The insurance industry in Türkiye faces several challenges, according to the Istanbul Chamber of Industry chairman Erdal Bahcivan.
For instance, many businesses believe it is meaningless to buy insurance because any damage they might suffer because of an untoward event would be within insurance deductible limits. This perception places their industrial operations and assets at risk of being uninsured.
The chamber has made several recommendations to mitigate the difficulties faced. One recommendation is for the authorities to make it compulsory for factories or workplaces to have the relevant insurance coverage before they are allowed to operate. This is targeted particularly at SMEs, whose awareness of the benefits of insurance needs to be raised.
Mr Bahcivan was speaking during a recent high-level meeting that covered the insurance industry. The meeting was hosted by the Chamber and attended by Türkiye vice president Cevdet Yilmaz and deputy minister of treasury and finance Osman Celik, reported Finans Gundem.
Apart from businesses’ perceptions of insurance, Mr Bahcivan said that insurers were struggling with other challenges. For instance, inflation has been rising in recent years and has affected asset values. This has had a negative impact on the insurance sector. The “twin transformations” that include digitalisation and going green have also affected the insurance sector.
Mr Bahcivan said that there were also many instances in which insurance companies refrained from insuring industrial facilities or, demanded very high premiums to insure them. This is especially so in sectors such as chemicals, paint, plastic and paper.
Another factor that increases stress for insurers is earthquakes. Mr Bahcivane said that in addition to the destruction and losses caused by the 6 February earthquakes in 2023, warnings have been raised about the risk of a possible huge earthquake hitting the Marmara Region, especially Istanbul.
The earthquake risk makes relations between industry and the insurance sector more challenging. This is particularly the case because of inconsistencies in risk coefficient calculations even between regions very close to each other. To improve the situation, a suggestion is for earthquake risk coefficients to be reviewed and updated by region in a consistent manner. M