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Sep 2022

Turkiye: Motor insurance premiums soar

Source: Middle East Insurance Review | Aug 2022

Premium income generated from motor insurance business in the January-May period increased by 131.9%.
 
However, adjusted for inflation, the real growth in this branch was 33.7%.
 
One reason for the growth in the motor insurance branch is increased premium rates, reported SigortaMedya. Another factor is higher vehicle prices caused by inflation.
 
However, high inflation, which reduces the purchasing power of individuals, also constrains demand for automobile insurance. Thus, a number of car owners only buy motor third-party liability insurance instead of comprehensive motor insurance because the former is more affordable.
 
Despite the rapid growth in the motor insurance branch, the technical loss and the serious increase in damage costs in the first quarter of this year have alarmed insurance companies.
 
AXA Sigorta CEO Yavuz Olken said, “Rising vehicle prices already account for a significant share of the increase in average premiums. In addition, it is necessary to take into account cost increases in foreign currency-based spare parts and exchange rate shocks.”
 
Since the second half of last year, there have been increases in the minimum wage and prices of spare parts due to the weakening Turkish lira.
 
In the non-life sector as a whole, financial results for the first quarter of this year showed technical losses of TRY1.2bn ($67m). In contrast, the non-life market posted a technical profit of TRY655m for 1Q2021, according to data from the Insurance Association. The combined ratio stood at 150% in 1Q2022.
 
Under current conditions, premium increases in automobile insurance are expected to continue. In addition, insurers are paying attention to cooperation with auto repair shops to reduce repair costs. M 
 
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