Insurance Sector Urges Reduction of 'Protection Gap'

Ahmet Yaşar, Chairman of the Insurance Association of Türkiye (TSB), emphasized the critical need to reduce the "protection gap" by increasing insurance coverage, highlighting its importance for both societal development and macroeconomic resilience. Speaking at a press conference, Yaşar announced that current premium production has reached $32 billion, with the penetration rate climbing to 2.7%. The ambitious target is to achieve a 5% penetration rate by 2030, which would necessitate boosting premium production to $50 billion.

Yaşar elaborated on the severity of the protection gap, noting the difficulty in quantifying its exact size due to data sharing issues. He pointed to the devastating February 6 earthquakes, which incurred an estimated cost of $106 billion, yet the insurance sector's payouts covered only 4-5% of this amount. In contrast, global natural disasters typically see insurance covering around 40% of the costs.

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There are problems with data sharing, so we cannot state the exact size, but for example, the cost of the February 6 earthquakes was $106 billion, while due to low insurance coverage, the sector's payments remained at 4-5%. Globally, insurance covers about 40% of natural disaster costs.

Özgür Obalı, TSB Secretary General, provided further estimates, stating that the protection gap is believed to be around 90% for individuals and SMEs, and 20% for the industrial sector. Several key initiatives are being pursued to bridge this gap. A mandatory disaster insurance scheme (ZAS), intended to replace mandatory earthquake insurance, is under consideration in the Grand National Assembly, with plans to promote it at the upcoming climate summit (COP31). Additionally, a supplementary retirement system (TES), which would replace automatic pension schemes, has been repeatedly postponed. The source of employer contributions remains a primary area of investigation for TES.

Another significant issue addressed is "loss of value" claims, a frequent point of contention between insurers and policyholders. New processes, including "smart expert assignment" and "advance payments," are being implemented to resolve these disputes. The expectation is that prompt payment of loss of value claims will reduce the number of appeals to the Insurance Arbitration Commission (STK), which handled a total of 760,000 applications last year.

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The protection gap is estimated at 90% for individuals and SMEs, and 20% for industry.