Ratings are under pressure for the Turkish insurers' Insurer Financial Strength from the Negative Outlooks on the Turkish sovereign and Turkish banks' ratings, according to the report released by the agency.

These Negative Outlooks influence the insurers' investment quality and business profiles which are the two key instruments for Fitch Ratings' credit assessment of Turkish insurers.

In August 2020, Fitch has revised the Outlook on Turkey's 'BB-' sovereign rating to Negative due to "lower foreign-exchange reserves, weak monetary policy credibility, negative real interest rates and a sizeable current account deficit" as the rating agency mentioned.

Turkish insurers have well survived in 1H2020 with lower claims frequency in motor and health lines, and adequate premium growth despite the pandemic.

"In addition, the sector has very low exposure to business interruption insurance, which has generated significant pandemic-related claims in other markets.We expect the market to become more sophisticated in the medium term, helping to address low insurance penetration (as measured by premiums to GDP)," said the agency.
Source: www.fitchratings.com