Reinsurance placements and renewals for 2020 have been completed without any major problem for the insurance industry, according to industry sources.
IUC chairman and general manager Menekse Ucaroglu told Insurance Gazette that the excess reinsurance capacity faced by Turkish insurance companies in recent years continued into this year.
Mr Fatih Agacik, chief underwriting officer at VHV Reasurans, said that VHV's growth is supported by increased capacity in the reinsurance market. He said that there were nominal increases in premium amounts paid to reinsurers in the face of increasing collateral amounts, and that premium rates have in general been adjusted in line with the risk, with discounts of 5-7.5% compared to the previous year.
He said that the gap in coverage caused by a limited number of reinsurers which had to withdraw from the market was closed by current and new market players.
Natural disasters and political and economic events in global markets in 2019 play a role in the decisions of the international insurance and reinsurance market in 2020.
Mr Kaan Acun, assistant manager at Milli Re, said, “Due to the decrease in the discretionary capacity provided by the major reinsurance markets, a significant increase is observed in the placement of corporate commercial and industrial risks domestically.“
Newcomer Turk Re
Mr Ucaroglu emphasised the importance of Turk Re to the sector, saying, “Turk Re entered the market very quickly and was effective in the renewals of 2020. It took part in the Turkish insurance sector as a second domestic reinsurer after Milli Re.”
Turk Re was established by the government in September 2019 to build domestic capacity.
But the reinsurance market faces certain challenges. The economic fluctuations and events experienced by the Turkish economy in 2019 have dented reinsurance business.
Mr Acun said that the high interest rate environment that has dampened economic activity has negatively affected the Turkish insurance industry. It has pulled down the growth potential, especially in life, motor own damage, traffic, construction, and housing insurance, apart from other classes of business.
He said that the increase in risks and liabilities assumed by the Turkish insurance industry, damages in industrial and commercial facilities throughout 2019, the impact of foreign exchange and inflation on damage costs, and increasingly competitive prices and conditions, have increased costs for insurance and reinsurance companies. They create pressure on technical profitability.
Bullish about reinsurance prospects in Turkey, Mr Agacik said that factors such as the increasing number of insured, insurance awareness, damages experienced by insurers and changing customer demands are shaping the market.
In addition, insurance companies are preparing new plans to increase their brand awareness and expand their product range, thereby expanding their market share and thus accessing profitable portfolios.
He said that reinsurers provide added value in new risk areas such as renewable energy, cyber, liability, surety, building completion insurance, as well as in the branches of traffic, health, accident, etc.