Turkey’s general insurance industry set for growth, says GlobalData
Credit expansion and government stimulus programmes are expected to drive growth in Turkey’s general insurance industry, which is expected to reach $11.25bn in 2025 in terms of gross written premiums (GWP), according to GlobalData.
The data and analytics company said substantial credit expansion and a surge in demand backed by government stimulus programmes will see Turkey’s economy grow by 8.5% in 2021, as compared to 1.8% growth in 2020. This economic recovery after a slowdown due to Covid-19 is expected to support Turkey’s general insurance industry growth, said GlobalData.
Its analysis reveals that the Turkish general insurance industry is projected to grow at a compound annual growth rate (CAGR) of 8.83%, from TRY68.15bn ($9.72bn) in 2020 to TRY104.03bn ($11.25bn) in 2025, in terms of 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 [figures],” said the firm.
Sutirtha Dutta, insurance analyst at GlobalData, said: “The general insurance industry will expand over the next few years, driven by economic growth as well as favourable 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.”
Looking at specific lines, GlobalData noted that motor insurance is the largest segment in the Turkish general insurance industry, accounting for 45.8% of GWP in 2020. It said 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 2016-2018. It added that motor insurance is expected to grow at a CAGR of 8.9% during the period 2020-2025.
The second-largest line is property insurance, 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, said GlobalData. According to the Turkish State Meteorological Services, the country registered 984 natural disasters in 2020, the highest since 1940. As a result, said the firm, property insurance is expected to grow at a CAGR of 9.31% during 2020-2025.