IJTEMT; www.ijtemt.org ; EISSN: 2321-5518; Vol. III, Issue I, Feb 2014 Index Copernicus (ICValue: 6.14), Ulrich, DOAJ, BASE, Google Scholar, J-Gate and Academic Journal Database. Page7 Page7 Insurance Distribution Channels in Turkey: Effectiveness of Bancassurance İsmail Yıldırım Department of Finance, Banking and Insurance Hitit University Çorum, Turkey Abstract—Bancassurance is basically the provision of selling of banking and insurance products by the same organization, under the same roof. In fact, the place always had insurance system. However, it is not common in the world. Now the sector bancassurance attaches great importance to the development. In particular pension applications, bancassurance work more efficiently, providing support for this trend. Banks can earn additional revenue by selling the insurance products, while insurance companies are able to expand their customer base without having to expand their sales forces or pay commissions to insurance agents or brokers. Bancassurance is a known insurance distribution channel in Turkey but it may be preferred to use generally by banks not by insurance companies. It was investigated in this study, the effectiveness of bancassurance in Turkey. Keywords-bancassurance; insurance; insurance distribution channels I. INTRODUCTION Insurance, one of the leading financial sectors, is highly sensitive to the economic development. Insurance sector in Turkey mostly lays out similar developments to emerging market. The last decade has been a colossal growth period for the Turkish insurance sector. The sector has witnessed a considerable rise of equity capital surpassing even the increase rate of total asset size that has heightened by dozen times; this feature proves that the recent growth has a solid monetary basis. Furthermore, direct premiums have accelerated parallel to financial expansion Turkey has gone through rather successfully throughout the course of the last ten years. Besides, entrance of novel players to the sector from abroad has endowed the sector with new management styles, different approaches and most importantly wide experience [1]. The largest goal of the domestic and foreign firms which are operating production of insurance premium is to obtain a higher market share in this developing sector and to increase their profitability by increasing production capacity. For this purpose, these companies are making their organizational structure as a market-oriented for establishing different sale organizations to identificate and dispel consumers' needs as a distribution channels and they improve these opinions becoming widespread day by day [2]. Bancassurance, the provision of insurance services by banks, is an established and growing channel for insurance distribution, though its penetration varies across different markets. Europe has the highest bancassurance penetration rate. In contrast, penetration is lower in North America, partly reflecting regulatory restrictions. In Asia, however, bancassurance is gaining in popularity, particularly in China, where restrictions have been eased. The research shows that social and cultural factors, as well as regulatory considerations and product complexity, play a significant role in determining how successful bancassurance is in a particular market [3]. II. DISTRIBUTION CHANNELS IN TURKISH INSURANCE MARKET The structure of distribution channels in Turkey consists of agents, banks and brokers; and the change of these distribution channels for the last five years has been remarkable. Between 2007 and 2011, the agents have a constantly decreasing, whereas the banks have an ever increasing market share as channels [4]. The main distribution channel for Turkish insurance companies is agency networks. As of August 2013, there were 61 insurance companies and two reinsurance companies registered with the Association of Insurance and Reinsurance Companies of Turkey. Seven of them are operating in the life insurance market, 17 of them are operating in the life and pensions market and 37 companies are operating in the non-life insurance market.