The expected growth in premiums and fragmented nature of the insurance market in Turkey means that a range of corporate transactions is expected to take place over the next few years, both in terms of consolidation amongst smaller firms and new entrants to the Turkish insurance market, according to BMI Research, a unit of the Fitch Group.
In a summary of a market report set for release shortly, BMI Research said that the Turkish insurance market is home to a number of well-established domestic providers, working alongside major multinationals which are expanding their presence in the country via growing bancassurance networks and other distribution channels.
The report noted too that there are some potential risks to consider, including an underdeveloped regulatory system.
Nevertheless, Turkey has reformed motor third-party liability (MTPL) business. Turkey also aims to balance the market by restricting the size of an insurer’s share of the MTPL sector to the size of its share of the overall non-life market.
BMI Research forecasts robust growth in Turkey’s non-life sector, driven both by the dominant motor business and a range of smaller lines including health and personal accident insurance. Overall, non-life premiums are forecast to grow by an annual average of just over 9.2% between 2016 and 2020, in local currency terms, with premiums reaching TRY38.7 billion (US$12.9 billion) by 2020.
The smaller life sector, which currently accounts for around 16% of premiums written, is expected to see similar growth over the forecast period, with life premiums written increasing from TRY4 billion in 2016 to TRY5.7 billion in 2020.
Domestic economic growth is expected to provide a boost to average household income rates, which will improve the affordability of, and demand for, a range of life products, including investment-linked products and retirement schemes. Economic growth is also the key stimulus for growth in the large non-life sector, where demand for products such as credit and financial guarantee insurance is growing alongside established basic lines such as motor and property, said the report.
There are more than 40 insurance companies operating in Turkey, according to the website of the insurance association.
TRY1 = US$0.33