News Middle East17 Jun 2020

Turkey:Milli Re outlines opportunities in insurance market

17 Jun 2020

In line with higher level of awareness about rights and obligations and the increased tendency to resort to litigation in society, demand for liability insurance is expected to expand in Turkey, says Milli Re in its 2019 annual report.

General Liability is one line that has been able to grow in real terms, with a 23% increase in premium income in 2019 compared to 2018. Accordingly, the share of General Liability in non-life premium has reached 3% and it is considered among the lines with the greatest growth potential.

Comprised of 13 sub-branches, 90% of the total premium in General Liability emanate from General Third Party Liability, Employers’ Liability and Professional Indemnity. While the growth in Third Party Liability and Employers’ Liability remained limited due to competitive pressures, there was 37% real increase in premiums from Professional Liability Insurance in 2019.

At the same time, it is expected that growth in health insurance business will continue, says the reinsurer, noting that premiums in this line of business grew by more than 34%.

Meanwhile, it is expected that the positive trend in financial lines such as Surety and Credit, which grew by more than 40% in 2019, will continue to develop in line with the economic conjuncture and state support, although their contribution to the insurance market is currently very small.

Cyber insurance too will be at the top of the insurance industry agenda, because along with the product diversity related with this class of business and the expected increase in demand for these products.

As for takaful, positive developments in recent years have been enhanced by the regulation enabling the necessary legal and operational framework for this segment, as well as by the emphasis given by the state to alternative financial markets. The total premium produced in this segment has reached 5% of the industry premium income at the end of 2019.

Regulatory framework

Milli Re also points out that one of the most important developments in the Turkish insurance market last year was the establishment of Insurance and Private Pension Regulation and Supervision Authority (SDDK). With this structure, it is envisaged that managing insurance industry through an exclusive entity will enable the maintenance of an optimum coordination between regulatory and supervisory functions and addressing the problems of the industry in a more rapid, efficient and effective manner.

On the other hand, as an extension of industry reforms, three insurance and three pension companies which are currently subsidiaries of state-owned banks will be merged to operate as two companies – a pension company and an insurer – within a single holding structure under the auspices of the Turkish Asset Fund in 2020. “It is anticipated that this entity which will be able to benefit from economies of scale more efficiently, will be instrumental in accelerating the growth of non-banking financial sector and enable Turkish insurance and pension sector to compete on a global scale,” says Milli Re.

Market premiums

According to the data published by the Insurance Association of Turkey, the premium volume of the insurance market reached TRY69.2bn ($10.1bn) in 2019, with an increase of 27% in nominal terms and 13% in real terms compared to the previous year.

Details of premiums generated by the various classes of insurance are as follows:

Branches

2019

Premiums

TRY

MarketShare %

Y-o-Y Change %

Accident

2,372,741,294

4.10

30.92

Health

8,358,143,518

14.44

33.85

Land Vehicles

9,406,268,988

16.25

19.93

Railway Vehicles

13,280

-

-

Air Vehicles

223,854,250

0.39

24.46

Sea Vehicles

413,511,536

0.71

37.72

Marine

950,787,872

1.64

14.58

Fire & Natural Disasters

8,447,103,132

14.59

21.15

General Damages

5,876,737,321

10.15

12.00

Land Vehicles Liability

18,711,638,555

32.33

18.02

Air Vehicles Liability

263,898,565

0.46

35.77

Sea Vehicles Liability

44,655,983

0.08

42.50

General Liability

1,712,142,924

2.96

23.01

Credit

304,281,300

0.53

22.53

Fidelity Guarantee

91,177,756

0.16

28.40

Financial Losses

505,294,367

0.87

46.19

Legal Protection

198,465,014

0.34

18.05

Support

158,666

-

21.26

Total Non-life

57,881,874,321

83.59

29.68

Life

11,359,715,131

16.41

64.14

Total

69,241,589,453

100.00

26.69

 

Source: Insurance Association of Turkey

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Recent Comments

Jamal Mohamed

Its encouraging. However, what about the loss experience?

17 June 2020