Abstract
The insurance sector mainly consists of insurance companies, insurance agencies, brokers, and reinsurers. For many years, false damages, without being linked to money, have undoubtedly been the most attractive aspect of the insurance industry. However, for quite some time, the insurance sector is also used by money launders to launder crime revenues due to the increasing volume of money transactions day by day. In order to mitigate the risk of money laundering, the insurance sector in Turkey is implementing the compliance program of Turkish Law No: 5549 on “prevention of laundering proceeds of crime.” The main components of this compliance program are the identification of the customers and reporting of suspicious transactions. It is concluded that the risk of money laundering should also be considered during damages and compensation payments, especially in life and pension companies. Policy and contract cancellations should be periodically reviewed, and the reasons for cancellations should be documented well.
TopThe insurance sector mainly consists of insurance companies, insurance agencies, brokers and reinsurers. In general, insurance companies are large companies that provide insurance coverage and undertake the risks specified in the policy against a certain premium. Insurance agents and brokers are intermediaries selling insurance companies' policies. Some of these agents and brokers only work for one insurance company and sell its policies, while others sell the products of multiple insurance companies. In addition to these two main components of the market, related organizations such as insurance experts and assistance companies that provide supportive services are also included in the market (Aykın, 2010).
Insurance companies assume the risks in the insurance policies and in return calculate the amount to be paid to them as a premium. Insurance companies clearly state the terms and duration of the contract, exactly what risks it covers, the premium and compensation amount in the policies (Çuhacı, 2003). How much premium will be paid is calculated based on the economic value of the goods in non-life insurances, and in the life insurances based on the insured's own value. Insurance companies direct the premiums collected from the insured to the investment in order to pay the insured's damages and compensations on time and completely. Life insurance companies prefer long-term investments due to the long duration of most of the life insurance products.
There are two types of insurance companies: Direct premium companies and reinsurance companies. Direct insurance companies are companies that issue policies and have direct contact with the insured. These companies provide the insured the relevant guarantee and receive a premium in return. Reinsurance companies, on the other hand, are companies that share the risks of the policies issued by insurance companies to the insured. Reinsurance is a kind of insurance company insuring itself, its portfolio. The insured does not have any contact with the reinsurance company. The premium is collected by the insurance company. Risks are transferred to the reinsurance company by the insurance company, provided that they waive a certain rate or amount of the premiums. Reinsurance companies also pay the insurance company upon payment to the insurer at the rate of their responsibility at the time of damage.
Table 1 depicts a comparison of companies in Turkish insurance. Two of the non-life companies established abroad continues to operate as branches of insurance companies of Turkey (Hazine Müsteşarlığı, 2020).
Table 1. Number of Companies in the Turkish Insurance Sector
| 31.12.2018 | 31.12.2019 |
| Out of Life | 38 | 38 |
| Life | 4 | 4 |
| Life / Pension | 18 | 18 |
| Reinsurance | 2 | 3 |
| Total | 62 | 63 |
Source: Hazine Müsteşarlığı, 2020
Key Terms in this Chapter
Insurance Premium: In the insurance system, premium is the insurance fee paid by the insured in order to purchase the coverage provided by the selling officer of the insurance.
Revenue of Crime: The proceeds of crime can be expressed as all kinds of economic benefits and values obtained from the acts deemed crime by law.
Insurance Company: A company that deals with the management, operation and sales of insurance businesses.
Black Money: Black money means money earned in ways and methods that the state would not allow.
Pension Mutual Fund: It is a mutual fund created by the pension company to evaluate the contributions collected within the framework of the pension contract and monitored in the individual pension accounts on behalf of the participants.
Crime: It is the deliberate and deliberate violation of legal values that should be protected in terms of the continuity of the social order.