Capital requirement analysis of Turkish insurance sector in the scope of solvency II : An application of an insurance company

Solvency II, a risk-based and principle-based arrangement for the capital reqirement of insurance and reinsurance companies, is expected to be implemented in the Turkish Insurance Sector in the future. It is aimed to compare the capital requirement calculations for the current capital requirement applications applied in Turkey with the capital requirement results calculated in line with the standard formula determined within the framework of Solvency II and to determine the deficiencies of the existing regulation. Solvency II regulations, there is no necessity due to the absence of Turkey's compliance with European Union members. However, it is inevitable for the Turkish Insurance Sector to adapt to the future Solvency II regulations in the context of harmonization studies of the European Union and to follow up new developments. In the study, the capital requirement of the company was determined in accordance with the Solvency Capital Requirement (SCR) according to the standard determined in the Solvency II Directive, using the data obtained from an insurance company operating in the Turkish Insurance Sector. As a result of the research, it has been determined that the insurance company with adequate capital according to the existing capital requirement calculations has a capital which is well below the capital requirement calculated according to the Solvency II regulation. Among the reasons for this situation, it is determined that the risk groups considered in the calculation of the existing capital requirement are insufficient. To ensure that Solvency II calculations can be implemented in the most appropriate manner in our country, the credit ratings of the insurance companies facing the credit risks and market risks are insufficient; it has been determined that there is no risk factor in our country in the scope of disaster risks and natural disaster risks that can occur in life and non-life branches. Key Words: 1. Capital Requirement 2. Solvency II 3. Solvency Capital Reqirement (SCR) 4. Minimum Capital Requirement (MCR) 5. Turkish Insurance Sector