The policies established for Türkiye Sigorta’s risk exposure are regularly reviewed in line with the changes taking place in the market conditions.
The risks considered in the risk management process are provided below:
Underwriting Risk
These are the risks stemming from the insurance contracts executed, e.g. failure to select the insured risks duly, failure to determine the insurance premiums so as to cover future losses, and concentrations stemming from failure to distribute risk.
When preparing the tariffs and making individual pricings, market conditions, reinsurance treaties, turnover, profitability and sustainable development goals are taken into consideration as a whole.
Each year, technical service directorates determine and update which risks will be assured under which circumstances at the agency, regional office and head office levels by making use of reinsurance treaties and past claims experiences within the framework of underwriting principles. Application principles booklet that includes the underwriting principles and also defines how and to whom insurance products will be or will not be sold under which circumstances is distributed to sales channels each year for information purposes.
Retention ratios by branches and conditions of treaties to be purchased are determined by the Reinsurance and Special Risks Directorate and Senior Management, taking into consideration the Company’s customer portfolio, past claims statistics, business volume planned for the following year, shareholders’ equity structure, and the current market conditions. Risks not covered in reinsurance treaties, exceed treaty terms and capacities or are disruptive to the Company’s treaty balance are provided assurance by making use of domestic and international optional reinsurance support.
Credit Risk
Credit risk is defined as the probability of nonfulfillment of liabilities towards the Company by the parties having a material relationship with the Company. Reinsurance transactions and premium receivables due from agencies are the main areas giving rise to credit risk for the Company. The Company follows up receivables arising from insurance operations within the frame of collection policies, and limits the same via coverage policies established. When selecting reinsurers, the “List of Reinsurance Companies Satisfying Financial and Technical Criteria” created by the T.R. Ministry of Treasury and Finance is taken into account, along with the ratings of reinsurers, and the Company monitors the impacts of market conditions upon ratings.
Market Risk
Potential losses in the values of the instruments within the Company’s portfolio as a result of changes in interest and exchange rates are considered within the scope of market risk. These risks are followed up via reports generated about the FC position and securities.
Liquidity Risk
Liquidity risk is the risk of the Company’s inability to satisfy its matured liabilities. This risk results from the inability to sell and liquidate assets particularly at times when cash is needed. Liquidity risk increases when the terms of assets are longer than the terms of liabilities.
The Company’s cash flow is monitored on daily, weekly and monthly bases, and assets and liabilities are managed by following up maturity mismatches and foreign currency positions via the balance sheet.
Operational Risks
Operational risk refers to the risk of direct or indirect losses resulting from inadequate and ineffective internal processes, employees and systems or external events
Actions to be taken for the activities and processes carried out across the Company are documented in the procedures prepared, and the job descriptions of employees involved in the processes are formally determined. The powers of business units and users have in relation to the processes and the approval mechanisms required to be adhered to are determined by the Board of Directors, General Manager and Assistant General Managers, and are defined on the basis of written guidelines and procedures.
Combating the Laundering of Proceeds from Crime and Financing of Terrorism (Anti-Money Laundering and Combating the Financing of Terrorism-AML/CFT)
Compliance Unit was set up and a compliance officer was assigned with the purpose of achieving the necessary compliance with the “Law on the Prevention of Laundering of Proceeds from Crime and Financing of Terrorism” and regulations and communiques released pursuant to the said Law. Money Laundering, Terrorist Financing and Suspicious Transactions Tracking Notification Policy has been devised within the scope of the Law, which has been approved by the Board of Directors and then submitted to the Financial Crimes Investigation Board (MASAK). The Company policy is regularly revised in accordance with the changes in legislation which are monitored closely, and the same is served on the agencies and employees. In addition, e-learning and face-to-face training is given to the entire Company personnel and agency employees in order to raise awareness pursuant to the Company’s training obligation. Post-training written assessments are made to review the face-to-face training given to Company employees based on measurement and assessment results.
The compliance officer evaluates potentially suspicious transactions that he/she has been notified or become aware of sua sponte and notifies those that he/she concludes to be suspicious to the Financial Crimes Investigation Board (MASAK).
The Board Member delegated by the Board of Directors regularly reports the Company’s risk exposure in relation to the use of the insurance service offered by the Company for money laundering or terrorist financing purposes and findings obtained from monitoring and control activities to the Board of Directors.
