Page 23 - Turkinsurance Digital Magazine

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Insurance market will continue to grow in 2020

KMPG Turkey published insurance market exceeded the limit of 20 thousand.
the insurance version of • Fund size in BES (Individual Pension System) reached 113.2
“Market Overview 2020”, billion TL, including the state subsidy funds. Total number of
a report series which eval- participants reached 6.8 million, and total number of contracts
uates 2019 and lists expec- reached 8.15 million. Fund size per participant stood at 12 thou-
tations for 2020 for various sand 888 TL in 2018, which climbed up to 16 thousand 588 TL
sectors. According to the in 2019.
report, Turkish insurance Asset size exceeds 200 billion TL
market where 62 compa- • During the first nine months of 2019, asset size of the insurance
nies operate including Ergo market, grew by 21.6 percent compared to the same period of
Sigorta, grew by 24 percent previous year, reaching 215.6 billion TL. During this timeframe,
during the first 10 months non-life companies grew by 21.6 percent, and life and pension
of 2019, compared to the companies by 24.9 percent.
same period of previous • Share of receivables from main operations in the asset struc-
year. During that time- ture stood at 59 percent, while share of financial assets climbed
frame, the market reached up to 13 percent. These figures indicate a 41 percent growth in
a premium volume of 54 billion TL and caught the overall mar- the financial assets of companies operating in Turkish insurance
ket production of 2018 in 10 months. Preliminary data indicates market. Growth rate stands around 25 percent for receivables
that the insurance market will reach a growth over the averages from main operations.
in 2020, with its high potential driven by the growth dynamics Debts continue growing
in population and economy. Kerem Vardar, Financial Services • At the end of 2018, payables from main operations increased
Sector Leader at KPMG, evaluated the report and said: “State to 98.9 billion TL; and then to 121.8 billion TL as of September
support in the strategic areas such as individual pension system, 2019. On the other hand, total liabilities-to-equity ratio which
agricultural and natural catastrophic insurance stands out as one stood at 17.7 percent in 2013, continued to decrease; reaching
of the market’s strong suits. High rate of working young popu- 11.8 percent as of September 2019.
lation is also another advantage. However, shrinking demand in • Technical profit, which translates into insurance operations
main sectors such as automotive and construction, as well as geo- only, reached 5.6 billion TL, up by 27 percent compared to the
political risks pose a threat to the insurance market. On the other same period of previous year. Non-life companies increased their
hand, there are some signs that economic activities that began to technical profits by 23 percent, life and pension companies by 36
liven up in the last quarter of 2019 will support the premium vol- percent and reinsurance companies by 47 percent.
ume and incomes. Complementary health insurance products will New amendments bring opportunities
become more popular, and products such as credit insurance and • Türk Re, which was founded in September 2019 with a capital
bond insurance will see better movement. Cyber insurance prod- of 600 million TL by the Ministry of Treasury and Finance, is ex-
ucts also become more important day-by-day. In parallel with the pected to increase local reinsurance capacity. The company aims
expansion in credits, life insurance will continue to grow. Nursing to keep reinsurance transactions of 1.2 billion TL worth inside
insurance is also expected to witness some developments.” the country.
• Insurance Regulation and Supervision Agency (SEDDK), a new
Highlights from the Market Overview 2020 Report by KPMG organization that is regarded as a significant structural reform in
Turkey include: the market, is expected to take important steps towards increas-
• The market grew by 24.3 percent in the first 10 months of ing the insurance awareness and reinforcing financial structures.
2019, reaching a premium volume of approximately 54.5 billion • Insurance companies that are owned by the state will be consol-
TL. idated under the roof of “Turkish Wealth Fund”. The project is
• Non-life production stood at 46 billion TL, and life production planned to be completed in the first quarter of 2020 with the aim
at 9 billion TL. of creating a scale economy and bringing the size of non-bank
• Total claims paid in the first nine months of 2019 reached financial industry to the level of global averages.
23.1 billion TL, which indicates an annual growth of 18 percent. Takaful will grow
Share of traffic and motor lines in that total stands at 56 percent, • Takaful will be one of the big opportunities in 2020. Global
while life insurance’s share is only 10 percent. premium volume of takaful exceeds 20 billion USD, 85 percent
Foreign investors have an appetite for Turkish insurance business of which are produced by Saudi Arabia, Iran and Malaysia.
• In 2018, the insurance market attracted a foreign direct in- • Analysts believe that this market will reach a size of 43 billion
vestment of 47 million USD; which increased up to 219 million USD by 2023. In recent years, ethical banking is rapidly develop-
USD in the first nine months of 2019. This brought total FDI in ing in also in developed European countries such as UK, Canada,
insurance market up to 8.1 million USD in the last 16 years. USA and Australia. As an extension, takaful is estimated to be-
• Outstanding mergers & acquisitions of 2019 include the acqui- come being the preferred insurance product.
sition of Unico Sigorta by SBK Holding, Ergo Sigorta by HDI • Despite being a relatively new area, takaful is developing rapid-
Sigorta, and Beha Sigorta by individual investors. ly in Turkey. Total premium production in takaful was 2.2 billion
• Since 2015, average growth in employment was limited to 1 TL in 2018, which increased up to 2.8 billion TL as of the end of
percent; while 214 new employees joined the insurance market in October 2018.
2018. At the end of 2018, total number of employees in Turkish