TURKEY: Life insurance slowed down the growth of the market

Turkey's insurance sector is unusual in the general context of Central and Eastern Europe - and, indeed, the Middle East - in that it is both large in absolute terms and rapidly growing. Unsurprisingly, this aspect has not been missed by the multi-national insurance companies - the result being that most of the regional (Central and Eastern European) and global players are now present on the Turkish market.

A number of substantial local insurers are associated with the major conglomerates and/or banking groups in Turkey. Unlike many of their counterparts in the Middle East, though, the local companies are not operating in the insurance sector for its own sake: if they can identify the opportunity to make a deal with a multi-national company (in relation to shareholding or product distribution, for example), they will seize it. Unlike in many Central and Eastern European countries, there is no titanic former state-owned (near) monopoly insurer that continues to dominate the sector.

The main problem comes from the nature of the non-life segment, which is crowded: there are typically 30 or so players who are active in all non-life branches. The regulator does not necessarily set rates and tariffs at attractive levels. For some lines, brutal competition means that business is written in terms that benefit the customer, not the insurer and its shareholders.

Profitability has been set on a downwards trend for the last three years. Because of the undeniable growth prospects, Turkey is not a market from which well capitalized multi-nationals or long-established local groups would want to leave.

A secondary challenge is represented by the fact that the number of people who are using life insurance appears to be growing less rapidly than in 2009 - 2010. The figures for mid-2011 suggest that the growth rate has slipped to low single-digit rates. The number of policies for which premiums are being received, though, has soared.

Therefore, from early 2012, life insurances slowly started to diminish, falling dramatically by 8.09% by the end of the first semester of 2012.

Evidently, a setback like this in life insurance could not hold back the Turkish industry which totalized, in 1H/2012, TRY 10.05 billion (EUR 4.42 billion) in gross premiums, growing by 12.75%. Total non-life segment managed a growth by 17.12% and maintained an 85.89% share of the total gross written premiums.

Motor insurance is another notable sector worth mentioning, gaining 21.58% compared to the same period last year, MTPL reaching around TRY 1.81 billion and growing by 24.39% in the last six months.

As far as the Turkish insurance companies are concerned, ANADOLU Sigorta is leading the non-life market with a 28.22% growth, managing around TRY 1.16 billion or EUR 512 million, AXA Sigorta placing second with TRY 1.13 billion. AK Sigorta came third, with TRY 706 million or EUR 310 million, followed by ALLIANZ and YAPI Kredi with EUR 705 and EUR 570 million equally.

On the other side ZIRAAT Hayat ve Emeklilik topped the life insurance sector in Turkey with a negative growth of 34.05% (TRY 368.88 million) in 1H/2011. ANADOLU Hayat ve Emeklilik placed second, decreasing by 1.49% (TRY 182.16 million) compared to the same period last year, followed by GARANTI Emeklilik, with TRY 136.25 million or EUR 55.14 million (growing by 5.62%). YAPI Kredi Emeklilik and HALK Hayat ve Emeklilik occupied the 4th and 5th places in the top, with gross written premiums of TRY 105.64 million (EUR 46.45 million) and TRY 92.29 mil (EUR 40.58 million).

Access www.xprimm.com and download the 1H2012 Turkish insurance market statistics.

Market portfolio (in EUR and TRY):
  • Gross written premiums
  • Growth rates
Market rankings in EUR and TRY (GWP/ Market shares/Growth rates):
  • All insurance market
  • Life insurance 
  • Non-life 
  • Motor hull
  • MTPL
  • Fire & allied perils
  • Damages to property
  • Health

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