“In the last decade, the annual growth rate of the Turkish insurance market was over 20% and over the inflation rate,” Mehmet Akif EROĞLU, Chairman of the Insurance and Private Pension Regulation and Supervision Authority (SEDDK) told XPRIMM in an interview recorded in Bucharest.

He explained: “Our market is gradually growing every year, which is very good, but we still have a penetration rate problem. It's very low, compared to the developing countries or Europe and actually, when we compare our real economic situation, it's not in the place that the insurance market deserves. We estimate that the penetration rate should be of around 3.5%, but right now it's around 2%. As such, while our economy is among the first 20 big economies, our insurance industry is within the first 40 countries, ranking 38.” He also added: “In the past year and part of this year, the Motor Third-Party Liability (MTPL) insurance sector was significantly more affected compared to previous years. During these two years, we experienced a high inflation rate while the interest rates remained very low, resulting in a negative gap between them. Typically, insurers invest the funds they collect, including the interest earned. This situation had a more pronounced impact on MTPL.”

A discussion about 2023 in the Turkish market wouldn’t make sense without referring to the Kahramanmaraş earthquakes, a catastrophe of unprecedented magnitude and geographical extent. Mehmet Akif EROĞLU: “The earthquake in Kahramanmaraş affected an extensive area, encompassing 11 cities, which is of considerable size. It presented a significant challenge for us, but both our government and our people have experience in dealing with catastrophic events, although nothing on this scale. […] our recovery has been commendable. For instance, in terms of the Turkish Catastrophic Insurance Pool (TCIP), as of September 10th, we have disbursed TRY 33 billion in claims and allocated TRY 37 billion for outstanding claims reserves. The insurance penetration rate was quite low in the affected area, but there were 1.5 million TCIP earthquake compulsory policies in place for all 11 cities. After the earthquake, TCIP received approximately 500,000 damage claims. We estimate that the total financial impact on the insurance sector, excluding TCIP, will reach TRY 75 billion when considering new claims yet to be filed. Excluding reinsurance companies, we anticipate that companies will bear a cost of TRY 2.5 to 3 billion. However, a significant portion of this loss will be covered by equalization reserves, and the impact on the capital adequacy of companies within the sector will be limited.”

Read the extended version of the interview in the latest issues of XPRIMM Insurance Profile Türkiye – FY2022 & 1H2023 or watch the video recording of the interview that Mehmet Akif EROĞLU granted XPRIMM in Bucharest.