation (Takaful) Insurance Regulation
  A draft regulation harmonized with both national and international standards has been prepared for the participation insurance and participation-based private pension system. This initiative aims to increase the insurance penetration rate in participation insurance, enhance public awareness of insurance, and offer alternative products and services to citizens who, due to their sensitivities, cannot benefit from conventional insurance products. It also seeks to strengthen participation governance mechanisms, enhance compliance with participation finance principles and standards, and, in line with the opportunities offered by the Istanbul Financial Center, attract foreign investors to our country and the sector.
• Surety (Bond) Circular 2025/13.
  Sets limits on exposure per obligor (15–35% of equity) and total gross exposure (5× equity). Phased implementation begins July 2025.
• Amended Agency Regulation.
  Raises minimum capital thresholds (with a minimum of TRY 3.25 million for legal entity agencies, at least TRY 4 million for the headquarters of branch-based agencies, and TRY 325,000 per branch), introduces equity-linked production caps, and requires periodic technical training.
• MTPL Coverage Revision.
  Adjusts statutory limits for property and bodily injury to preserve real protection amid inflation.
• Digitalization and Reporting Standards.

Extends mandatory electronic policy issuance and real-time data transmission for key lines.

Each measure supports our broader goals: safeguarding solvency, enhancing transparency, and preparing the market for sustainable, technology-driven growth.

XPRIMM: How is IPRSA ensuring effective supervision and enforcement amid these changes?

D.M.: We continue to apply a risk-based supervision model that blends quantitative metrics with qualitative assessments. In 2024–25, over 120 on-site inspections were conducted, complemented by thematic reviews on policyholder complaints, licensing (insurance companies, brokers), technical provisions, technical and financial analysis, claims and compensation procedures capital adequacy, reinsurance management, and governance.

Enforcement is firm but fair. In 2024, administrative fines totaling TRY 53 million were imposed for breaches of conduct, solvency, and reporting obligations. Where needed, we have suspended underwriting rights or revoked licenses.

Dispute resolution remains efficient: The Insurance Arbitration Commission handled 3 million cases by mid-2025, providing a trusted alternative to litigation.

XPRIMM: Finally, how do you view Türkiye’s role in the regional insurance landscape?

D.M.: We see Türkiye as a crossroad—geographically, financially, and institutionally. Through cooperation agreements with Kazakhstan, North Macedonia, Azerbaijan and Spain, and active participation in IAIS and IFSB, we are exporting regulatory dialogue and learning from peers.

As a regional hub, our goals include attracting foreign capital, developing reinsurance capacity, and offering a robust regulatory environment for cross-border business. The adoption of best practices in capital adequacy, digital infrastructure, and catastrophe risk management positions us well to take on comparative leadership in the region.

Interview conducted by Daniela GHETU