Page 13 - Turkinsurance Digital Magazine

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Exclusive Interview: “We will carry out an

intensive effort to reposition insurance.”

President of the Insurance Association of Turkey, Uğur Gülen: “The efforts
to strengthen our sector financially, especially before the potential Marmara
earthquake, are our top priority.”

First of all, congratulations on your new position. What would On the other hand, the new insurance contracts standard IFRS
you like to say about the new era that started with your presi- 17, developed by the International Accounting Standards Board
dency at TSB? (IASB) to make the sector more transparent and comparable, will
be a priority on the agenda.
Our industry, consisting of intermediaries, domestic and foreign re-
insurers, claims adjusters, lawyers, loss adjusters, regulatory au- With the implementation of IFRS 17, which will come into effect
thorities, customers, and domestic and foreign partners, forms the on January 1, 2024, the aim is not only to make the financial state-
central pillar and the core of a massive ecosystem. Therefore, en- ments of insurance companies more transparent and comparable
suring the sustainability of our industry and allowing it to receive but also to obtain more information about profit generation meth-
the value and share it deserves from this ecosystem in return for its ods, asset and liability compositions through the upcoming new
contributions is of vital importance. The goal of TSB is to influence footnotes. With IFRS 17, not only finance and related project em-
all stakeholders by generating policies, solutions, and recommenda- ployees but also all company employees involved with internal sys-
tions for the insurance ecosystem, and to establish a collaborative tems, data, and processes will be affected. Hence, companies that
structure with industry players through agile business principles to started early preparations, including those facing various obstacles
ensure the implementation of these initiatives. and challenges in the process, still encounter difficulties. However,
despite all these obstacles and challenges, the transition to IFRS 17
Actually, it is precisely to secure this. Therefore, as an organization, will result in insurance companies achieving compliance with local
we will conduct intensive work to redefine the insurance industry. requirements while also obtaining consistency, comparability, and
The efforts to strengthen our sector financially, especially before transparency across financial statements.
the potential Marmara earthquake, are our top priority. Efforts by
our industry regarding the need for capacity expansion are ongoing. Parallel to IFRS 17, we expect regulations from the Insurance and
Private Pension Regulation and Supervision Agency (SEDDK) re-
Moreover, the establishment of the Complementary Pension Sys- garding capital adequacy calculations. An adaptation of Solvency II
tem, as announced in the Medium-Term Program in September, is regulations to the conditions in our country will ensure the calcula-
among our top priorities within our Association. tion of capital adequacy according to rules that have global validity
for our companies. Current calculation methods are not responsive
What new developments can we expect in the field of insurance to the needs of today. Inflation adjustment is another issue on the
in 2024? In your opinion, what areas in insurance are expected agenda for our companies in 2024. Companies are required to sub-
to change and transform? ject their financial statements to inflation adjustment according to
the Tax Procedure Law if the increase in the price index exceeds (1)
Especially after the earthquake on February 6th, the importance of 100% in the last three financial periods, including the current pe-
urban transformation has once again been understood. In this con- riod, and (2) 10% in the current financial period. In environments
text, urban transformation has been included in the Medium-Term with high inflation rates, conducting inflation adjustments is crucial
Plan, and we expect both Construction Inspection Insurance and for reflecting the true state of companies' financial statements. This
Building Completion Insurance to be important agenda items in the way, financial results can be analyzed more accurately, and future
coming period. Additionally, the development and widespread adop- strategies can be formulated in a more secure manner in line with
tion of a "Disaster Insurance" covering all disaster risks are also this information. Considering that inflation adjustment was last ap-
among the agenda topics for this period. plied in our country in 2003, it brings to the forefront the issue
that our teams do not have sufficient experience in this regard. Our
Regarding the healthcare sector; in this period where digitization expectation is that the Public Oversight, Accounting and Auditing
is rapidly increasing, it is evident that health service providers will Standards Authority will publish inflation accounting implementa-
give more emphasis to telehealth services, which have become more tion guides, taking into account the unique financial structures of
prominent with the Covid-19 pandemic, and the demand will also our insurance companies in these guides.
increase. Insurance companies are also continuing their initiatives
and efforts in this field. How will inflation adjustment affect our companies?

With digitization, cybersecurity insurance is gaining increasing im- When companies prepare inflation-adjusted financial statements,
portance alongside health insurance. It is undeniable that not only they will be affected by inflation based on their net monetary posi-
individuals but also commercial enterprises need protection against tions. In companies with asset net monetary positions, losses/infla-
cyber attacks for business continuity. tion losses due to inflation will be observed, while in companies with
liability net monetary positions, gains/inflation gains will be seen.