Remodeling of the legal infrastructure for the Turkish insurance industry signifies the most important headline of 2007.

Intense efforts have been invested lately to integrate our financial markets in general, and our banking sector in particular, with the international markets within the scope of Turkey's harmonization with the European Union. In this frame, the relevant laws were formulated and enforced years ago. Yet, it was 13 years later that a new regulation could be made relating to the insurance industry that takes place among financial markets; nonetheless, the insurance bill was accepted by the Turkish Parliament and enacted on 03 June 2007.

The Insurance Law no. 5684 sets forth that numerous matters will be stipulated by regulations to be published. In the short time that passed since then, many of these regulations have been rapidly drawn up and put into force by the Turkish Treasury. Thus, it will be fair to refer to 2007 as a year of remodeling in the legal infrastructure for the insurance industry.

2007's second highlight is the continued interest of foreigners for penetrating the Turkish insurance market through acquisitions or shareholding.

First witnessed in banking within the finance sector, this development is started to be observed also in the insurance industry in the recent years. Currently, eight of the top ten insurers accountable for the highest premium production in non-life branches are either foreign companies or companies having foreigners as their majority shareholders. It is also known that several more foreign establishments have filed applications with, and are in the process of obtaining permission from, the Turkish Treasury to set up or acquire companies. Foreigners' interest is expected to be ongoing in the period coming, which is going to result in further reduction in the number of Turkish insurance companies after a while.

Other important developments of 2007 in the insurance industry

Although year-end 2007 data are yet to be published, according to the results for the first three quarters provided by the Association of the Insurance and Reinsurance Companies of Turkey, the total premium production of the insurance industry grew 14% year-on. It is estimated that the growth in the industry will stand in the range of 13 to 15% as at year-end. Although the ratio of increase in 2007 premiums is above the annual CPI declared as 8.39%, it floats below the increase ratios of previous years.

While transition to partial deregulation in traffic insurance stands out as another key development in 2007, the longstanding losses continue in this branch, regardless of the amounts transferred from financial accounts.

In parallel with the practices in the European Union, the new legal framework for liability insurance imposes the obligation to purchase liability insurance for individuals practicing certain professions and activities.

Upon the introduction of the Private Pension System, the decline experienced in the life branch in the recent years is expected to be sustained also in 2007, resulting in a year-on decline of premium in this branch.

In 2007 the legal infrastructure of the insurance industry was renewed, the insurance bill was accepted by the Turkish Parliament and enacted on 03 June 2007.