Turkiye: Insurance association head presents industry report card and wishlist

The insurance market in Turkiye generated a total premium income of TRY483bn ($15.1bn) in 2023, an increase of 105% compared to 2022, Mr Ugur Gulen, president of the Insurance Association of Turkiye (TSB), indicated.

This was despite 2023 being a difficult year for the sector with exchange rate uncertainties, economic fluctuations, damages caused by the 6 February Kahramanmaras earthquakes and rising reinsurance costs.

Mr Gulen said, “The insurance penetration rate, which is our top priority, has increased in the last 10 years,” adding, “We are rapidly moving towards our goal of reaching 3%.” 

“The amount of compensation paid by our sector in 2023 amounted to TRY327bn,” he added.

The figures cited by Mr Gulen were not inflation-adjusted. The monthly inflation rate in Turkiye in 2023 varied, standing at 64.3% in January, and falling to 38.2% in July before rising to 64.8% in December 2023.

Looking ahead

Mr Gulen also talked about the increasing importance of building completion insurance and receivables insurance and expressed confidence in the rising popularity of the Private Pension System (BES).

He said that the biggest challenges for the insurance sector would be climate change and Nat CAT, adding, “In Turkiye, the most important risk in particular— the expected Marmara earthquake — stands before us. With the awareness that this cannot be avoided, we believe that the way to take action is with the support of the state to raise public awareness.”

The expected big earthquake

Experts have been warning about a possible major earthquake of at least magnitude 7 in the Marmara region, where Turkiye’s commercial hub Istanbul is located. The disaster could affect 28m people and devastate the metropolis and surrounding cities, particularly because of the huge volume of housing that is not quake-proof. In August 1999, a powerful earthquake in the eastern Marmara Sea rocked Istanbul, killing 18,000 people.

Capital strength

Stressing the need for a strong capital structure in the insurance sector, Mr Gulen said, “Capital strength is of critical importance to the insurance industry to be able to compensate for losses caused by catastrophic risks, especially the possible Marmara earthquake. Therefore, it is important to create policies to strengthen the capital structure of the insurance sector.

“In this context, in the traffic branch (compulsory motor third-party liability insurance), it is thought that the transition to free pricing will have a structural and sustainable effect. In the coming period, insurance rate hikes, earthquakes, sustainability and education will be a priority and we will work intensively on these four areas.”