Turkey’s insurance market set to grow

Turkey’s insurance market has enjoyed growth in recent years, and low per capita spend and penetration rates suggest further upside according to a new report from Benfield.

“There has been a surge of foreign interest through both direct and indirect investment in Turkish insurance since 2006,” said Angela Coad from Benfield’s Industry Analysis and Research Team, authors of the report.

“Economic growth, low penetration rates, an expanding population, increasing awareness of insurance and a more robust regulatory environment have all been cited as attractions of the insurance market.”

Total premiums have more than doubled during the last five years, rising from TRY3.7bn (£1.1bn) in 2002 to TRY9.6bn (£3.4bn) in 2006. Non-life premiums led this growth with a 29% per annum increase over the period and represented 86% of the total market by 2006.

Accident insurance still dominates and accounted for 33 % of premiums written in 2006. Motor TPL accounted for 15 %, however low profitability remains an issue for both lines.

The Turkish insurance market is concentrated with the top ten companies accounting for 74 %and 89 % of 2006 non-life and life total premiums respectively. Market share for the top five non-life companies totals around 50 % and has been relatively stable since 2001. Market concentration is higher in the life sector, perhaps reflecting the greater immaturity of the market.

The insurance industry has undergone structural change with a number of regulatory initiatives including the introduction of compulsory earthquake insurance and private pensions. Legislation has introduced greater discipline and brought the industry more into line with international practice.

According to the report, approximately two thirds of the Turkish market’s need for reinsurance coverage is met by the international market. Burgeoning foreign interest in the direct market suggests reinsurance will remain firmly placed on the international stage.