Turkish non-life insurers should benefit from improved operating conditions and stronger pricing in 2025, Fitch Ratings says in a report titled "Turkish Non-Life Insurance: Gradual Steps to Market Stabilisation".
Easing inflation, high interest rates and regulatory action are supporting sector earnings and resilience, although risks persist from economic volatility and challenges in motor third-party liability (MTPL), Fitch adds.
The operating environment in Turkiye continues to stabilise, with annual inflation slowing to 44% in 2024 and 35% by end-May 2025, the lowest since 2021. Gross written premiums surged by 73% in 2024, driven by health, motor and property insurance. Health insurance premiums increased by 89%, reflecting heightened demand as public health services deteriorate. MTPL premiums rose by 86%, boosted by a new pricing indexation system, while property insurance premiums also grew significantly, reflecting increased customer awareness of natural disaster risks.
Nevertheless, Fitch expects overall underwriting profitability to remain challenged, with a sector combined ratio of about 110% in 2025. Motor damage and property lines are likely to be profitable, but the health segment faces intense competition, and MTPL remains structurally loss-making, with a 2024 combined ratio of 145%. The premium cap indexing mechanism introduced in May 2024 and a one-off 14% premium increase in February 2025 have reduced MTPL underwriting losses, but regulatory price caps still prevent risk-based pricing. Sustained improvement in profitability is unlikely without structural reform.
2025 prospects
The Turkish insurance sector will likely grow further in 2H2025 on relative macroeconomic stability and a stabilising operating environment. Fitch expects earnings to be strong again in 2025, supported by stronger pricing and strong investment income due to high interest rates.
Sector resilience has been strengthened by tighter capital adequacy rules, quarterly solvency monitoring and restrictions on excessive premium growth. The sector’s regulatory solvency ratio improved to 156% at end-1H2024 (end-2023: 147%), aided by high interest rates.
The Turkish Catastrophe Insurance Pool and the regulator are working to extend catastrophe coverage to more risks, aiming to increase sector resilience and ensure prompt compensation after natural disasters.