TURKEY: ALLIANZ Sigorta's head pleads for stronger insurance regulation
According to ALLIANZ top executive, the underwriting losses registered by the Turkish market rose to $1 billion in 2010, 45% higher than in 2009 and more double as compared to 2008. The explanation lies mainly in the fierce competition and lack of regulation. Unfortunately, low profitability and underwriting losses also cause decline in customer service, weakening the public trust in the insurance sector. Moreover, a good profitability is essential also in order to capitalize on the high potential of the Turkish market. "Turkey still has insurance penetration which stays at 2 percent of the gross domestic product of the country," he said. "In order to convince shareholders overseas, Turkey need to become a market that does not only have the potential to grow but also to produce return on investments." Consequently, "moving toward a regulatory framework that is more in line with the banking industry" is crucial to attaining sustainable growth in Turkey's insurance market, he said.
Turkey's economy administration has done a fantastic job by launching strong regulations in banking after the 2001 crisis, the chief executive said. "Unfortunately, this is not yet the case for the insurance industry."