20 Jan 2022
Posted in Insurance
Turkey’s general insurance industry to reach $11.25 billion in 2025, driven by credit expansion and government stimulus programmes says GlobalData
Turkey’s economy is expected to grow by 8.5% in 2021, as compared to 1.8% growth in 2020 driven by substantial credit expansion and a surge in demand backed by governments stimulus programmes. An economic recovery after a slowdown due to COVID-19 is expected to support Turkey’s general insurance industry growth, according to GlobalData, a leading data, and analytics company.
GlobalData’s analysis shows that the Turkish general insurance industry is projected to grow at a compound annual growth rate (CAGR) of 8.83% from TRY68.15 billion ($9.72 billion) in 2020 to TRY104.03 billion ($11.25 billion) in 2025, in terms of gross written premiums (GWP).
Due to the continuous depreciation of the currency, the general insurance industry in Turkey is expected to grow at a slower pace of 12.4% as compared to 17.7% growth in 2020 as seen in GlobalData’s data.
Sutirtha Dutta, Insurance Analyst at GlobalData comments: “The general insurance industry will expand over the next few years driven by economic growth as well as favorable government and regulatory policies. However, the profitability of insurers remains shadowed due to escalating inflation and constant volatility of domestic currency against euro and depreciation against the US dollar.”
Dutta offers their view on the key segments in Turkey’s general insurance industry:
“Motor insurance is the largest segment in the Turkish general insurance industry, accounting for 45.8% of GWP in 2020. The segment grew by 11.04% in 2020, supported by a recovery in vehicle sales and an increase in premiums by insurers during 2019-2020 in order to remain profitable after stagnant growth during 2016-18.
“The introduction of Special Consumption Tax (SCT) in August 2020, resulting in a decline in prices of automobiles, will boost vehicle sales which is also expected to contribute towards premium growth. Motor insurance is expected to grow at a CAGR of 8.9% over the period 2020-2025.”
“Property Insurance is the second-largest segment, accounting for 27.8% of general insurance GWP in 2020. The segment grew by 29.2% in 2020, due to increased occurrence of natural calamities and extreme weather events. According to the Turkish State Meteorological Services, the country registered 984 natural disasters in 2020, the highest since 1940. As a result, property insurance is expected to grow at a CAGR of 9.31% over 2020-2025.”
Personal Accident and Health
“Personal Accident and Health (PA&H) insurance is the third-largest segment with an 18% share of general insurance GWP in 2020. It grew by 15% in 2020, driven by rising risk awareness among individuals. PA&H insurance is expected to grow at a CAGR of 7.6% during 2020-2025.”