The Insurance Association of Turkiye (TSB) has released a comprehensive position paper titled "State of the Insurance and Pension Sector Report", outlining the sector's strategic contributions to the Turkish economy and vision for sustainable growth and offering policy recommendations for a more inclusive, accessible, and sustainable insurance ecosystem, Middle East Insurance Review reported.

According to the TSB's 2030 vision in the report, the goal is to increase total premium production to USD 50 billion and raise the insurance penetration rate to 4.7% by the end of this decade. This growth is not merely quantitative but also essential for reducing the risk burden on public finances and providing long-term investment financing, TSB says.

The report emphasises the need for the insurance sector to position itself not only as a structure that addresses today's risks, but also as one that provides solutions for the economic and social needs of the future. Its proposals include:

Strengthening the insurance sector's capital structure

Especially in the non-life insurance sector, technical profitability must be increased to permanently strengthen the capital adequacy ratio. The most fundamental problem area in this field is the compulsory motor third-party liability branch (traffic insurance). 

To improve the traffic branch, the TSB proposes:

• A "person-based policy system" to reward safe drivers with lower premiums
• Transitioning to a free tariff model to ensure fair pricing and sustainability
• Enhancing data sharing between insurance companies and public institutions like the Social Security Institution to streamline health insurance claims

Restructuring, increasing quality, and diversifying distribution channels

A key driver of sustainable growth in the insurance sector is improving distribution channels and integrating digitalization into all sales processes. Despite the strength of bancassurance and traditional agency channels, developing digital and hybrid sales models is critical for the sector's long-term competitiveness.

Introducing new products

The TSB introduces unit-linked insurance, a new investment-funded life insurance plan designed to bridge the gap between savings and protection.

Further innovations include:

• Parametric Insurance: Providing rapid, data-driven payouts for risks like climate change and natural disasters.
• Microinsurance: Tailored for low-income individuals and small businesses to increase financial inclusion.

Promoting retirement funding

The document also underscores the strategic importance of the Supplementary Pension System (TES), which aims to increase household savings and maintain living standards during retirement.

According to the TSB, if these reform proposals are implemented, “insurance will become the permanent insurance of Turkey's macroeconomic resilience", the TSB said.