Rising credit debts prompt insurance demand

ISTANBUL - Hürriyet

People move to take out a policy against debt payment risks. DAILY NEWS photo

A total of 1.4 million people in Turkey have taken out a policy against the risk of failure to pay their credits and credit card debt.

Those taking measures against risks of debt payment failure have paid 200 million Turkish Liras premium in the first seven months of the year, but the loss payments of insurance companies have been soaring rapidly as well due to the rising debt carriage in the country.

The insurance companies have been offering debt protection insurance under unemployment insurance. The insurer pays the personal loan or credit card debt of the insured if he or she will be out of the job.

Both insurance products have been attracting a rapidly rising number of people as the premium collected in 2013 until now has already surpassed the amount collected in the whole of 2012: 125 million liras.

The highest demand comes from urban residents who are employed permanently, also called white-collars, insurers say, drawing the policyholders’ profiles.

The latest report by the Turkish Banks Association (TBB) showed that the number of people with card debt and loan debt surpassed 680,000 as of June, while the amount was around 822,000 in all of 2012.The number of people who couldn’t pay their credit card debt reached almost 400,000 by the end of June.

The rising debt levels, which have been picked up by the government lately, have even spurred the banking watchdog BDDK into action, as it announced Aug. 16 new measures to control credit card spending and to enable more controlled use of credit cards.