Even if our insurance sector succeeded to generate a higher premium than the inflation rate in stable way recently, it has contracted about 2 percent due to the effects of the crisis which sprang up abroad in 2008 and argued to be the one affecting the real economy and the biggest one ever experienced for last 40 years. Yet, there are positive developments in the insurance sector in 2009 and about 5-7 percent growth is expected by the end of this year.

While the sophisticated practices have been increasing both in financial reporting and taxation fields in the insurance sector, serious progress has been made by our companies with respect to regulation infrastructure in matters like forward-looking balance soundness, provisions and capital adequacy.

Turkey has been adjusting as a country to the new capital adequacy regime, Solvency II, which is maintained by European Union (EU) in relation to the insurance sector and which is expected to go into force by 2012. It is aimed that the sector will be ready to the Solvency II 85 percent until 2011 and completely by 2012. It is also expected that EU will make radical changes in its insurance sector in terms of new capital adequacy regulations based on risk and it is argued that mergers and take-overs may come through among insurance companies in parallel to increasing capital requirement together with Solvency II.

On the other hand, because the process of globalization has paved a way for liberalization of all finance markets and their regularization by similar rules, this situation has forced companies in the market to compete with international counterparts as well as with each other. For this reason, improving competitiveness has become a vital obligation.