Page 13 - Turkinsurance Digital Magazine

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According to the statistics by the Insurance Association of In 2018, insurance market has continued to carry out these crit-
Turkey, the market has produced 28 million TL premiums dur- ical functions, and continued to grow during the first six months
ing the first half of 2018. What is your assessment about the in parallel to the growing economy; though by slightly losing pace
market’s first half performance? with a rate of 5.2 percent. Within this framework, life insurance
segment has reached a total premium volume of 3.8 billion TL,
As the second largest sector of financial markets after banking, growing by 16.1 percent during the first six months of this year.
insurance continues to be a strategic sector for Turkish economy Excluding the double-counted indirect premiums from the risky
with its critical functions and an asset size of 160 billion TL ac- policyholders’ pool of motor vehicles compulsory third party li-
cording to the results of the first six months of the year. Economic ability insurance, in non life branches total premium production
developments have been the driving force behind the development amounted to 22,9 billion TL, with a 15,3 percent rise compared to
of insurance market in 2018, as in previous years. Driven by the same period of the previous year. Thus overall, total premium pro-
recovery period since the end of 2016, Turkish economy grew over duction of the market has reached 26.7 billion TL with a growth
expectations by 7.4 percent in 2017; becoming the fastest growing of 15.4 percent over the same period of last year.
economy among G20 countries. Growth in insurance premium vol-
ume progresses in parallel with the developments of our economy; As for the life insurance, 16 percent of growth in written pre-
however, last year’s sector-specific developments such as tariff miums compared to the same period of previous year has been
in traffic insurance and risky policyholders’ pool in MTPL have parallel to the progress of consumer loans. Yet, there has been no
shaped the trajectory of our market for this year. real growth, neither in non-life nor in life insurance segment, due
to the high inflation rate. As a segment dominated by credit life
From the beginning of 2018, fluctuations in foreign exchange insurance, regulations on credits and overall credit volume are the
rates and increase in the interest rates have made an impact on the major determiner of life insurance premium production. In this
premium production and financial results of the insurance market. perspective, to increase the penetration of voluntary life insurance,
Sharp increases in exchange rates make a negative impact on in- which has a small share in premium volume in our country, it is
surance lines that depend on equipment and spare parts imported significant to expand the use of products other than payment pro-
from other countries, such as motor, traffic and health insurance. tection products, such as education insurance and savings prod-
On the other hand, increasing interest rates and tightening precau- ucts.
tions by the BRSA (Banking Regulation and Supervision Agency)
are among the most important factors determining the course of In 2017, insurance market was impacted by natural disas-
life insurance. Moreover, higher-than-expected inflation rate in- ters. What precautions does the Association take in this area?
creases insurance costs and causes pressure on market’s financial Could you inform us about the attitude of insurance market
results. Although the current growth in financial revenues seem to about natural disasters?
make up for it to a certain degree, we are bound to see the negative
impacts in the medium term. As unusual weather events and natural disasters occurring all
around the world in recent years due to climate change and global
Despite all these challenging economic developments during the warming increase in number and frequency, their impact on society
first six months of the year, insurance market has insured a to-
tal sum of 107.2 trillion TL, which is 35 times higher than the
Gross Domestic Product in 2017; therefore keeps playing a vi-
tal role in ensuring the continuity of investments. As of the 6th
month of 2018, insurance market contributes to the sustainability
of economic activities and protection of individuals by reaching 16
billion TL in paid compensations. Besides, the market shares the
burden of our state via institutions such as TCIP (Turkish Natural
Catastrophe Insurance Pool) and TARSİM (Agricultural Insur-
ance Pool), disciplines financial initiatives by ensuring efficient
risk management; while at the same time providing employment
for approximately 200 thousand people, combined with the other
related sectors it serves. With a fund size of 133 billion TL includ-
ing the pension market, insurance makes new investments possible
and supports economic growth. Therefore, it is not surprising to
see strong insurance markets in countries with strong economies.

Funds supplied to the economy by the insurance market are espe-
cially channeled into the Treasury of the Republic of Turkey and
Capital Market, and 85 percent of them are in Turkish Lira. Con-
sidering that at least 10 percent of pension funds must be invest-
ed in Real-Estate Investment Funds, Venture Capital Funds, and
Infrastructure Investment Funds, as well as the fact that pension
funds are long-term by their nature; insurance and pension market
has a function of deepening and stabilizing the capital markets.