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New bancassurance link


BNP Paribas Cardif Emeklilik have just announced that they have signed an agreement with Fibabanka to sell personal pensions.


Fibabanka is a small bank, having just 25 branches. But the deal enables BNP Paribas Cardif Emeklilik to widen their distribution network. As the pension league table is extremely competitive, every little sale helps make a difference in rankings.


Rumours that Cigna is buying Finans Emeklilik


The rumour mill in the Turkish insurance market is pretty reliable. This week the jungle telegraph says that the winner in the race to buy Finans Emeklilik (the bancassurance partner of Finansbank) is Cigna.


Cigna entered the Turkish market in 2011; best known in the US and Europe for their health business, they have been focusing on life in Turkey. Until now their distribution strategy has been mainly through direct sales and affinity groups.


Credit card usage up 25% in a year!


As a major product of all bancassurers in Turkey is life insurance linked to a credit card balance, increased usage of credit cards automatically flows through to increased life insurance premium.

The interbank card centre has just published figures that show that between April 2011 and April 2012, both usage of credit cards, debit cards, and withdrawals from ATM machines using these cards rose significantly.

The statistics show that the preferred payment method in the country is credit card – by a clear margin!

Only one in ten Turks saves for the future


A survey commissioned by ING Bank could lead you to conclude that there is no point in launching a savings or pension product in Turkey. Alternatively, you could say that there is such a huge potential market which is currently untapped.

According to the report entitled “Research on Savings Trends in Turkey, the great majority of Turks have absolutely no savings at all.

Professor Alpay Filiztekin of Sabancı University in Istanbul conducted the research. He performed monthly surveys of 800 people from 26 provinces across Turkey.

His results show that in the second quarter of 2012, only 11.3% of Turkey’s urban population possessed some form of savings – yes, only some form of savings, let alone a savings or pension policy with a life insurance company.

The perception of insurance in Turkey


According to a survey into the perception of insurance in Turkey carried out by IDE Danişmanlık on behalf of the Association of Insurance and Reinsurance companies, we still have a long way to go!


Comparing the results of the 2012 survey with the previous one carried out in 2008, we can be pleased that more people are aware of insurance. But during the intervening four year period there has been no real increase in the percentage of the population who are insured.


Branches such as Personal Pension, life insurance, comprehensive motor insurance, health insurance, mandatory earthquake cover, household, and personal accident scored between 75% and 95% on the awareness scale. But less than half of the participants in the survey had heard of agricultural insurance, travel insurance and third-party liability.


Private unemployment insurance – when the government is mean, plug the gap yourself


When compared with European standards, Turkey’s State unemployment benefits are extremely low.


A thesis prepared by Müşerref Küçükbayrak of Turkey’s Ministry of Development entitled “The scope of Turkey’s unemployment insurance and its analysis in the context of employment” compares the ratio of benefit payments from the system to contributions made into the system.


For most European countries the ratio is at least 20% (the Netherlands tops the table at 82,2%). But Turkey is bottom of the league with just 6,8%.


The Association of Insurance Companies soon to include Pensions!


Article 36 of the draft law relating to the Personal Pension system, submitted to Parliament at the end of April, changes the name of the organisation we call “the Birlik” for short from “Türkiye Sigorta ve Reasürans Şirketleri Birliği” (The Association of the Insurance and Reinsurance Companies of Turkey) to “Türkiye Sigorta, Reasürans ve Emeklilik Şirketleri Birliği” (The Association of the Insurance, Reinsurance and Pension Companies of Turkey).


This seemingly minor change has important consequences. It will bring issues relating to the Personal Pension System into the Birlik’s remit and give the sector one roof under which to discuss and analyse issues affecting it, suggest changes through working committees, and lobby Parliament, the Treasury and other policy makers.


Draft Law describes how the new tax-relief on pensions will work


More details emerged about the proposed new regime for tax-relief on pensions, in the draft law relating to the Personal Pension system, submitted to Parliament at the end of April.

The system is set to change from a direct tax-relief at source, given to the insured pension, to the so-called State Contribution (“Devlet Katkısı”).


The draft law contains the following provisions in Article 25/A:


The State Contribution is calculated as 25% of the contributions paid in respect of the contributor to the Personal Pension account, with the exception of payments made by an employer, and is paid to the relevant account from the allowance placed in the Treasury budget for this purpose.


Increase in household debt fuels growth of life insurance


We all know that the main driver of insurance sales in Turkey is bancassurance, and the main life product sold is mandatory loan insurance.


Figures for 2011 issued by the Banking Regulation and Supervisory Agency (BDDK) show the massive increase in household debt over the last 10 years in Turkey; the growth in life branch premium reflects this increase in the banks’ loan books.


Although when compared with more developed economies the average household debt in Turkey is small (for example, the mortgage market is not well developed here), the ratio of household debt to household assets in Turkey has increased tenfold over the last ten years. In 2002 debt was 4.3% of financial assets; by the end of 2011 this had risen to 40.5%.


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